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Surviving Debt: Interest Rate Reduction for Members of the Military on Active Duty

While you are on active duty in the military, you should only pay 6% interest on your credit cards for those card charges that you, your spouse, or your dependent incurred before you entered active duty. Since credit card interest rates are typically several times this amount, this can result in you saving thousands of dollars if your card balance was high enough when you entered active duty and if you were slow in paying that amount off. Any higher interest rate assessed against you while you are on active duty that should have been assessed at 6% must be credited back to you.

Surviving Debt: Negotiating to Reduce Your Credit Card Debt

Often a credit card company will agree to reduced payments or accept payments in installments. But if you need all your money to pay your high priority obligations and other necessities, don’t enter into negotiations with the credit card issuer on reducing your payments. Instead, just tell the card issuer you cannot pay at present. If you can meet your more pressing obligations and still make partial payments on your credit card debt, here are some tips about negotiating with the credit card company.

Surviving Debt: Avoid Debt Settlement and Debt Elimination Companies

You may hear about companies that claim they can help you reduce your debts or eliminate them. These companies are a total rip-off. Never use them. Some say they can send you documents or sell you tips that will eliminate all your credit card debt. They offer a “bond for discharge of debt,” “a declaration of voidance,” or a “redemption certificate.” Or they tell you that “monetized” debt need not be paid. Other times, they claim to be “sovereign citizens” or offer to set up sham arbitration proceedings to eliminate the debt. These are totally bogus offers.

Surviving Debt: Credit Counseling and Debt Management Plans

Credit counselors offer budgeting advice, and this certainly can be helpful. Sometimes they also offer debt management plans. A difference between a debt management plan and debt settlement is that a debt management plan requires you to pay all of your debt and your creditors agree to it in advance. While you usually get a discount on the interest rate and late fees, you are still paying the full bill. It may take years to pay off your credit card debt under a debt management plan—are you prepared to continue to make payments to the credit counselor for that long of a period?

Surviving Debt: The Bankruptcy Option

Bankruptcy is an option that can legitimately eliminate all your credit card debt. A chapter 7 bankruptcy can wipe out all of the typical credit card debt (unless you rack up the debt just before filing bankruptcy). A chapter 13 bankruptcy can reduce how much you pay and spread payments over three years or more—it is more commonly used if you want to protect against the loss of your home or car.

Surviving Debt: Do Not Let Collectors Pressure You

Do not let debt collection harassment force you into wrong decisions. Make your own choices about which debts to pay first based on what is best for you.

You are not a deadbeat—circumstances outside your control prevent you from paying all your debts. The most common reasons most people cannot pay their bills are job loss, illness, divorce, or other unexpected events. Creditors and collectors know this. The debt collector’s job is to try to convince you to pay their debt first. Your job, however, is to make the right choices for you and your family.

Surviving Debt: What Collectors Can Legally Do to Collect on a Debt

Most debts, such as almost all credit card obligations, medical bills, and cell phone charges are “unsecured.” You do not have to put up any collateral such as your home or car to secure repayment. An unsecured creditor collecting a debt that is not owed to the government (for example, tax debts or federal student loans) can only legally do the following four things if you do not pay their debt:

Surviving Debt: Nine Ways to Stop Debt Collection Harassment

1. Investigate the collector. You may receive calls from scammers pretending to be debt collectors. Do not make any payments unless you are sure that the collector is legitimate. Investigate whether the person calling you is legitimate by asking for the caller’s name, company, phone number, and business address. Simply asking these questions may discourage a phony debt collector from contacting you again.

Surviving Debt: Illegal Debt Collection Conduct

The major law dealing with illegal debt collection conduct is the federal Fair Debt Collection Practices Act (known as the FDCPA). The FDCPA only applies to debt collectors (including collection attorneys), but state law may have similar requirements for the creditors’ own collection efforts.

The FDCPA requires collection agencies to take certain actions, including:

Surviving Debt: Introduction

Cutting expenses is hard work and takes a lot of commitment. Work together with your family to understand the situation and to figure out ways to cut expenses. Think about putting away your credit cards, at least for a while, keeping only one to use for emergencies.

Surviving Debt: Saving Money on Insurance Coverages

Make sure you are not paying for automobile or homeowners insurance purchased by your lender when the lender thinks you do not have your own coverage. This lender-placed insurance is very expensive and offers less protection than insurance you purchase yourself. Cancel lender-placed insurance after finding your own insurance.

Surviving Debt: Medical and Dental Care

Cut down on medical costs by making sure you obtain medical insurance—often available today with very low premiums if your income qualifies. Medical insurance not only pays for a good part of your medical bills, but also reduces the size of your bills—medical providers charge insurers far lower rates than they charge an uninsured consumer.

Consumer Banking and Payments Law: 1.5.10.5 Preemption Under the Former Rules for Federal Savings Associations

Prior to the Dodd-Frank Act, a sweeping preemption rule adopted by the Office of Thrift Supervision (OTS) had purported to preempt the entire field of lending regulation for federal savings associations.233 A federal court held that a claim that a federal savings association manipulated the order of posting of debits and deposits in order to increase overdrafts was preempted by this regulation.234 Congress explicitly repudiated field preemption when it enacted the Dodd-Frank Act in 2010, and fed

Student Loan Law: Listing of Provisions, Source, and Authority

TITLE 34—EDUCATION

SUBTITLE B—REGULATIONS OF THE OFFICES OF THE DEPARTMENT OF EDUCATION

CHAPTER VI—OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION

PART 682—FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM

SUBPART B—GENERAL PROVISIONS

34 C.F.R. sec.

682.200 Definitions.

682.201 Eligible borrowers.

Student Loan Law: 34 C.F.R. § 682.211 Forbearance.

(a)(1) The Secretary encourages a lender to grant forbearance for the benefit of a borrower or endorser in order to prevent the borrower or endorser from defaulting on the borrower’s or endorser’s repayment obligation, or to permit the borrower or endorser to resume honoring that obligation after default. Forbearance means permitting the temporary cessation of payments, allowing an extension of time for making payments, or temporarily accepting smaller payments than previously were scheduled.

Student Loan Law: 34 C.F.R. § 682.210 Deferment.

(a) General.

(1)(i) A borrower is entitled to have periodic installment payments of principal deferred during authorized periods after the beginning of the repayment period, pursuant to paragraph (b) and paragraphs (s) through (v) of this section.

Student Loan Law: 34 C.F.R. § 682.411 Lender due diligence in collecting guaranty agency loans.

(a) General. In the event of delinquency on an FFEL Program loan, the lender must engage in at least the collection efforts described in paragraphs (c) through (n) of this section, except that in the case of a loan made to a borrower who is incarcerated, residing outside a State, Mexico, or Canada, or whose telephone number is unknown, the lender may send a forceful collection letter instead of each telephone effort required by this section.

(b) Delinquency.

Student Loan Law: 34 C.F.R. § 682.201 Eligible borrowers.

(a) Student Stafford borrower. Except for a refinanced SLS/PLUS loan, a student is eligible to receive a Stafford loan, and an independent undergraduate student, a graduate or professional student, or, subject to paragraph (a)(3) of this section, a dependent undergraduate student, is eligible to receive an unsubsidized Stafford loan, if the student who is enrolled or accepted for enrollment on at least a half-time basis at a participating school meets the requirements for an eligible student under 34 CFR part 668, and—