What does it really take to get funding for an idea, startup or business?

Transcript

Welcome Facebook viewers. My name is Brad Botes. I'm an attorney with the Bond & Botes Law Offices and we bring you this Facebook Live every Wednesday at 1 o'clock PM Central Time. We really just like to touch upon issues that we think will be important to consumers and people that might need our assistance Today, we are very fortunate to have a good friend of mine and an attorney that is known nationally and does work both nationally and internationally. Josh is known as the student loan Lawyer. Josh Cohen, who you practice out of Vermont, Correct. I know you're licensed in both Connecticut and and Vermont. Correct. I'm I'm based in Vermont. I've moved up here in 2012. I started my practice in Connecticut. That's why I have both. So, for our viewers, at the bottom of voters office is we help people with money problems and one of the areas that we see a lot of people having problems with are with student loan debt. In fact, it's the second second most significant type of debt that people face in this country. Millions of individuals with student loan debt and a lot of people that have a hard time maintaining a student loan payments I will tell you a few things about our guests and then I'll I'll let him give a little bit more background. So, I first met Josh about 10 years ago. I think Josh, you are speaking at an NCAA National Consumer Law at the conference and I said, who is this young guy? Who who is this young guy? He knows so much about student loans and you really burst upon the scene and you've developed such a great reputation but for background purposes, Joshua got his bachelor's degree at Randy's University that was back in 1996. You know, that's got a MBA from Phoenix University in 2002 and then went out and your law degree from Quinnipiac University School of Law that was in 2007. again, somewhere and I believe it was 2011 just looking back at my records. I believe it's the first time I met you, Josh, you popped on the scene and you are giving a talk at the conference to attorneys from all over the country about student loan law and since that time, you've just developed such a reputation. I know people from all over attorneys and consumers reach out to you and so I really appreciate you joining us today. Oh well, thank you for invite. Happy to talk. Tell us. Tell us just a little bit more about your background and how you got into this field. Josh. You know, it's just a matter of all of the circumstances falling into the right place. When I was an undergrad at Brandeis University, my work study job was in the financial aid office. so, I would take calls from prospective freshmen who want to know about their financial aid. Never thought anything further would come of it. I have a in psychology. So, sounds like a good pre law degree. It was and the truth of the matter was law was never on my radar, honestly. Okay. Law fell on my radar in about 2003. 2000. Yeah, It's about 2003. After I finished my MBA I was living in Orlando and I was working at a school for youth offenders. That's the politically correct term for them. Juvenile delinquents but youth offenders. I was the business manager at the school. I was in the number two position and I was told that I didn't get any kind of education bonus or raise for getting my MBA and I was newly married and I realized I was topped out in my salary at 35 thousand. That's not where I want it II knew I wanted more. I had a cousin that had just been accepted to law school. She and I were talking and I realized, you know what? I could do this. I think I'm interested in this and I was interested in consumer protection but I had no further idea what I would do with it. I took the LSAT. I did well enough. Got partial scholarship to Quinnipiac. My uncle and sister had attended there as undergraduates. So, I ended up at Quinnipiac. It was a chance to get out of Florida and back to New England which is what I wanted you know, vacationing up here all the time. during law school, I did a brief stint over my two all summer at Legal Aid in Bridgeport. Sorry, not Bridgeport Water Berry, Connecticut. and that's where I learned about consumer law and really practicing and I learned about the FD CPA there, Federer Collection Practices Act but we also had a gentleman come in that has student loan problem I was actually working for something called the Consumer Law Project for elders. Anybody over age Sixty-five automatically received help for consumer law issues. It didn't matter what their income was. This gentleman came in his social security is being offset. He was in his 80s. It was being offset because of a student loan that he hadn't paid and who knows how long he had been a long hauler, a truck driver. So, you know, bills happen and you lose track of things. and like today, back then, the Department of Education wasn't always diligently collecting debts and it sat there but I heard student loan and I popped up. I said, wait, I know what to do. So, they gave it to me because you know, it's not the run-of-the-mill thing. I referenced NCL C's student loan manual, National Consumer Law Center verified a few points by the end of the summer. We had him out of default. He was making payments of $5 a month, keeping a social intact. Everything worked but from there, I also landed a job with a consumer attorney in Connecticut by the name of Dan Blinn where I learned FD CPA, and more motion practice and things of that sort. I stayed with Dan through my three L year and after I passed the bar, we decided to part ways and Dan is still a mentor for me. I think he's a he does an excellent job with that but I went off on my own and I took two cases from Dan that were student loan issues. They blossomed into my first class action when I was only 9 months into practice and Dan, Dan helped me. He had, he does class action. So, he came in and helped me and it was the first of its kind the spawn, I think six or eight copycat class actions off of that. and that's where I really started getting into student loan work because it fell on me. I started talking other attorneys who thought I was nuts for doing it but also gave me their files because they didn't want to do it and that's really how it grew. It was just I became the student Lawyer by default because nobody else was doing it right. and I became known across the Us. I was getting calls from bankruptcy attorneys in states I've never been to, you know, still helping these folks and then, you and I met at the first NCL S conference I've ever went to. It was Chicago. I remember that one, right? And yes, that was in 2011. very first one and I remember I was in the back row actually answering questions under my breath. You turn around and said, you know, a lot about this stuff and. Exactly. That's how it started but student loan work is because no one else wanted to really dive into it. Everyone else is already got their established practices. 