How to file an adversary proceeding for student loan bankruptcy

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As most people dealing with debt know, there are many different kinds of debt and some types are more difficult to eliminate in bankruptcy than others. Student loan debt is one such debt that’s not automatically discharged in bankruptcy proceedings. Unfortunately, this fact has led many people to believe that student loans can’t be discharged at all. Many borrower can discharge student loan debt through bankruptcy, but it requires additional steps.

This post explains how to file an adversary proceeding for student debt bankruptcy in Oregon, and help you decide whether it’s the right move for you.

How Do You File an Adversary Complaint for Student Loan Bankruptcy?

Getting student debt discharged through bankruptcy requires filing for an adversary proceeding. An adversary proceeding is a legal action that occurs within a bankruptcy case; it’s a formal process used to address specific issues or disputes between various parties that cannot be resolved through the regular bankruptcy process.

What are the Steps to Getting Student Debt Discharged through Bankruptcy?

The first step should always be consulting with an experienced bankruptcy attorney. Bankruptcy laws are extremely intricate, and this process is no exception. Need help finding a student loan lawyer? Check out our blog on how to hire the best student loan lawyer for you

If you and your bankruptcy attorney believe your case meets the criteria, you should proceed with these steps:

  • File the complaint: The complaint is filed with the bankruptcy court overseeing your case. There are specific forms and procedures you need to follow, which your attorney will be familiar with. Filing the complaint initiates the adversary proceeding and sets the legal process in motion.
  • Serving the parties involved: After filing the complaint, it must be properly served to all relevant parties, including the student loan lender or servicer. This ensures that everyone involved is aware of the legal action and can respond accordingly.
  • Responses and negotiations: The opposing party will respond to your complaint. This usually leads to negotiations or settlement discussions. Your attorney will guide you through these interactions and help you make informed decisions about potential resolutions.
  • Court proceedings: Depending on the progress of your adversary proceeding, you might need to attend a deposition and trial. Your attorney will represent your interests and present your case to the judge.
  • Decision rendered: The judge will ultimately make the decision. If the court rules in your favor, your student loans will be fully discharged.  The judge can also order a partial discharge if it appears you can pay back some but not all of your student loans.

How Do They Decide Whether to Discharge Your Student Debt?

The judge will make a decision based on your specific situation. The decision is based on three main guidelines:

  • Are you unable to maintain a minimal standard of living for you and your dependents? This is determined by current income and expenses.
  • Is there a likelihood you will be able to pay back your loans in the future? Factors the judge will consider include disabilities, long-term unemployment, and other adverse circumstances.
  • Have you made a good faith effort to repay your loan up until this point? If you’ve enrolled in an income-driven repayment plan, applied for forbearance or forgiveness programs, or consolidation, this can be used as evidence that you have made a good faith effort to pay.

Are You a Candidate for Student Loan Debt Discharge through Bankruptcy?

If student debt is crushing your ability to become financially independent, you may be a good candidate for student debt forgiveness. Of course, as with any possible legal strategy, it’s vitally important to get an opinion from a lawyer with specialized knowledge – in this case, an experienced bankruptcy attorney. An lawyer who focuses his practice on bankruptcy issues will understand the ins and outs of this particular area of law and can review with you some important considerations before you move forward.

While discharging student loans through bankruptcy is not guaranteed, taking the right steps and seeking professional guidance can increase your chances of achieving a favorable outcome and gaining relief from your student loan debt. If you’re ready to start exploring your options for filing an adversary complaint for student loan bankruptcy, give us a call today. Our experienced Oregon-based bankruptcy attorneys are ready to answer all your questions.

How to Get Student Loan Forgiveness After the 2023 Supreme Court Ruling

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Are you burdened with a mountain of student debt that feels like it will never go away? Especially after the Supreme Court’s recent ruling on the student loan forgiveness plan, millions of Americans are wondering if they will ever find relief from these insurmountable loans. 

If you’re in this situation, there’s still some hope. Many people are unaware that there are several different ways they can achieve student loan forgiveness, even after the Supreme Court’s ruling. In this blog post, the debt relief experts at OlsenDaines will explain what you need to know to get rid of your student loans and find financial freedom. 

About the Supreme Court’s Ruling Against Student Loans

In late 2022, the Biden Administration announced its plan to discharge more than $400 billion in federal student loans across the country. Most borrowers would have been eligible for between $10,000 and $20,000 of immediate relief. However, a few states contested the plan and claimed it was unconstitutional, sparking a legal battle that would ultimately determine the outcome of Biden’s original plan.

The case was brought all the way up to the Supreme Court, which on June 30th reached a decision: that the President did not have the authority to automatically discharge these loans. Biden’s original student loan forgiveness plan would not be allowed to proceed.

