Category: Debt

Debt, Student Loans

COVID-19 Student Loan Relief Extended through May 2022

Last week, the U.S. Department of Education announced* a further extension of the COVID-19 emergency relief for student loan repayment, interest, and collections.  The pause was previously extended until January 31, 2022, but an additional 90 day extension was approved through May 1, 2022.

So what does this mean for you?  Eligible** loans have been granted the following relief measures:

    – Suspension of loan payments

This suspension will help 41 million borrowers save $5 billion in student loan payments per month.  There is no fee for this, and your loan servicer will automatically implement the suspension.  There is nothing you need to do on your end!

    – Temporary 0% interest rate

Your loans will not accrue (accumulate) any additional interest until May 2022.  Optional payments made during this time can allow you to pay off your loans faster, and lower the total cost of your loans over time.

    – Stopped collections on defaulted loans

Throughout the emergency relief period, tax refunds will not be withheld, wages will not be garnished, Social Security payments (including disability benefits) will not be withheld, collection calls will stop, billing statements will not be sent, and interest will not accrue.

When your student loan payments are set to resume, you may have some questions on what that will look like for you.  If you are interested in having your federal or private loans evaluated by CCCS of Buffalo’s student loan experts for various options you may have available to you (consolidation, income based repayment, forgiveness, deferment, forbearance, etc.), please give us a call at (716) 712-2060 option 1 to schedule a student loan counseling session!

Resources:

* https://www.ed.gov/news/press-releases/biden-harris-administration-extends-student-loan-pause-through-may-1-2022

** https://studentaid.gov/announcements-events/covid-19/payment-pause-zero-interest#which-loans-eligible

Debt

Zombie Debt: Run, Hide or Stand Your Ground?

Have you received a call or letter demanding you pay an old debt that either you forgot about, paid off, or is simply not yours? AHH! You may be a victim of “zombie debt collection”.

Zombie debts typically show up for various reasons:

1.      Sometimes they are debts that are either very old and/or no longer owed – past the statute of limitations (SOL) for legal action in your state, which is usually between three and six years. 

2.     You may have forgotten about the debt or had previously settled on the debt with either the original creditor or another collection agency.

3.     The debt is a result of identity theft.

4.     You filed the debt with a bankruptcy filing and it was discharged.

The biggest issue with these zombie debts is that individuals are pressured into paying the debt, which they may not even need to pay! The first step is not to acknowledge the debt, but request verification that the debt is in fact yours, and that you may be required to pay. Let the collector know that you would like to “validate” the debt prior to discussing it any further; obtain their name and address…then hang up the phone and end the conversation.

o       Send a debt validation letter, certified return receipt requested (this way you know they received it). The collection agency will have to give you proof of the debt, such as the original creditor with account number, the original balance when it was sent to collections, any interest or fees that have been charged, along with any payments applied to the debt since being sent to collections. They must also provide you information on how you can continue to dispute the debt, if necessary.

BEWARE! Be advised that if you acknowledge that you owe a debt, or agree to make a payment for any amount, then it could reset the statute of limitation and you could be legally responsible for this bill, even if it’s not yours. 

Keep your zombie debts in their grave this year!

Debt, Student Loans

Student Loans – Huge Changes Coming to Public Service Loan Forgiveness (PSLF)!

On October 6, 2021, the Department of Education announced an overhaul that is coming for the Public Service Loan Forgiveness (PSLF) program for federally backed student loans!  For a limited time (now through October 31, 2022), borrowers may receive credit for past payments made on their student loans that would not have otherwise qualified for PSLF.

Key parts to this announcement include:

  • Implementing a limited PSLF waiver to count prior payments
  • Simplifying what it means for a payment to qualify for PSLF
  • Eliminating barriers for military service members to receive PSLF
  • Automatically helping service members and other federal employees access PSLF
  • Reviewing of denied PSLF applications and identifying/correcting errors in PSLF processing
  • Improving outreach and communication with PSLF eligible borrowers
  • Simplifying the PSLF application process
  • Making long term improvements to PSLF through rulemaking

 

Helpful links:

What borrowers need to know: summary of new rules, next steps, FAQs

PSLF help tool

Want to know what this may mean for you?  We at CCCS of Buffalo offer Student Loan Counseling!  To speak with a knowledgeable counselor about your student loan options, please give us a call at (716) 712-2060 today to schedule an appointment!

Debt, Student Loans

Student Loans: Their Current State & What to do Next

Student Loans: Their Current State & What to do Next

At the onset of the pandemic, in anticipation of economic challenges and concerns looming for nearly 43 million loan borrowers, student loan assistance came when legislation passed within the CARES Act, providing a student loan payment pause and interest waiver through September 30, 2020 on federal education loans held by the U.S Department of Education. Fast forward over one year, three extensions later, and federal student loans are at a standstill. We want to recap the current relief that is available on student loans, as well share some strategies you can take now, and going forward as the relief expires.