2011 is also, when I started, I launched my workshop teaching other attorneys how to do this because it works so seamlessly with bankruptcy practice and other debt management practices, you know, consumer law. So, that is the long winded. How did I get here? Well, well, for our viewers, you're in a child nationality as we Loan, Attorney and I apologize. to our viewers. We seem to be getting a little bit of feedback. So, at the Bonded Voters Law Offices, we help people with money profits. We have offices throughout Alabama and throughout Mississippi and if you're a lot of people after this past year, year and a half are having financial problems. if you're having a financial issues, mortgages, foreclosures coming out of forbearance, student loans coming out of forbearance, we encourage you to reach out, be proactive. We're all from absolutely free initial consultations. If you want do them by phone or video from the comfort and safety of your own home but reach out and be proactive. Be prepared to address some of these problems. Josh, we did an episode just recently about the fact that the foreclosure forbearance period is coming to an end and a lot of people worried about house payments that they've missed but it made me think just about everyone we see certainly a large percentage of folks that come to see us also have outstanding student loan debt during this pandemic There has been AA, forbearance at least with federal student loan payments. We're going to learn more about from you today about when we can expect that forbearance period to come to an end. What it means and we just want to talk to people about student loans in general and what some of the things are that can be done as a bankruptcy attorney with the bankruptcy process. My hands are somewhat limited. Most people know that you can't typically discharge a student loan in bankruptcy. There is a hardship discharge exception. Sometimes, we can do things to a reorganization. Chapter thirteen, bankruptcy to help with student loans but Josh really is the expert and we will include Joshua's contact information on the screen here throughout this interview today. If you need to get in touch with somebody that can really help with student loan issues, Josh Cohen is the one to talk to. So, Let's start with this. Tell us what the forbearance on student loan payments really has been and and when do you expect to see an end to that forbearance period? You know, thanks for starting there. So, this big forbearance that we're talking about, it falls under the CARE act which was implemented back in March of 2020 Actually it was in April but they made it a little retroactive to march. the problem was twofold Really? this forbearance could have and should have been provided by the secretary of the Department of Education, The secretary has the ability to do that by snapping their fingers and say, hey, we have a state of emergency. I am declaring that all actions stop on student loans and they did this the actual the first master time they did this was after hurricane Katrina where they their fingers and all student loan collections of any kind in that area. ceased, there were no qualifications. If it was a federal loan, it stopped and yet that didn't happen this time. So, congress had to step in and say, okay, we created the CRS Act which had lots of facets to it but they also created a student loan pass to it which said, we'll offer forbearance, We'll stop interest. no collections. If you're in default, yada yada yada. The problem was because it's congress and everything has to be They made qualifiers. So, believe it or not, not every federal Loan was covered by this pandemic. forbearance, it was only Loans held by the Department of Education. So, for instance, if you had Loans with a Navient that were not held by the Department of Education but we're actually owned by Abby for Sally Maybach in the day, you weren't covered and there was mass confusion and they changed the vernacular and said, oh, you have a commercial loan. What is I mean, to anybody that doesn't do this for a living Commercial to me means not a federal loan and so, I had a massive amount of people calling me in April last year going, I thought my loan was federal but it's not. No, it is federal. It's called the commercially held federal loan. So, you're you don't fall under cares. You still gotta make your payments now to the credit of the industry, Many of them hopped on the train and said, you know what? We're going to offer you a forbearance anyway but all of terminated it back in January of 2021. So, we still have this gray area when we had a change of guard and we have the new secretary of education. I believe it's Cardona. I believe it is his last name in March, March 30th of 2021. He snapped his fingers and said, you know what? I am making the CRS Act to encompass everybody. So, if you hadn't what's called the commercial loans or FFEL Loans. Now, they were covered by cares. Now, they have 0% interest and he made it retroactive and if you are in default and you had collections, they stopped all of that and something very interesting if someone defaulted between March of 2020 and when that announcement came out or even til today, if you defaulted because it was an FPL and you thought you didn't have to make payments there reversing that to vault. So, here we have a secretary of education who stepped in and said, wait a minute, we're going to fix this and the process is so slow. They're working out the logistics but the point here is if you have a federal loan that defaulted after March of 2020, it is going to be reassigned to the Department of Education. The default will be rebound if you had any offsets or garnishment that will be refunded and we're still seeing the come out. but that's what happens. So, it was from the CRS Act because congress had to do it and now, the Department of Education is stepping in saying, no, no, no, we'll cover everybody. So, we're starting to see that mass protection So, so one thing I've picked up on real quick and this is Josh is it's important for people to know what type of student loan they have and let's start real basic. So, there are private student loans into our federal student loans Give