Ways to Get Rid of Student Loans

Though the Supreme Court’s decision was disappointing for student loan borrowers across the country, that doesn’t mean it’s time to despair. Most people don’t realize that they may already qualify for these other methods of student loan forgiveness:

Filing for Bankruptcy

Historically, student loans have been considered non-dischargeable through bankruptcy. However, thanks to the Department of Education’s policy changes in late 2022, student loan discharge is more accessible through bankruptcy than ever before. The catch is that you have to demonstrate that the loans are inflicting undue hardship upon your financial situation. 

Unfortunately, there is no strict definition of undue hardship – which is why it was so challenging to use bankruptcy for student loan discharge in the first place. However, the Department of Education has established a list of 14 guidelines that can help determine whether a borrower qualifies. Some examples of factors that can contribute to undue hardship include:

  • If the borrower has a disability
  • If the borrower made a good faith effort to repay the loans
  • If the borrower’s income is below the poverty line for their state

While you don’t have to meet all the guidelines to qualify for full or partial discharge, meeting several of the criteria will increase your odds of a favorable outcome. It’s also worth noting that the process of proving undue hardship can be complex, and it’s important to have a skilled and experienced bankruptcy attorney on your side. An attorney can help you navigate the process and increase your chances of success.

 

Income-Driven Repayment Plans

Income-driven repayment plans (IDRs) use your family size and discretionary income to determine an appropriate monthly payment amount. For many people, the IDR can significantly lower monthly payment amounts. And, IDR plans offer complete loan cancellation after making a certain number of qualifying payments – typically over the course of 20 or 25 years. Some of the most common IDR plans include:

  • Pay As You Earn (PAYE)
  • Revised Pay As You Earn (REPAYE)
  • Income-Based Repayment (IBR)
  • Income-Contingent Repayment (ICR)

The main differences between these plans are the percentage of your discretionary income required in each monthly payment and the amount of time you must make payments before qualifying for forgiveness. 

In addition to the four IDR plans above, the Biden Administration has also announced a new plan called the Saving on a Valuable Education (SAVE) plan. This plan has the lowest monthly payment of any available repayment option and offers a number of other benefits to make your debt more manageable. SAVE is rolling out in the summer of 2023 and goes into full effect beginning 2024.

Public Service Loan Forgiveness

To provide relief for full-time employees of government services or non-profit organizations, the federal government also offers Public Service Loan Forgiveness (PSLF). This allows the student loans to be forgiven after 120 qualifying payments, or just 10 years, while working for a qualifying public service organization. Some examples of qualifying employers include:

  • Military service
  • Public health
  • Public education
  • Social work
  • Early childhood education
  • 501(c)(3) tax-exempt organizations

It’s important to note that the 120 payments do not need to be consecutive, but you must fill out paperwork to delineate which payments contribute toward your forgiveness plan. Additionally, not all employers qualify for PSLF. To see if your employer qualifies you for this type of loan forgiveness, use the Department of Education’s search tool for employer eligibility. 

How a Student Loan Lawyer Can Help You

Though there are several methods you can use to find relief from your student loans, the process is rarely easy. But, you don’t have to face it all on your own. At OlsenDaines, we strive to provide our clients with the information and resources they need to combat debt and find financial stability. Whether you need help determining which program is right for you or you need help navigating a bankruptcy case, our skilled lawyers have your back. 

To schedule your free legal consultation, give us a call today!

Steps To Hiring a Lawyer For Student Loan Forgiveness

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For many people in the United States, student loans are a source of overwhelming financial stress. If you are struggling to repay your debt, a student loan attorney can help you – from reaching student loan forgiveness to lowering your monthly payments, a lawyer has the expertise needed to significantly reduce your financial burden.

However, if you are already struggling to make payments on your debt, the idea of spending even more money on a lawyer may feel overwhelming. To help you determine whether a student loan lawyer is right for you, here’s what you need to know about the costs (and savings) associated with student debt attorneys.

Why Hire a Student Loan Lawyer?

A student loan lawyer is a legal professional who specializes in the laws and regulations pertaining to student debt. They can provide guidance and representation to borrowers who are overwhelmed with their payments, facing predatory lending practices, or dealing with other debt-related problems. Student loan lawyers can help by:

  • Combatting predatory lenders: If you suspect you are the victim of predatory lending practices, an attorney can help hold your lender accountable. They know the ins and outs of consumer protection laws and can pursue remediation from unfair or illegal lending situations.
  • Negotiating settlements: An attorney can work with your lenders to make your debt more manageable. They may help lower interest rates, map out an achievable payment plan, and find other ways to help relieve the burden of your debt. 
  • Defending against lawsuits: In some circumstances, a private lender may take legal action against you. A student loan lawyer can help you navigate the situation and defend you in court for a more favorable outcome.
  • Navigating forgiveness programs: Many people don’t realize that they may qualify for a student loan forgiveness program. An attorney can examine your situation to help you find and qualify for student debt forgiveness.
  • Discharging student loans through bankruptcy: Depending on your situation, you may be able to discharge your student debt through bankruptcy. Thanks to new policy updates by the Department of Education, student loan forgiveness is more accessible using this approach than ever before.
  • Dealing with debt collectors: Debt collection agencies can be incredibly difficult to deal with. A lawyer will not only protect you against collector misconduct, but they can also handle communications to make your situation less stressful.