Current Relief Available:

  • Interest and monthly payments on federally held loans are suspended through September 30, 2021.
  • You do not need to contact your student loan servicer or take any action on your federally held student loans.
  • Make sure your servicer has up-to-date contact information and check your mail or email so you can receive any updates or information about your loans.
  • Suspended payments through September 30, 2021 will count towards any student loan forgiveness program, as long as all other requirements of the loan forgiveness program are met.
  • The Department of Education has stopped the collection of defaulted federal student loans.
  • Private student loans are not covered by the COVID-19 emergency relief assistance

What strategies can you take at this time?

·         During this continued period of 0% interest until September 30, 2021, you can make payments which will be fully applied to the principal balance. If you are in the financial position to do so, this is encouraged, as it is always a good thing to pay down on 0% interest loan! (Albeit temporary)

·         If you are concerned about more pressing household expenses such as your mortgage, rent, insurances, medical, utilities and groceries; you may want to consider taking advantage of the student loan payment suspension to ensure that you are able to cover your basic needs during this time of uncertainty.

·         Another reason to take advantage of the student loan payment suspension is if you currently lack sufficient savings. Have some savings can be the catalyst in protecting you in the event of financial emergency, avoiding debt, as well as reducing your financial stress.

Preparing for Repayment to Resume:

·         When the payment suspension ends, you’ll receive your billing statement or other notice at least 21 days before your payment is due.

·         Check out the new tool, Loan Simulator on https://studentaid.gov/loan-simulator/ to find a repayment plan that meets your needs and goals, or to decide whether to consolidate your loans. Loan Simulator can help you estimate payments under a variety of repayment plans, including income-driven repayment (IDR) plans.

·         How can you find out how much your payments will be when payments restart? To find out what your payment amount will be, you will want to contact your loan servicer, as they are your official source for up-to-date information about your loan and repayment.

·         Are you concerned that your student loan payment will be too high when payments resume? You may be eligible to lower your monthly student loan payment by enrolling in an income-driven repayment plan. Under an IDR plan, payments may be as low as $0 per month.

 The best thing you can do at this time is review your student loans and ensure that you have a game plan for when the current student loan relief expires. Contact us for a Student Loan Counseling session if you need help managing your student loans! (716) 712-2060

Debt

Helping America Achieve a Debt Free Future!

The COVID-19 Pandemic has led to hardships for our neighbors, communities and our nation. Consumer Credit Counseling Service (CCCS) continues to focus on coaching people through personal financial struggles and placing them on a path to achieve their short term and long term financial goals.

CCCS took a pause on our expansion plans to focus on adjusting our operations to accommodate ease of efficient and effective remote work, but in 2021 we are strongly positioned to continue to expand throughout the U.S. so that we can help even more consumers who are in need of a trusted financial counseling organization. As of January, we now offer services to residents in Ohio!

More to come. If you or someone you know needs assistance with creating a plan to becoming debt free, please call 1-800-926-9685 or (716) 712-2060. 

Debt

Debt Management FAQs – Part 2

What types of debts can be included in a Debt Management Plan (DMP)?

You would be able to include any credit cards, personal loans, medical bills, or collection accounts.

What types of debts CANNOT be included in a DMP?

You would not be able to include student loans, mortgage, auto loans, or personal loans that are secured by collateral.

What are the costs associated with a DMP?

There is a monthly service charge of $35* (included in your monthly payment to us), and a one time initial set-up fee of $55* (payable with your first month’s payment only).  Unlike a debt settlement or debt relief agency, we do not charge fees based on a percentage of your debt, and the fees are nominal to cover administrative costs only, as we are a non-profit.  There are no “hidden” fees.  The only other fee you would ever see from CCCS is if your payment was returned (bounced check or returned ACH), and the amount of that fee is $25.

*The amount of the monthly service charge and set-up fee may vary depending on state requirements; however, the maximum amounts are $35 and $55, respectively.

Can I use my credit cards while enrolled in a DMP?

Any account that goes on your plan will be automatically closed out by your creditors, and you will just be paying down the balance.  Creditors reduce your interest rates and your minimum payments, so the “trade off” is that the account will be closed for future purchases.  The overall objective of a DMP is to be free from all unsecured debt, so the continued use of credit cards while on the program would be counterproductive.  If you did need to leave an account off the plan for any reason (needed for emergencies, medical expenses, home maintenance, etc.), please speak with your counselor and they will be able to help you determine what your best course of action would be for your situation.

How long does a DMP last?

DMPs are designed to be paid off with regular monthly payments over the course of approximately 3 to 5 years (60 months, or 5 years, being the maximum allowed by the NFCC National Foundation for Credit Counseling).

Is a DMP a legal contract?

No.  There is no commitment, as a DMP agreement is open-ended.  You can stop your DMP at any time, and your creditors would just go back to your initial terms.  There is no penalty from CCCS to terminate a DMP.

How can I get started?

Give us a call at (716) 712-2060 to schedule a Financial Counseling Session.  You and your counselor will review your financial situation and determine what debt repayment option will make the most sense for you and your situation, and go over the details of what a DMP will look like for you.  Alternatively, you can complete our online application (click here!) and a counselor will review your situation and put together an assessment that you will be emailed within 3-5 business days.  You can then work with your counselor directly to go over your assessment and get enrolled in a DMP.  Ultimately we have YOUR best interest in mind and are here to help you!  So contact CCCS of Buffalo, Your Money Mentors, today and take that first step toward financial freedom!