A memo released from inside Navient shows that borrowers are rigged into forbearance so a greater amount of interest can grow on the debt. This came out during the ongoing lawsuit between the Consumer Financial Protection Bureau (CFPB) against Navient for allegations that Navient purposely encouraged student borrowers towards options ill suited for their financial situation.
When a borrower goes into forbearance, they temporarily stop making payments or make reduced payments, likely due to an inability to make enough income. After 6 months of graduating, students are expected by the loan provider to start making payments.
Many students struggle to find a steady job, if not a career in their field, immediately when they leave school. While the borrower struggles to get their finances in order, the debt grows larger. As a result, borrowers find themselves paying off a debt that hasn’t reduced after several years. In many cases, the debt has become bigger.
Navient is one of the government agencies hired by the Department of Education to collect on federal loan debts. They have faced similar lawsuits for mistreating, misinforming, or misdirecting student borrowers towards options that are more detrimental than beneficial to their situation.
The leaked memo only proves further that Navient routinely uses practices that prey on borrowers, especially those of low-income who are unable to make monthly payments towards an egregious amount of debt. They would rather entrap borrowers in a never ending cycle of debt and repayments than assist them, as their job would entail.
Back in 2018 nine teachers filed a lawsuit against Navient, one of the government’s student loan servicers for misleading borrowers or blocking them from accessing a public service loan forgiveness program. According to the New York Times, out of the 146,000 applicants to the program at the time, only 3,200 saw their student loans forgiven.
Times of crisis always have a significant impact on any country’s economy. Worse, when the country is caught unprepared, and that is what we’ve witnessed around the world. COVID-19 has pushed the “superpowers” to the wall economically, and countries are struggling to remain afloat.
This week Time magazine predicted that a wave of bankruptcy filings for small businesses will ensure following the recovery of Covid-19. The government’s attempts to provide relief for small businesses have been unsuccessful to say the least since their guidelines allow for major corporations to take millions of dollars from the fund.
With cases of COVID-19 now at 586,057, where only 43,637 have recovered, while 23,604 have lost their lives, there is significant damage that’s been dealt to America’s economy. The sad fact is that we are not sure of when this pandemic will end and so the numbers may continue increasing in the foreseeable future.
President Trump signed a bill providing financial relief for Americans struggling in the wake of the coronavirus shutting down all non-essential businesses. Part of that bill granted a six-month suspension period on federal student loan payments until September 30th.
Anyone can qualify to file for bankruptcy. There isn’t an exact amount of debt or financial difficulty required. You don’t have to show insolvency or meet a certain standard.
You should always speak with a lawyer before beginning the bankruptcy process to ensure it’s the best option for you. Michelle Labayen is a knowledgeable and experienced bankruptcy attorney with offices in New York, NY, and Newark, NJ. Florida licensed attorney Drew Gaddis is counsel and would be representing all clients in Florida.