How Much Does it Cost to Hire a Student Loan Lawyer?

The cost of a student loan lawyer can vary significantly, often ranging between a few hundred dollars to a few thousand. How much you will pay typically depends on which fee structure the lawyer uses. The most common fee structures include:

  • Hourly rates: When you pay the lawyer an hourly rate, it can be challenging to predict exactly how much their services will cost in total.
  • Flat fees: This is when you pay the lawyer a set amount for their services, which can be helpful if you want to know exactly how much their services will cost before starting.
  • Contingencies: This is where the lawyer is only paid if they reach a desired result. It is most commonly used for class action lawsuits.
  • Hybrid plans: A lawyer may charge both a flat fee and a contingency. Similar to a regular contingency, this is most common in class action lawsuits.

Can Hiring a Student Loan Lawyer Save Me Money?

Though hiring a student loan lawyer may seem costly, doing so could save you thousands of dollars in the long run. By relieving some – or all – of your student loans, they can drastically lower your monthly payments, help you combat wage garnishment, and overall make your debt more manageable. The money you invest in a student loan attorney today can certainly save you a lot in the future.

Get a Free Legal Consultation

Considering investing in a student loan lawyer, but want to learn more about the process or costs? Get a free legal consultation from the experts at OlsenDaines! For over 40 years, we’ve been representing residents in Oregon with the goal of educating, informing, and empowering our clients. Your financial recovery is our top priority, which is why we offer affordable rates and disclose all of our fees from the very beginning. If you’re ready to learn more or get started, call us today to schedule your consultation.

How to Hire the Best Student Loan Lawyer for You

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Did you know that the total student loan debt in the United States has surpassed $1.7 trillion? This massive debt burden weighs on the shoulders of millions of individuals trying to secure a better future through higher education. If you’re one of them, you know that student loan debt is more than just a strain on your checking account. It’s a daily source of stress and confusion, too – and that’s if everything is going according to plan. If complexities arise, you may find yourself in need of a lawyer to help navigate through the red tape and explain all of your options to you. But how are you supposed to know how to hire the best student loan lawyer for you?

In this blog, we’ll discuss some of the factors you should consider when looking for a student loan lawyer. Our mission is to provide you with the right information to help make an informed decision.

What Can a Student Loan Lawyer Do for You?

Student loan debt can feel insurmountable. Finding the right student loan lawyer can feel like a beacon of hope and relief. So, what can a student loan attorney do for you?

First and foremost, a student loan lawyer will fight for you and advocate for your rights and best interests. They have the expertise to review your loans, determine if there are any violations or predatory practices, and create a legal strategy to move forward. Frequently, student loan lawyers will negotiate on your behalf with lenders to secure more favorable terms or lower interest rates. They can also represent you in legal proceedings if the need arises. They will pursue any and all options to have the debt dismissed or forgiven, if those are possibilities.

A student loan lawyer is a powerful ally who will relentlessly champion your cause and work towards relieving the burden of your student loans.

What Do Student Loan Lawyers Specialize In?

Student loan lawyers possess a wealth of knowledge in how to navigate the intricate landscape of student loan laws and regulations. Of course, each lawyer you speak with will have their own areas of specialization, so it’s crucial to find one whose expertise aligns with your specific needs and goals.

Here are some of the legal service areas that student loan lawyers excel in:

  • Loan Forgiveness: Student loan lawyers can help you explore and pursue various loan forgiveness programs and explore options for getting your debt dismissed.
  • Loan Repayment Plans: Repayment plans can be complicated. A good student loan lawyer can navigate the complexities and help you understand and select the most suitable option for your financial circumstances.
  • Loan Disputes: If you’re having problems with your loan servicer, such as misapplied payments, billing errors, or incorrect loan balances, a student loan lawyer can advocate on your behalf and resolve these disputes.
  • Debt Collection Harassment: Student loan lawyers protect your rights and defend you against aggressive debt collection tactics.
  • Administrative Hearings and Appeals: Wage garnishments and tax refund offsets are frequently leveraged against borrowers. A student loan lawyer can represent you in hearings and appeals processes.
  • Bankruptcy and Student Loans: Student loan lawyers can offer guidance on bankruptcy proceedings, exploring options like undue hardship discharge, or developing a repayment plan within a bankruptcy framework.