us a quick explanation of the difference between private and federal student loans. Very simply, a federal student loan is one that was either administered by the Department of Education which are called Direct Loans because you're getting the money directly from the Department of Education or the older models which you can't get after 2010. Those are called FEL, Federal family Education Loan Program. That's what started back in 65 and carried through until 210. Those are loans that are offered by private banks or or different guarantee agencies like mine from VA Vermont Student Assistance Corporation They aren't from the Department of Education but they are guaranteed So, if you run into trouble, your loan will eventually end up with the Department of Education. That's what makes it federal. Compare that to a private loan that you can take from any bank. It is not guaranteed by the Department of Education and it will never be guaranteed or it will never ever end up in the Department of Education's hands. That's the difference and what that really means for us is what happens if you into trouble when you're paying the loan, there's no problem. It's all about what can happen to you if you have a problem. That's the big difference. So, again, federal loans have the government behind it. Private doesn't it? Is it too simple to say that if it's a federal student loan and you get into trouble, there are a lot more options available to you that if there's a it's a private student loan, That's exactly true. As trouble as the collection powers are for federal loans, it is the only consumer product I know that has a fail safe. You have the ability to fix your mistake, to get it out of default or curing as we call. In fact, there's two different methods for it so you can really run into trouble twice and get out of jail twice with the Federal Loan, a private loan just like a credit card. if you go too long and and after 6 months or so it's dead. It's defaulted and and you can't fix it, you either pay it or Brad and find a way to work through bankruptcy. Yes, big difference. Okay. So, what I want our viewers to understand is the first thing you need to do is you need to figure out what type of student loan you have If it is a federal student loan that there's then another layer because there are different types of federal student loans as Josh explained and and and I think it's important here to stress that, you know, whenever I get into a conversation with somebody about helping folks with student loans, there's this immediate well, people should pay their student loans. I had to pay mine and I did pay student loans and you probably did too. What? we're not talking here about student loan forgiveness. That's a whole another topic. It's something we'll leave to the politicians right now. but you and I both help people that are unable to pay their student loans or other bills as they become Due and student loans are a special category because typically a student loan cannot be discharged in bankruptcy. You know, Josh, I met a year ago with one of our congressman and his staff to talk about actually forbearance is at that point before there was and there's still not clarity as you explain but the first reaction was we don't want to just forgive student loans and I said, no, I said, Funerals are important because as a bankruptcy attorney, there's usually not a whole lot I can do with student loans and he said, you mean loans aren't discharged in bankruptcy and I and I had to explain it. No, they're not Typically discharged in bankruptcy. So, Josh, generally, student loans are different from any other debt primarily for that reason. Primarily because you can't deal with them in bankrupt See you. So, what is the first step somebody should take if they have a federal student loan and they're unable to make their payments. So, I want to take one step back. You know, we talked about federal versus private. I want to give a resource. the first place anyone should go to verify if they have a federal or private loan is student Aid.gov That is the Department of Education's website. That's where you can go to find your federal student only if you know you have a loan and it's not there. It's a private loan. and you can always cross check your credit report to what you find on student Aid.gov Student Aid.gov will also tell you, is it a direct Loan held with the Department of Education. So, you're covered by CARES Act or is it an app at BL Loan? not with the Department of Education and now you're covered under the extra layer that they put on to it since March. but this plugs right into your question, Brad, what do you do when you can't afford your loan? Well, they say the thing you should do is call your servicer, okay? You can call your servicer. The servicer is the Fers is the company. you're making your payments to. That's correct. Yes. Whoever you're could be. be. Navient, Great Lakes Fed Loan servicing Now Not. There's a ton of other companies out there. They're a servicer. They don't necessarily hold or own your loan but they're happy to take your money. That's their job. So, you should give them a call and see what they can offer you. I'll tell you what they're going to offer you forbearance. deferment which you have to qualify for or they should talk about Id income driven repayment. Some of you know it as income based repayment. Some of you have heard it as pay as you earn All of those are particular payment plans. under ID Are and there's five different income driven repayment plans. It depends on is a director. Is it Fl? How old is it? Because some of these do have date restrictions What I tell people to do is go to student Aid.gov and you can get a lot of information there. In fact, there's even a calculator to help you run. What would my income driven repayment be based on my family size and my adjusted gross or current income if there's been a decrease that's really I like to start and then call your servicer and say I was on the website. I've learned about this. How can you help me make that happen? All of this has to be done with the paper application or you can do it through student Aid.gov but it's still worth having that conversation with your servicer. The Department of Education for years has said, you don't need help with this service will do it. The truth as as you know what you're doing and you've done the math, you don't need someone like me. I admit that you know, this a self-help system. So, start with student Aid.gov. See what you got. Run the calculators. That's where I start. Alright. So, explaining to our viewers what