During and after the mortgage crisis, debt settlement companies preyed on borrowers in trouble. Many people had difficulty paying their home mortgage, which was often more than the then current value of their home. These companies were often scams that told customers to pay them and not their bank so that the bank would magically agree to lower their payments. This strategy almost never works, and state and federal governments had to work hard to shut down these companies. According to a July 14, 2014 New York Times article, student loans are the new financial product that scammers are trying to take advantage of.
Many students have taken on too much debt. The total student loan debt in the US stands at over $1.2 trillion. Not only are loans large, but many graduates are unemployed, making the payments impossible and impracticable. It is not only new graduates that are having trouble making payments, but also middle-aged college graduates. In fact, seven million graduates have defaulted on at least $100 billion in loans.
Borrowers have each paid hundreds of dollars to these misleading companies. The companies claimed that there were forgiveness programs that did not exist, and some pretended to be affiliated with the US Department of Education. Many of these services charged borrowers without their permission. The Federal Trade Commission (FTC) has received 10% more complaints in 2013 than in 2011. They received 204,644 complaints in 2013 about fake credit services. Illinois is taking action and will be the first state to sue these types of companies over student loan scams. One can only predict that other states will follow due to the sheer number of complaints and the unresolved nature of this problem.
If you are facing financial difficulties or if you are considering bankruptcy, then you should talk to a lawyer. While student debt cannot be discharged in most bankruptcies, it is still wise to seek advice from someone who is not a scam artist. Jayson Lutzky has been practicing law in New York State for over 31 years. He has a Bronx office on 183rd Street, located conveniently one block from the 4 trainâ€™s 183rd Street stop. The attorney offers free in person consultations. To set up a confidential, no obligation appointment, please call 718-514-6619. Visit www.MyNewYorkCityLawyer.com for more resources