When Should You Hire a Student Loan Lawyer?

Student loan debt should not interfere with your life or make your personal finances untenable. If it does, you should consider hiring a student loan lawyer. By enlisting their expertise, you gain an advocate who will fight for your rights, provide you with comprehensive legal advice, and equip you with the tools needed to overcome the challenges that student loans pose. At the very least, they can give you a better idea of the options available.

Am I Eligible for Student Loan Forgiveness Programs?

Eligibility for student loan forgiveness programs can vary depending on factors such as your profession, income, loan type, and repayment history. Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness, and Income-Driven Repayment (IDR) plans are just a few examples of the options out there. 

To truly understand if you qualify for any of these programs, it’s highly recommended to consult with a knowledgeable student loan lawyer. They can assess your unique situation and guide you towards the best course of action.

How Much Does a Student Loan Lawyer Cost?

The fees charged by student loan lawyers will depend on several factors, including the complexity of your case, the services required, and the attorney’s experience and reputation. Setting up a consultation with an attorney can give you a more concrete answer. 

During the consultation, we will take the time to understand your needs, evaluate the intricacies of your case, and provide you with a clear understanding of the potential costs involved. Our goal is to be transparent and work with you to find a solution that aligns with your budget and provides the dedicated legal support you deserve.

The Path to Financial Freedom Starts Here

In the quest to free yourself from the burdens of student loans, finding the best student loan lawyer can be key to unlocking a brighter future. At OlsenDaines, we pride ourselves on being tireless advocates who are committed to fighting for your rights.

Call us today to schedule a consultation and let us show you firsthand how our unwavering commitment to your cause can make all the difference. 

What to Know About the Student Loan Payment Pause Extension

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Federal student loan payments have been paused since March 2020, and the Department of Education recently announced that borrowers will have even more time before payments are set to resume. Though the loans have been in limbo for nearly three years now, it’s important to remain prepared for when the pause is lifted. To help you get ready for when payments resume, here’s what you need to know about the recent student loan pause extension:

Why the Student Loan Payment Pause Was Extended

Student loans were originally put on hold to provide economic relief at the beginning of the COVID-19 pandemic. Though the pause was only supposed to last for a few months, the pandemic continued to severely impact the financial stability of millions of Americans well beyond the expected timeline. To help borrowers through the ongoing public health crisis, the Trump and Biden administrations extended the pause several times over the last few years.

Before the most recent extension, student loan bills were scheduled to resume in January of 2023. However, the Biden administration also took steps toward Student loan forgiveness by announcing that a new program would discharge up to $20,000 of federal loans for each qualifying student.

Before students could find relief through loan forgiveness several states and institutions filed lawsuits against the plan to prevent it from taking effect. With the legality of the forgiveness program in question, the case has gone all the way to the Supreme Court. The Justices have set a hearing date on February 28, 2023, to determine whether the President has the authority to eliminate the loans without an act of Congress.

While student loan forgiveness is being debated in court, the payment pause will remain in effect. According to the Department of Education, the pause is extended because they “don’t think it’s right to ask you to pay on loans you wouldn’t have to pay were it not for the lawsuits challenging the program.”

When Will Student Loan Payments Resume?

Unlike the previous pause extensions, the most recent extension doesn’t have a specific end date. Instead, the timeline will be determined by the duration of the legal battle over the student loan forgiveness program.

If the Supreme Court reaches a decision prior to June 2023, then payments will resume 60 days from the date of that decision. However, if the Supreme Court does not decide by then, the payments will begin 60 days after June 30, 2023. The absolute latest that payments will resume is August 29, 2023 – though borrowers should remain prepared in case the pause ends sooner.

Student Loan Payment Pause FAQs

What does the pause on student loan payments mean?

The pause on federal student loans allows students to temporarily skip payments without consequences. The Department of Education stopped collections on defaulted accounts and set loan interest rates to 0% so that debt does not continue to accrue.

What if I was behind on my student loans before the pause began?

Millions of Americans were behind on student loan payments even before the pause began. To address this problem, the Department of Education announced the Fresh Start initiative, which provides relief to payers who are in default by:

  • Granting access to federal student aid for students with an unfinished degree
  • Not garnishing wages or withholding tax refunds and Social Security payments
  • Restoring the ability to rehabilitate loans later on down the road
  • Providing access to student loan forgiveness programs and IDR plans

Should I keep paying during the student loan pause?