exactly an ID Are is, What it and I know you said you can look to the website. you can determine what payments and are but in simple terms, it's it's a repayment plan based upon your income. That's exactly it. That's exactly The problem with that is if you're making a payment based on your income that is less than the interest that is accruing on that student loan, then, even though you're making payments, the balance you owe is going up with caution. Yes, we call that negative amortization. So, you get into an idea, you're making the payments. What's the next step? Is there a next step? So, here's the thing to understand about income driven repayment plans and I've I get a lot of people who call me because they don't get all the information. So, this is where it becomes important. So, thank you for this question too. Income driven repayment is not just about getting an affordable payment which for most folks is negative amortization. They are paying less than the interest and a lot of people panic for good reason because they're $50000 loan after a few years is now 60 thousand even though they're paying it or it goes from 100 to 150 Number one, interest always accuse. there is no way to stop interest no matter what you do. So, pandemic. Exactly. This is the first time we've ever seen that. Thank you, Brad. That's right. So, the interest is always accruing. so your interest might be $100 a month but you're only paying fifty. So, it's still racking up. Here's what people need to understand that servicers inadvertently forget to tell them with any income driven repayment plan, there is forgiveness. If you are on the plan anywhere, between twenty to 25 years. It depends on which particular income driven repayment plan you're on but they're all twenty to 25 years. That means whatever balance is left after the twentieth or 25th year is automatically Forgiven written off gone Here's the catch, right now. The way the law is written. the borrower will receive a 1099 SA cancellation of debt. Does that mean it's taxable? Only your CPA can tell you that because there are things that CPAs do that are magical. That's not what I do but there are ways that you might be able to reduce the burden. The other question is, how old are you going to be when you get forgiveness? Are you going to care about tax? If you're 85, when you receive this this thing, you know, that's that's The other issue is forward looking and get a lot of people that are nervous about receiving a tax bill for 250 thousand. You're not getting a tax bill for 250. Let's say and II use large numbers because my clients average 75 to $200000 in student loan debt. That's a lot and so people, you know, they do the math. They say, well, I'm going to get, you know, 150 thousand written off. That's not your tax bill. That's how much you have Just put on the paperwork. talk to a tax attorney or CPA. They can calm your nerves or talk to a certified financial planner. They're very good with this stuff. My point is, take it now so you can survive for the next twenty to 25 years and are you kicking the can down the road? Yes. Does it become a slightly bigger snowball? Maybe we also don't know what's coming down the pike and eventually I know we're going to talk about some things that we're seeing out of the new Department of Education. I'm very helpful things are going to look much better in 20 years or so. yeah III. Hope that to be the case because I know how many people struggle with student loan debts. Something I want to make sure that I simplify here that Josh just talked about Most people don't understand that when a debt is forgiven, whether it's a student loan debt, whether it's you negotiated some kind of settlement on a credit card, whether it's a mortgage debt, if a debt is forgiven, in most instances, the IRS says. That's that's income. and again, we're not going to get deep into the woods as to the tax implications of that but you need to be aware if a that's Forgiven outside of bankruptcy, it's generally deemed to be income and this taxable. So, although you may be getting rid of what you owe on your credit card or your student loan or your mortgage, you may have a big tax bill. So, it is so important to talk to a tax professional about the implications. Alright. So Joshua say, I'm a student loan. I have student loan debt. I'm unable to pay it this last year. It's been tough at some point and that student loan is going to become Due and payable again. I've determined that I have a federal student loan and I've looked at what my ID Are payment should be. First step is to contact the servicer then and talk to the servicer about getting enrolled in the program. Is that correct? So, in order to get enrolled, you have to do paperwork. So, you can either call your servicer or sometimes just on their website. you can get the application. It's called the income driven repayment application. If you talk to your servicer, you can have them. They'll Email it to you or mail it to you or if you go to student Aid.gov, you can download the form there and I believe you can actually apply online through student Aid.gov and it will it will funnel it to your servicer. So, So, you've got a plethora of methods to do it. Alright. So, what if I'm who's already behind on my payments? I was in default on my student loan payments and does that affect my eligibility for an ID? It does. So, any borrower that is in default cannot have an income driven repayment plan. In fact, they can't have any of the benefits. The forgiveness is or any of that until they get their loan out of default. Now, You can get your loan out of default. The simple, the two simple methods are is called rehabilitation where you have to make nine payments over 10 months that you negotiate with your debt collector. Easy enough to do or the method that I prefer is you can simply consolidate your loan. Now, this is a term of consolidation usually refers to taking a federal loan and refinancing it through the federal government. That's consolidation. If I ever say refinance. I'm actually talking about private loans which is a very different different things, right? To consolidate a federal loan again is a paper application or you can do it through student Aid.gov. It is not a credit issue. So, it doesn't matter what your credit looks like. There's no closing costs, origination fees. There is a fee to get out of default anywhere between sixteen to eighteen and a half percent. They tack that on to the back of the loan and you do have to apply for an income driven repayment plan at the same that you consolidate and that's great