{"id":7731,"date":"2018-09-26T07:00:02","date_gmt":"2018-09-26T07:00:02","guid":{"rendered":"https:\/\/nybankruptcy.net\/main\/?p=7731"},"modified":"2019-05-09T02:35:53","modified_gmt":"2019-05-09T02:35:53","slug":"new-york-state-sues-student-loan-debt-relief-companies","status":"publish","type":"post","link":"https:\/\/nybankruptcy.net\/main\/new-york-state-sues-student-loan-debt-relief-companies\/","title":{"rendered":"New York State Sues Student-Loan Debt-Relief Companies"},"content":{"rendered":"<p>Student loans may be difficult to discharge in a New York bankruptcy case, but debtors might still need to file if they pay the exorbitant fees charged by student-loan debt-relief companies. It&#8217;s been a few years since these outfits were in the news, likely because debtors have become more knowledgeable about income-derived repayment (IDR) options. Nevertheless, on September 20 the New York Attorney General&#8217;s office sued twelve student-loan debt-relief companies for deceptive practices aimed at debtors. Here are some of the tactics these companies used, along with suggestions so debtors know to avoid them.<\/p>\n<ul>\n<li><b>Claiming they were affiliated with the federal government and offering to help student debtors with their payments.<\/b> Debtors can avoid these companies by simply going to the Department of Education&#8217;s Web site instead, which outlines student-loan repayment options for free.<\/li>\n<li><b>Charging fees to debtors and dishonestly claiming that they would send those fees to their lenders.<\/b> This tactic is common to many debt-relief debt scams: pay us instead of your creditors and we&#8217;ll help negotiate with them to reduce your payments. Essentially, the goal is to play middleman for doing less than nothing.<\/li>\n<li><b>Charging debtors for applying for loan consolidation or signing up for IDR plans.<\/b> These options are free to debtors, so paying someone to do it for them is a waste of money.<\/li>\n<li><b>Holding themselves out as &#8220;loan experts,&#8221; even though they are not, and then charging up to $1,000 for what was often bad advice.<\/b> Debtors can get free, accurate advice from the Department of Education.<\/li>\n<li><b>Advising debtors to consolidate their loans when doing so might cost them the opportunity to cancel their debts via an IDR plan.<\/b> Some consolidation loans are not eligible for IDR plans or Public-Service Loan Forgiveness, which cancels student loans after ten years if debtors work in the public or nonprofit sectors.<\/li>\n<li><b>Demanding illegal upfront fees of between $100 and $450 to apply for benefits and consolidation from the federal government.<\/b> Again, this can be done for free.<\/li>\n<li><b>Lending money to students at usurious interest rates (20 percent) to help pay for debt relief services.<\/b> It&#8217;s almost always a bad idea to go greater into debt to repay debt, but debtors should never agree to rates this high.<\/li>\n<\/ul>\n<p>The full complaint against the companies is here (<a href=\"https:\/\/ag.ny.gov\/sites\/default\/files\/debt_resolve_summons_complaint.pdf\" target=\"_blank\" rel=\"noopener noreferrer\">pdf<\/a>).<\/p>\n<p>If you are struggling with student-loan debt, then talking to a debt-relief or debt-settlement company will only worsen your situation, and you may need to file bankruptcy anyway. Otherwise, there are many resources for trying to reduce student-loan debt, but the key is that they&#8217;re free. Here&#8217;s a link to the Department of Education&#8217;s Web site that discusses <a href=\"https:\/\/studentaid.ed.gov\/sa\/repay-loans\" target=\"_blank\" rel=\"noopener noreferrer\">how to repay your student loans<\/a>.<\/p>\n<p>If you&#8217;re struggling with education debt, then discussing it with a New York bankruptcy lawyer may help because discharging some debts can free payments for the student loans, and a chapter 13 filing can cap the interest on arrearages.<\/p>\n<p>For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced <a href=\"https:\/\/nybankruptcy.net\/main\/\">bankruptcy lawyer Brooklyn NY<\/a> Bruce Weiner for a free initial consultation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Student loans may be difficult to discharge in a New York bankruptcy case, but debtors might still need to file if they pay the exorbitant fees charged by student-loan debt-relief companies. It&#8217;s been a few years since these outfits were in the news, likely because debtors have become more knowledgeable about income-derived repayment (IDR) options. &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/nybankruptcy.net\/main\/new-york-state-sues-student-loan-debt-relief-companies\/\"> <span class=\"screen-reader-text\">New York State Sues Student-Loan Debt-Relief Companies<\/span> Read More \u00bb<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-global-header-display":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":""},"categories":[16,7,27],"tags":[2,51,52,161,28,87],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>New York State Sues Student-Loan Debt-Relief Companies<\/title>\n<meta name=\"description\" content=\"Student loans may be 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