It is possible to continue making payments during the student loan pause, and doing so could be beneficial depending on your situation. Ask yourself these questions to determine if it makes sense for you to continue repaying your loans:

  • Do I have other forms of debt? If you are swamped with debts outside of your student loans, then you should take this opportunity to pay off as much as possible. Use the cash you’re saving on student loans to pay down things like credit cards, personal loans, medical bills, and more.
  • Do I have a healthy savings account? The main purpose of the student loan pause is to give borrowers the chance to build financial stability. If you are living paycheck to paycheck without any backup savings, this payment pause may be a good time to fill up your bank account with a little extra padding.
  • Will I still have a large balance even if student loans are forgiven? If all of your debt could be forgiven through the student loan forgiveness program, then it’s best to wait until the Supreme Court reaches a decision to avoid making payments on a loan that could be wiped out entirely. However, if you will still have a lot left on your account even if a portion of your loans are forgiven – and you have the ability to pay – then it could be a good idea to continue with regular payments.
  • Can I eliminate student loans in bankruptcy? The Department of Education issued new guidelines in November to make it easier to eliminate student loans in bankruptcy.  Many people who could not eliminate student loans int eh past in a bankruptcy, can now utilize these new guidelines and eliminate their student loans.
  • Am I using an income-driven repayment (IDR) plan? With an IDR plan, your loan balance will be forgiven completely after making a certain number of qualifying payments. During the student loan payment pause, each month counts toward a qualifying payment regardless of whether or not you pay. With this in mind, it typically doesn’t make sense to continue with payments when enrolled in an IDR plan.

Will automatic payments restart once the pause is lifted?

Automatic payments will not restart on their own. Borrowers will have to opt-in to confirm their enrollment before payments will be taken out of their accounts.

Student Loan Debt Relief

With the student loan forgiveness program on hold, many borrowers are waiting eagerly for the Supreme Court to reach a decision before taking action. However, it’s best to be proactive so you are financially prepared for the payments to resume, no matter what the legal verdict is.

If you are feeling overwhelmed by your financial situation and are concerned about affording your student loans once payments start back up, don’t wait to get help! The debt relief attorneys at OlsenDaines can help you create a plan of action. With over 20 years of experience serving Oregon residents, we know how to access creative relief solutions that can take the stress of serious debt off of your shoulders. From finding other forms of student loan forgiveness to eliminating debts through bankruptcy, we can help you reach financial freedom no matter what your circumstances are.

Need help regaining control of your finances? Contact us to explore your options in a free legal consultation!

Explaining the New Bankruptcy Discharge Process for Student Loan Borrowers

Person adding up student loan debt on calculator

Over 42.8 million Americans have student loans, making it one of the most common forms of debt in the United States. While the amount of student loan debt has increased in recent years, it remains one of the most challenging types of debt to discharge through bankruptcy. However, the Department of Education recently reformed its policies to make the discharge process easier and more accessible to student loan borrowers. In this guide, we’ll explain everything you need to know about the new bankruptcy discharge process for student loans. 

Adversary Proceedings and “Undue Hardship”

In order to be considered for student loan discharge, individuals must initiate a separate lawsuit within their bankruptcy case called an “adversary proceeding”. During this process, the debtor is essentially suing the student loan lender. To do so, however, the debtor must demonstrate that he or she is experiencing “undue hardship” as a result of the loans.

Prior to these policy changes “undue hardship” was an undefined term in the bankruptcy code, which made it challenging for courts to judge each case by universal standards – leaving a lot of room for interpretation. 

In the past, most courts used something called the “Brunner Test” to determine who qualified for student loan discharge. This test was originally created in a 1987 court case during which a woman attempted to discharge her student loans less than a year after earning her degree. The goal of the test was to deter individuals from rushing into bankruptcy immediately after graduating, and it includes three questions:

  • Have you made a good-faith effort to repay the loans?
  • Are you unable to maintain a minimal standard of living while making the payments?
  • Is your financial situation likely to persist?

If the answer to each of these questions is “yes” and is supported by extensive evidence, then the loans can be discharged. 

On the surface, this may seem like a great system for discharging student debt. However, adversary proceedings are lengthy and costly, and they often weren’t successful because the requirements to pass the Brunner Test were still highly variable. Over time the test became increasingly difficult to pass, and many legal experts think it is now close to impossible to have loans discharged through this method.

How New Policy Changes Make Student Loan Discharge More Accessible

Debtors are still required to initiate an adversary proceeding within their bankruptcy case in order to be considered for student loan dischargeThe recent policy changes will ease the process by:

  • Setting clear standards for what is considered “undue hardship”: The current process uses arbitrary methods to review evidence and determine whether the debtor is experiencing undue hardship. According to the Department of Justice’s recent press release, the new process will include a thorough review of the debtor’s financial situation against concrete standards. These standards will be based on data provided by the Department of Education, along with other information that could contribute to undue hardship. This will ensure each debtor is judged fairly, without room for subjectivity.
  • Allowing for partial discharge if appropriate: Historically, student loans were either completely discharged or left entirely intact. The new policy changes allow for partial discharges depending on the debtor’s financial situation, which will make relief more accessible to those who are struggling with student loans. 