because they do the consolidation They do the math for your income driven repayment plan. Boom. You're off and running The process for consolidation takes thirty to 90 days. So, for those of you that are in default right now, now is the best time to start the consolidation process because then you should be out of default by October 1st which is when the CARES Act is set to expire which means you won't any negative collection activity and you will be ready to make your first payment based on your income come October with everybody else that now is the perfect time to work on it. So, again, folks, this is another example of you need to be proactive. You need to contact your service or you need to do the paperwork that's required. You need to ask questions and if you can't get these things done by yourself, you reach out to one of us at one of our offices or that. have a little bit more complex issue. Perhaps, you're not in Alabama or Mississippi. Josh Cohen is an excellent resource and we've kept his contact information here on the screen Josh, before we get into the next issue, I want to touch on a couple of items that I get a lot of questions of The first is people say, well, I understand that student loans are sometimes this in bankruptcy If you're otherwise a bankruptcy candidate, if you have student loan debt, the exception provides essentially that if you are disabled, if you have some some condition or some situation that would qualify you for a hardship discharge, then, you can get rid of those student loans in bankruptcy. It's a difficult process. It's well, it's more difficult I think than it would offer the alternative is Josh and correct me if I'm wrong here but a lot of people that would qualify for a hardship discharge in bankruptcy may qualify for an administrative discharge based on their disabilities. Correct. Talk about the administrative discharge for student loans based upon a disability and how that process works. Okay, so, what you're talking about is called the total and permanent disability discharge or TPD and it's exactly what you said and that's exactly what the title says. You have to be totally and permanently disabled. It's It's a very simple application process and there are three ways to qualify. So, the first one is if you happen to be a veteran and you have 100% disability rating from the VA for a service related incident, all you need is that piece of paper that says 100% service related disability. You staple it to the application, you mail it to Not who's in charge of doing all of these no matter who your servicer is, and you will hear back within 60 days that loan is gone. That's it. That's the easiest one. The second one, if you are collecting social security disability, through Social Security Administration, you should have a rating or a review period. If your review period is 5 years or more, which I've heard is rare but I've seen them. If you're a viewer, 5 years or more, all you need to do is staple a copy of the statement showing your review period is five or more you staple to the mail it to me that and within 60 days, your loan is gone. For those of you that are not veterans or not on SSDI or have an SSDI review period of less than five. The the majority you take the application to your doctor. any doctor that you have and I know that most folks have multiple doctors depending on the severity of their difficulty. You only need one doctor to fill it out and the standard is very simple that either our terminal or you have something that has affected you or will continue to affect you for a 60 month period or accumulative thereof that stops you from gainful employment. okay? And that's the simple term. doctors can look at this and they can fill it out very easily. They know by looking at it. Yes, you qualify. No, you don't. And the simple question you have with your to ask your doctor before you get started is do you think I should be working now? Of you have had this conversation with your your doctors. In fact, many times I find people are working against medical advice. Yes. Well, here's an advantage and I'll talk about a loophole in a minute. So, basically, if your doctor's willing to fill it out, I don't want to call a loophole. If your doctor is willing to fill it out, then, you fill it out, you send it to me that and within 60 days, you get back a decision. That's the first part and if you are granted a discharge, it's gone now. discharge is tax free. There's No10 ninety-nine S or anything. It's tax free. That's it. So, that's good. Now, things to note very quickly you receive a discharge not as a veteran but if you receive it under SSDI or through your doctor, then there's a three-year monitoring period and this is where we, can I talk about a loose loophole about employment on that monitoring. They want to know. Have you earned any income and if you have, you have to send them a copy of your tax return. They're only looking at your portion if you're married, they don't care about your spouse, you can still file jointly the the benchmark that they're looking for is if you're still working and earning income, you are not allowed to earn more than the poverty index for a family of two. regardless of what your family size is. Poverty index for a family of two which right now I believe is about $17000. That means Technically, you could work part time as long as you earn less than 17 thousand, you're still good. So, don't feel like you have to be completely disabled and you're not allowed to work. 17 Thousand is about the cap. If you're not working, then you check the box that says, no income gone and again, this is from earned income from work. It's not rental income. It's not ebay sales. It is work a paycheck. The other question I get often is about public service type forgiveness of student loans and I know you could probably talk about this for quite a while but give us a synopsis of how that program works. You know, now is a great time, Brad because the report is just come out and I think it's been hitting the papers as well that public service loan forgiveness still has a 98% rejection rate and I'm going to break that down in a minute but very public service loan. Forgiveness is a program for anybody that is employed by a US government, whether it's federal, state, county, or town, or if you're employed by a 501 Cthree nonprofit, or a not for profit that has a public service interest, Ambulance companies are actually the best example of that. They are not for profit, right? You must be employed full time which is whatever the employer defines it as or 30 hours, whichever is