Bankruptcy Article of the Week
Student Loan Measures Won't Help Those Already in Too Deep
Congress has been digging deep into student loan and education funding issues lately. Both houses passed legislation to cut subsidies to lenders and pour that money—$20 billion worth—into direct student aid.
There's no question that the new legislation, which the President has indicated he will sign, provides some big benefits for today's college students and those headed toward college. Pell grants are increasing, new loan repayment options will become available, and borrowers who work for ten years in a public-service industry will enjoy reduced payments and forgiveness of any debt remaining at the end of those ten years.
At the same time, U.S. Secretary of Education Margaret Spellings announced that student loan default rates were at an historic low—just 4.6%. But not everything is as rosy as the press releases would have us believe in the world of student loans. Some of the reasons the Department of Education cited for the decline in defaults included a record number of consolidations, many of which extended repayment periods from ten years to 30. Loan relief and other aid to families and students victimized by the 2005 hurricanes also played a role. And with nearly 3.5 million borrowers entering repayment each year, even the relatively low 4.6% is nothing to be glossed over lightly.
While the Department of Education makes optimistic announcements, local news outlets report stories of college graduates living with parents for several years after graduation in an effort to pay down loan debt, and non-profits are suffering because college graduates and professionals with student loan debt can't afford to accept public-service-oriented jobs.
At the same time, we're learning that the student loan industry may be just as unsavory as the credit card and subprime mortgage lending industries. Last week, the U.S. Senate Health, Education, Labor and Pensions Committee released a report on marketing practices in the Federal Family Education Loan program that included evidence of donations, services, loan funds and other benefits to colleges and their employees in exchange for student loan referrals, constraining financial aid officers from providing unbiased financial advice to students.
So where is the relief for those already in too deep? As we know all too well, it's not to be found in the bankruptcy code, and it appears that it isn't to be found in the new student lending and aid legislation, either. Finch Rating, referencing the expected impact on the federally guaranteed loan program, included a scant sentence indicating that the existing loan market wasn't expected to be affected. It seems that the existing debtors won't be, either.
The Numbers Game
Of the 44 million mortgages covered in a recently-released Mortgage Bankers Association survey, 0.65% of them went into foreclosure in the second quarter of 2007.
In other words, approximately 286,000 of the 44 million mortgages covered in the survey went into foreclosure sometime in the second quarter ending June 30th. This percentage of mortgages entering foreclosure was at a record level for the second quarter.
The MBA survey detailed that the nationwide rate for foreclosures would have dropped if it hadn't been for states like California, Florida, Nevada and Arizona, which all experienced increases in foreclosure filings. 34 states had declining foreclosure filings in the second quarter while other states had very slight increases.
With that said, early reports from California-based RealtyTrac indicate that there were 244,000 foreclosure filings in August.
The Numbers Game: Part Two
28 new attorneys joined the SFT Program last month. That's nearly one new attorney for the number of days in August!
Thanks to the entire SFT team for their dedicated efforts during this time period.
With that said, we'd like to welcome all of our new attorneys to Start Fresh Today. If you have any questions, please call 1 (800) 435-9138 or shoot an email to info@startfreshtoday.com. We look forward to getting you started with our products and are very excited that you are making your new bankruptcy requirements under the 2005 law much easier and more manageable with SFT.
As for our loyal attorneys, we'd once again like to thank you for choosing Start Fresh Today as your comprehensive solution to the bankruptcy reform. We couldn't be where we are without your participation, and we appreciate all of your input and support since the inception of BAPCPA.
Kevin's Corner
Practice Management Tip of the Week:
"Human nature is to act emotionally, and it's important to understand and validate that when speaking with potential clients.
"Last week, we talked about the importance of listening and letting your prospective client talk about what's important to him. There are, of course, certain questions you have to ask for your own preliminary screening purposes, but the majority of your interaction should be geared toward drawing out what's on the caller's mind and learning about what's motivating him to talk with you.
"This may mean asking questions to which you already know the answers. You know, for instance, that creditors and collection agencies can be ruthless and brutal. Still, if your potential client is motivated by phone calls from creditors, you'll want to ask how those callers are treating him.
"First, verbalizing his experiences in clear terms helps make the problem concrete for him and drives home the fact that action is required. Second, his negative creditor experience provides an opportunity for you to empathize and put yourself firmly in his camp.
"Whatever specifics your caller is most concerned about—house, car, creditor harassment, medical bills, student loans, impact on his reputation, or any of a host of other possible issues—follow up on those concerns with questions and with empathy, even if you've heard it all before. At the end of the conversation, your future client will have painted a clear picture of a problem that requires action, and will feel validated and confident that you're on his side."
- Kevin Chern
President, Start Fresh Today
Did You Know...
that you can access all of the most commonly-used bankruptcy court forms from the convenience of your SFT Attorney Account?
That's right! Simply log into your SFT account, visit our 'Resources' section and click on the link for 'Bankruptcy Court Forms'.
Upon taking these steps, you will find everything from and in between Form 1, Voluntary Petition to Form 24, Certification to Court of Appeals.
Simply click on the form that you need to access, and it will appear in an Adobe format for you to print. It's that easy.
Got questions? Give us a call at 1 (800) 435-9138. We're more than glad to help out.
Ordering Client Inserts
Running low on client inserts? Simply call (800) 435-9138 or shoot us an email requesting more client inserts to info@startfreshtoday.com, and we'll send them out to you as soon as possible.
All we ask is that you simply include your new credit counseling and debtor education inserts in your client intake folders. Thanks again for your cooperation.