Considering Bankruptcy?

If you are overwhelmed with debt and need relief, don’t hesitate to contact the knowledgeable bankruptcy attorneys at OlsenDaines. Whether you’re dealing with significant student loans or other types of debt, we can assess your situation and help you determine the best course of action to regain financial stability. With over 40 years of experience serving individuals and businesses throughout the state of Oregon, we know how to help you with everything from foreclosures to creditor harassment. Whatever you’re facing, we can help. Just give us a call today to schedule your free legal consultation.

New Updates to Student Loan Forgiveness

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Student debt can be overwhelming. If you have a high balance or have been making payments for years, then it may feel like your loans will never come to an end. Recently, the US Department of Education made updates to its policies that will make it easier for individuals to overcome their student loan debt.

Some of the largest changes to their policies will make loan forgiveness more accessible to individuals on an Income-Driven Repayment Plan, which could offer relief to thousands of students across the country. To take advantage of these new updates to student loan forgiveness, it’s important to understand how they work and who qualifies.

What Is an Income-Driven Repayment Plan?

Income-driven repayment (IDR) plans are designed to help individuals who have student loan payments that are disproportionately high compared to their income. These plans calculate your required payments based on how much you earn annually rather than how much you owe. As a result, your payments could be lower and much more affordable than standard repayment options. Consumers may qualify for one of these four types of IDR plans:

  • Pay As You Earn (PAYE): Takes monthly payments at 10% of your discretionary income without exceeding what you would normally pay with a Standard Repayment Plan.
  • Revised Pay As You Earn (REPAYE): Takes monthly payments at 10% of your discretionary income.
  • Income-Based Repayment (IBR): Takes monthly payments at 10-15% of your discretionary income based on what you borrow, without exceeding what you would normally pay on a 10-year standard repayment plan.
  • Income-Contingent Repayment (ICR): Takes monthly payments at 20% of your discretionary income, or the amount you would pay over a 12-year fixed payment plan – whichever is less.

Problems with IDR and Student Loan Forgiveness

Most individuals on an IDR can qualify for student loan forgiveness after making consistent payments over 20-25 years. However, there are some challenges associated with IDR plans that could block consumers from having their loans forgiven, even if they qualify. The two main obstacles to having your loans forgiven on an IDR plan are:

  • Progress tracking: To have your student loans forgiven, you must make a certain amount of qualifying payments over the course of 20 to 25 years. One of the largest challenges associated with IDR and student loan forgiveness is progress tracking. Lack of documentation makes it difficult or impossible for consumers to tell when student loans are due to be forgiven.
  • Forbearance steering: IDR plans and student loan forgiveness can be hugely beneficial to consumers, but they are not ideal for loan providers. For this reason, many servicers broke the Education Department’s rules by pushing consumers toward forbearance – or payment pauses – rather than educating them about IDR options. These pauses are not a long-term solution and can allow your balance to grow even more. Not only that, but they also do not count toward student loan forgiveness requirements.

Updates to Student Loan Forgiveness Policies

The Education Department recognizes the issues associated with IDR plans and loan forgiveness. For this reason, it recently announced policy changes that will make student loan forgiveness more accessible to borrowers. These policy updates include:

  • Counting certain long-term forbearances toward IDR forgiveness: To account for previous instances of forbearance steering, the Education Department will make a one-time adjustment to retroactively count long-term forbearances toward forgiveness. This will include a 12-month limit for a single stretch of forbearance, and a 36-month limit for cumulative pauses.
  • Increasing oversight on service providers’ use of forbearance: In order to prevent future forbearance steering, the Education Department will work with the Consumer Financial Protection Bureau to monitor and regularly audit each loan provider’s use of forbearance.
  • Performing a one-time revision of IDR payments to remedy inaccuracies: Past documentation inaccuracies could prevent qualifying consumers from having their loans forgiven. To remedy these previous mistakes, the Federal Student Aid (FSA) will perform a one-time revision that will retroactively count any months in which borrowers made payments toward IDR.
  • Upheaving the IDR tracking system for better documentation: To permanently fix the IDR payment counting system and prevent future mistakes, the Federal Student Aid office (FSA) will begin displaying IDR payment counts on each consumer’s Student Aid account. This will simplify the counting and tracking process, while showing consumers exactly how close they are to loan forgiveness.

Do FFELP Loans Qualify?

Federal Family Education Loan Program (FFELP) student loans are privately owned but federally backed. Most loans taken out prior to 2010 are FFELP loans, though your service provider can help you determine which type of loan you have if you aren’t certain.