more many employers to find. It is 32 to 34 hours. If the employer says you're full time, you're full time So, one, you need the right kind of employer. It doesn't matter what you do as long as you are employed by them full time. Two, you must have a direct Loan. So, go to student Aid.gov and verify and three, you must make payments under either the 10 year standard plan which most of us can't afford. or income driven repayment plan. as long as you're on an income driven repayment plan, that's good. You need all three of these, The job, the loan, the payment for 120 months all at the same time. The program started effectively October, 2007. So, any payments after October, 2 seven count Once you have 120, which is ten, sorry, 10 years, you then apply for public service loan forgiveness. This is a redemption program. It's like when we used to go to the fairs and we go to midway and you'd get a ticket from all those games and then you'd you'd save up all your tickets. So you get a whoopie cushion. This is the same thing. Once you have 120 tickets, 120 months, then you go to the Department of Education and cash it in for forgiveness and anything not paid within those 10 years is Forgiven tax. free. done. Sounds simple. Yeah. The next question was, why? Why is such a high 90.8? 98%? You said of this? Don't qualify. Okay, so, here's what's happened so far. First of all, since payments only start counting as of October, 2 seven, no one qualified forgiveness until October of 2017. We had an administration that wasn't very helpful. That was actually trying to kill the program with the new administration they're working but Not as fast as they can Now, the I don't want to call them the gatekeeper but there's a company called Fed Loan Servicing which is a servicer. They are charged with tracking the qualifying payments. One of the problems they've had is they don't get to see the records of your previous servicer unless there is a request to do so. So many people are seeing that they only have fourteen payments counted when really they should have much more because they were previously with another company. So, that's that's the hint of one problem. Now, your loan doesn't get assigned to fed loan unless either one you consolidated with fed loan or two, you fill out what's called an employer certification form and you do that every year. and that sends a message to your services. Wait a minute, this guy's doing Ps up. They transfer your loan to Fed Loan Now, Fed Loans starts tracking now. They're trying to get the records from the other servicers That's slow going. So that's one problem. There's actually an old servicer that doesn't exist anymore. That was an abomination. That was instead of putting people on an Id, they put them in forbearance. So, people thought they had a $0 ID Are that was counting. Nope, they're in forbearance. Forbearance doesn't count or people were making payments but still on a forbearance and they weren't tracked. Right. So, that is a nightmare. That's that is So, that's one piece of it. Another piece only direct Loans qualify. Many people didn't realize this until they were in their ninth or tenth year and then you have to consolidate and bring your loan to Direct Loans. You don't start qualifying until you have a direct Loan. So, anything before that doesn't count. Three and the most annoying one, you're in the wrong payment plan. Many people are on what's called the 25 year fixed plan or even the Twenty-five-year graduated plan That's not based on your income. It is a literal Amor plan to pay off your loan. So, if you're in the wrong payment, plan, those payments don't count. There was a fix made. If you're on the wrong payment plan, it's called TPLF temporary public service, loan forgiveness. Now, that's been in existence for two or 3 years now with that one, you have to show that the payments you made were as much or more than it would have been had you been on Ir Now, that's already a face palm. We know that's not really the truth. The reason why people took the 25 year plan is because it was cheaper than the Id, right? How does that happen? Here's my rule of thumb for Id. You can have Ir. It will help you if you make less than what you owe. Now, for the majority of people on Ps, that's true. They may owe seventy or $100000 but they only earn fifty. so IDR works for them. Reverse it. What if you only owe 30 thousand a year? $30000 but you make 70 thousand a year. You're not going to for public service, loan forgiveness because you're going to pay your loan off before the 10 years comes. Is that unfair? I'm not here to discuss that but that's really so a lot of it is people are applying, not realizing they're missing something now, is it their fault? No, the servicers have done a terrible job and the Department of Education has done a terrible job with public relations on this program. but but it's another instance that I keep repeating this folks. you can't just make assumptions. You can't just assume that You're in a public service type profession that your student loans can be forgiven as Josh just emphasize here, there are a lot of boxes you need to check to make sure that you're going to qualify and that your student loans going to be forgiven. as you expect it to be. I want to take just a short break here just to recap. My name is Brad Botes. I'm an attorney with the Bond and Botes Law Offices where we help people with money problems. We're located throughout Alabama. We're located throughout Mississippi. We know a lot you are having financial problems right now. It's been a tough year and a half. We're offering absolutely free initial consultations with an attorney with an experienced attorney and we'll do it by phone or video. However you're comfortable right now, we want to help and you need to reach out and ask questions about what your options are before you get into trouble Today, We're very lucky to have one of the top student loan authorities in the country in my opinion, Josh Cohen has become as the student loan Lawyer, not only by his clients but by professionals, other attorneys all over the country. He has an excellent reputation. He has excellent practice and he's been kind enough to share some important information today. It's important for our viewers to know, you know, these Facebook Live broadcasts live on our Facebook page and they live on the website So, if you know somebody that can benefit from what Josh has had to say today, please share this showed with them. Encourage people to listen so that they know how you know, income dependent repayment plans, work, public service, forgiveness works. However, if you have, have, if you're totally and permanently disabled, how you might qualify for forgiveness. There are all kinds of important things to know about your student loans. It's very important to reach out for help. Joshua. We do have a couple of questions that have come in from some of our viewers that I want to post to you and then I'm going to finish up by talking about what we can expect with student loans in the future. I don't always have time to get all of these questions yet but let me pick one or two here. So, This is just a very general question and I think you've addressed it but what will happen if I can't make student loan payments when the forbearance period ends? what's going to happen? So, to answer the direct question, what's going to happen is if this is a federal and it defaults. Now, let me back up. A federal loan doesn't default when you missed the first payment, you have to miss nine payments for a federal loan to default. So, you've got time to fix it or find someone who can help you. If you end up defaulting, the government has quite a few tactics. Very draconian, draconian but they have a few, they can garnish wages without a lawsuit. They can take 15% after taxes They can. if you collect social Security, they can take 15% of it but they have to leave you with $750 a month. If you receive a tax refund, they can take it and apply it to the loan. Those are the big three. They will of course hire a debt collector who will call you They do have the ability to sue you as well and I gotta tell you, those lawsuits are a bit scary especially if you have a direct Loan because your government's held with the department with Department of Education which means you're sued by Department of Justice. You get a lawsuit that says the United States of America versus you. you're being sued by a country So, wage garnishment, Really the big one. that hits people. Nobody likes to lose control of their own money and that's exactly what a wage garnishment does and this wage garnishment has priority over a judicial wage garnishment. So, if you've been sued by a credit card company and being garnished, the Department of Education gets priority there. and you just made an excellent point there. There's no lawsuit required before the garnishment starts with a student loan type garnish. now in Alabama and II expect nationally, it's a smaller percentage than a traditional garnish. Schmidt's 15% but of your paycheck starts disappearing. It's a big problem. So, reach out to somebody for help. before you get into trouble with student loans. Another question here, What if I have a cosigner now? I assume that if it's a cosigner, it may be a private student loan or there may be a parent plus type situation here explain how that works. If you would, Josh, I'll start with the parent plus because quite honestly, it's very rare to see a cosign on a parent plus loan. Now, a parent plus loan is one that a parent takes out for a child that is an undergraduate study Now, here's another sign. If you, the student or a cosigner or mom or dad is a cosigner, it's a parent. It cannot be a parent plus loan because the student can't cosign on a parent plus loan for themselves There could be a graduate plus loan that many times either a parent or a spouse will be an endorsement cosigner but those are also still rare. So, you're absolutely right Brad when you hear a cosigner, I think private loan, Why? Because it's worthy and most federal loans are not based on credit. So, you don't need a cosigner Only plus Loans are. so, you might need a cosigner. I think this is a private loan, Brad, you're correct. So, back to the, what was the question again? Now, we're going to ask question. Well, the question is, what can I do to protect my cosigner if I'm not going to be able to make the payments I would say you need to call Brad because the only real protection you get for a cosigner on a private loan is a chapter thirteen automatic stay right very hard. If you can't make the payment. So, so for our viewers and thank you Josh for the plug there but if if if you do have a cosigner, you're worried about that loan that you're unable to make payment on impacting a cosigner, a chapter thirteen personal reorganization, bankruptcy is not going to Get rid of the student loan. In most instances but it allow you to protect yourself from that student loan creditor and in most cases, protect your cosigner. Also, while you're in the chapter thirteen. Now, Josh, that's the second time I've talked about it's difficult discharge of student loan in bankruptcy and you may not be able to get rid of a student loan to a chapter thirteen bankruptcy and I think you've not in your head a little bit both times sideways. So, What's been your experience with you today without getting too deep into the weeds? I believe there is a very, very important difference between a federal loan and a private loan when comes to a bankruptcy discharge action or an advocacy proceeding federal loans are hard to discharge and my first question is, what is your income driven repayment? And if you tell me, it's only $5 a month, we're not getting a discharge because you can afford $5 a month. I like to do is juxtaposed that with a private loan. Private loans don't offer you a payment based on income. It's there. They have two payment plans, pay or don't pay. That's really your choice and from my experience, I, this is not for everyone but I actually find a chapter thirteen can be useful and filing a discharge action can be useful not necessarily for a full discharge but it gets to start settlement discussions and that is where you can definitely protect the cosigner because you can get into a settlement discussion, get into terms with the payment plan that you can afford, All of your cards are on the table because correct me if I'm wrong, Brad but you have to give them your budget and all of your finances in a thirteen. So, the the lender comes in knowing exactly what you've got and what you don't. So, settlement discussions I find are very fruitful and very useful way to protect your cosigner. The lender gets some money. You get to keep some money and and both sides can actually work. Again. It's very specific but I do find that that's a very useful tool that is that can work in the thirteen is is that adversary for settlement II would agree and for our viewers, you're going to have better luck with this in some bankruptcy courts and than other bankruptcy courts. you know, For instance, Josh, even with the income driven repayment plans, often, if somebody is in a chapter thirteen