Though FFELP loans can benefit from these updates to student loan forgiveness, consumers must apply to consolidate any commercially held loans into a Direct Loan to qualify. If you want to take advantage of the new IDR fixes, you need to apply for loan consolidation by January 1, 2023.

Get Help With Your Student Debt

If you’re struggling with student debt, now is the time to take action! While it may feel intimidating to navigate all of the Education Department’s student loan policies, you don’t have to manage it all on your own. At OlsenDaines, it’s our goal to help eliminate the stress of debt so you can regain control over your finances. With over 40 years of experience serving Oregon residents, our debt relief attorneys know the intricacies of local and federal laws. We know what it takes to help you get the best outcomes possible, so you can get one step closer to a life without debt. To get help with debt relief, schedule your free legal consultation today!

Debt Snowball vs Debt Avalanche

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Eliminating debt can feel like an overwhelming task – especially without the right plan in place. Thankfully, there are many different repayment strategies that you can choose in order to begin rapidly paying off your balance. Two of the most popular and effective debt repayment plans are known as the “snowball” and “avalanche” methods. While these tactics are similar, they have some key differences that can help you decide which strategy is best for you.

What is the Snowball Method?

With the debt snowball method, you pay off debts in order of smallest to largest balances. By putting the majority of your money toward loans with smaller balances and making minimum payments to all other debts, you can swiftly cut through your debts. This method is popular because it is easy to implement and provides quick results, which is great for building momentum and motivation.

What is the Avalanche Method?

In the debt avalanche method, you pay off loans based on interest rates. By targeting loans with higher interest rates first while making minimum payments to any other debts, you can quickly pay off debt while cutting down on the amount of interest you pay over time.

Though this tactic is great for eliminating debt quickly and with the least amount of interest, it is a little more difficult to implement and keep up with. The debt avalanche method also produces slower short-term results, which may be challenging for individuals who struggle with motivation.

Which Debt Repayment Method is Best?

Unfortunately, there is no “one-size-fits-all” plan when it comes to debt payment plans. It all comes down to which plan you can feasibly implement and keep up with – after all, no plan is useful if you won’t be able to stick to it. To help you determine which tactic may be better for you, here are some pros and cons of both debt repayment strategies:

Debt Avalanche

  • Eliminates debt faster
  • Reduces total interest paid
  • More difficult to implement
  • Takes more time to see results

Debt Snowball

  • Produces results quickly
  • Builds motivation and momentum
  • Takes more time to eliminate debt
  • Requires you to pay more interest

When to File for Bankruptcy

If you have a mountain of debt that you are struggling to pay, these repayment strategies may still feel too overwhelming. In some cases, filing for bankruptcy is the best way to take control of your financial situation. Here are some signs that you should file for bankruptcy:

  • You’re at risk of foreclosure
  • Your liabilities exceed your income
  • You don’t have any savings
  • You’ve already tried negotiating

Get Legal Help Today

Don’t let your life become bogged down by unmanageable debt. If you’re struggling to make ends meet because of debt, it may be time to contact a legal expert who can help you assess your options. That’s where the trusted attorneys at OlsenDaines can help. Our team has over 40 years of experience serving Oregon and Washington, and we strive to make it easy for you to get back on your feet. To get started, schedule a free legal consultation today.

 

Bankruptcy and HOA: What You Need to Know

What you need to know about filing for bankruptcy with an HOA - OlsenDaines bankruptcy attorneys in Oregon

If you live on a property with a homeowner’s association and are overwhelmed with late dues or fees, then you may be wondering if bankruptcy is a viable way to eliminate these debts. While this may seem like a straightforward question, there are several factors that can impact whether or not your HOA debts can be discharged through bankruptcy. To help give you an idea of what your situation might look like, the experts at OlsenDaines have put together a guide on what you need to know about bankruptcy and HOA.

Can I Discharge My HOA Debt Through Bankruptcy?

Your specific circumstances will impact whether or not you can dismiss HOA debt by filing for bankruptcy. To determine if your HOA fees can be discharged, begin by asking yourself these questions:

Which chapter of bankruptcy are you filing for? The two most common chapters of bankruptcy are Chapter 7 and Chapter 13. While Chapter 7 bankruptcy is intended for lower-income individuals with fewer assets, Chapter 13 is geared toward those with more assets and disposable income. Knowing which chapter you qualify for will give you a better understanding of what your debt relief options are.

Do you plan to keep the property? With both chapters of bankruptcy, you should be able to wipe out past HOA dues by forfeiting the property. However, if you plan to keep your condo or home, you will still be responsible for paying your HOA debts.

With Chapter 7 bankruptcy, you should treat the HOA like a bank holding a mortgage and plan to make payments both before and after you file. It’s important to know that the HOA could still foreclose on your home if they have a lien on your property, even if your debts are discharged.

Meanwhile, if you are filing for Chapter 13 bankruptcy and plan to keep the property, your repayment options may look a little different. Since this chapter allows you to reconfigure your debts into a payment plan, your past HOA fees should be included in your monthly installment.

Can an HOA Foreclose on My Property After Bankruptcy?

Even if you are granted bankruptcy, an HOA may be able to foreclose on your property depending on your specific situation. Here are some instances where an HOA can foreclose on your property after bankruptcy:

  • Your foreclosure has already taken place: Bankruptcy cannot undo a foreclosure that has already taken place. So, if the HOA has already foreclosed on your property and the home is no longer in your name, the outcome of your bankruptcy petition will not be able to reverse the process.
  • The HOA filed a lien against your property: Once an HOA files a lien against your property, they may begin the foreclosure process. Though you are granted an “automatic stay” while filing for bankruptcy – meaning that the HOA cannot move forward with the foreclosure process during your petition – they may be able to resume the process once you are granted bankruptcy. Bankruptcy cannot get rid of a lien filed against you even if your debts are discharged, so your property may still be foreclosed on.
  • You accrue more fees after bankruptcy: Bankruptcy will only discharge debts accrued prior to your petition, so you will be responsible for any fees due after you are granted bankruptcy. This is true even if you are forfeiting the property; you will have to pay any fees that accumulate between the time you are granted bankruptcy and the sale of your home. To avoid accruing more fees and debt, it is best to wait until the property is sold before filing for bankruptcy if you are planning to surrender the home.

Your Local Bankruptcy Experts

Here at OlsenDaines, we understand how stressful and complicated it can be to file for bankruptcy. That is why our experienced attorneys are always here to help. We strive to make the process as fast and easy as possible while ensuring that you are getting the most out of your petition. With over 40 years of experience serving people throughout Oregon, we are very familiar with local bankruptcy laws and are prepared to help you regain control over your finances so you can truly start fresh. If you are looking into bankruptcy and would like to speak with an expert, contact us today to set up a free legal consultation!

Does Debt Disappear After Bankruptcy?

Does debt disappear after filing for bankruptcy? Debt relief attorneys at OlsenDaines in Oregon State

If you’ve found yourself battling against a mountain of debt, you may be considering bankruptcy as a way to get back on your feet. After all, filing for bankruptcy can be an effective method for relieving debt and regaining control over your finances. But, should you file for bankruptcy, will all of your debt disappear?

The answer to that question is a little complicated. Though bankruptcy can help relieve many different kinds of debt, there are some kinds that will stick with you. If you are considering filing for bankruptcy, it’s important for you to know what kinds of debts are covered and which kinds are not.

What Debts Can Be Forgiven by Bankruptcy?

Bankruptcy can help you regain financial stability by relieving a wide variety of debts. Your exact amount of relief, however, will largely depend on your specific situation and what kind of bankruptcy you qualify for. If you aren’t sure which path would be best for you, a bankruptcy attorney can help you find a solution that relieves as much debt as possible.

Chapter 7

Chapter 7 bankruptcy is intended for individuals with a lower income and fewer nonessential assets. To qualify for this type, you have to pass a means test, which verifies your income. The types of debt that this chapter can cover include:

  • Medical bills
  • Overdue utility charges
  • Outstanding credit cards
  • Collection agency accounts
  • Lease agreement deficiencies
  • Checks written on insufficient funds

Chapter 13

Chapter 13 bankruptcy is intended for individuals with more disposable income and more nonessential assets. This type of bankruptcy is considered “reorganization”, where you will create a payment plan to repay secured debts – such as alimony, child support, and mortgage delinquencies.

Depending on your specific situation, other types of debt may be reduced, but that is not always the case. Chapter 13 bankruptcy can be tricky to navigate, so it is best to contact a skilled bankruptcy attorney to determine the best approach for debt relief.

What Debts Cannot Be Forgiven by Bankruptcy?

Though bankruptcy can absolve many kinds of debt, there are a few types that usually cannot be discharged. The types of debt that bankruptcy generally cannot cover are:

  • Student loans
  • Alimony and child support
  • Tax debts

While these debts are generally not forgiven through bankruptcy, each person’s situation is different. A knowledgeable and experienced bankruptcy attorney can examine your unique circumstances to help you relieve as much debt as possible.

Experienced Debt Relief Attorneys

Bankruptcy can be difficult to navigate, and without the right guidance, you may miss
opportunities to relieve debt. If you are considering filing for bankruptcy, contact the skilled bankruptcy attorneys at OlsenDaines in Washington and Oregon today. Our experienced lawyers understand the ins and outs of bankruptcy law, and they can help you get the best outcome possible for your situation. We can help you through any step of the process so you can regain financial security as easily and effectively as possible. Call us today to schedule your free legal consultation.