bankruptcy and they're not even allowed to some class without getting into the weeds here but they're not able to treat that Loan separately for bankruptcy purposes. that there are certain things we can do in getting you into a chapter thirteen to begin with and we and we had the same conversation about the end end of the foreclosure. Forbearance is getting you into a chapter thirteen so you can get some initial protection and then try and come up with a plan. It is often a good first step. Josh. we are nearing the end of the hour here and there are two things I want to do and I ask you one more question but just so you're prepared, I'm also going to give you a moment at the of this conversation to pitch in with anything that you think may have forgotten you. That's important. The question I think a lot of people want to know is what can we expect with the current presidential administration or our government in the future with respect to student loan that it's a big, big problem and it's one that's going to need to be addressed. What what what do you think is going to happen? So, I'll get through this quickly. Number one, the administration has been talking about a $10000 forgiveness. I don't think it's going to be more than ten. I do think the 10 thousand will happen. I actually think it'll happen in August or September. They need need to it before the midterms. politics aside two, they have the Department of Education came out with the list of things that they want to redo. One of them is the borrower defense to repayment. If you You were defrauded by your school. So, pay attention for that Two, they're looking at redoing the entire income driven repayment plan, scrapping the five plans we have coming up with one new one with an even better friendlier formula. Watch out for that. That can take the next 18 months but be aware of it and the third thing I want to touch on actually the fourth thing they're looking at revamping the public service loan forgiveness as well so that instead of it being a 10 year all or nothing Every 2 years, you receive a percentage so that by the time you reach the tenth year, all of its Forgiven but if you only do public service for 2 years, you get 10% Forgiven, 4 years will be 20% Forgiven. So, pay attention for all of that. The Department of Education really came out with the laundry list of things that they want to revamp and some of it they've already started on through what's called negotiating rule making to make changes official changes not just policy but actual regulation changes So, as you to the public. Yeah. changes to the public service program. would just be wonderful. you know, encouraging people to go into public service after they completed their education is is not a bad thing. No, it's certainly would be helpful for our country and many of our communities and students with with with large student loan debt but I interrupted you there. Let me give you a chance to finish your string of thought. No, that's that's really what I coming. Other things that are not as common. There are some folks that unfortunately have spousal consolidation loans where they're allowed to put his, you know, both of their loans together. There's no exit The terminate the program in two six but they didn't put an exit ramp so you're stuck. They're there is also talk of somehow allowing them to be split whether it's only in a divorce situation or or something but to allow split consolidation so that people can get their lives back on track and fully enjoy their divorces is really one of the issues that we're seeing here Also, that have an FPL, spousal. They don't get public service, loan forgiveness because they can't bring it it over to direct So, there's a lot of good things that I see coming down the pike. You know, it's going to take a few months to see it fleshed out but I think by the end of the summer, we're going to see some things really starting to blossom. Well, I hope that's the case. We certainly need help a lot of people with large student loan debt need some need some assistance I want to tell our viewers before we finish up here are an area that require I think a large amount of expertise. Josh is an excellent resource. We provided his contact information at the bottom and Modus Law offices. We'd like to try to maintain relationships with a variety of different experts in their fields. We encourage you to reach out to us with any type of legal problem with any question. If it's something we can't help you with, we'll help you get the right resource to the right person. If you Learn more about Josh, I encourage you to go to my partner around six. This is a podcast. It's see you on our website. It's called Next Lawyer up and then Ron approaches his podcast a little bit different than what I do here with Facebook Live and and that we learn more about Josh and about his background and his experiences and and just it's really a fascinating listen. So, I encourage you, go to our website, go to our podcast and you can find the interview that I did with Josh the for More and Josh. I was with Ron in Chicago at that in CLC conference in 2011. when I first met you, Josh and you really opened my eyes up. to to relieve that's available for people and I've learned a lot from you since I want to. Thank you for your time but I want to give you a chance here at the end. Is there anything important that I may have missed that you want people to know about dealing with student loan debt Now, the thing I can tell people that's really important now that the CARES Act is set to expire is pay attention to your mail. Pay attention to your Email, and if you're not sure, contact your servicer and just stay on top of it as best as you can because honestly, nobody knows really how this is going to end and any major announcements will get very good press coverage. So, just pay attention to what's going on. absolutely II. keep telling our viewers, you've gotta be proactive. You've gotta reach out and help yourself. There are people like can help you. We want to help you at the Bond and Botes Law Offices but you can't ignore the mail. You can't ignore communications. You can't stick your head in the sand. Folks. Now is the time to get out and ask for help. protect you and your family. Gosh, one last time. Thank you for joining us today on Facebook Live. I appreciate you and the work you do to our viewers. Josh wants to help you. We want to help you. at and boats. We care about you. We treat our clients like family and we look forward to seeing you again next week. Thank you everybody and thank you Josh. Thank you.