| Volume 78 Number 3 |
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The People’s Lawyer’s Tip of the Day
As a general rule an employer may not require an employee to take a lie detector test. The employee may be required to submit to a test, however, if the employer is investigating a theft and has a reasonable suspicion that the employee may have been involved. Click here for more.
Debt Collectors Banking on Student Loans
The average amount of student loan debt for borrowers under 30 years old is over $20,000. Those who attend graduate school can easily see their student debt loan reach or exceed $100,000. Unfortunately, in a down economy, the "worth" of a college degree isn't as high today as it once was. As a result, nearly one in six borrowers is in default on their student loans, totaling $76 billion in total default nationally. Unlike traditional forms of unsecured debt, like credit card debt, student loan debt is a much greater burden for those who fall behind on their payments. The government can garnish wages, seize tax refunds, and take a portion of social security payments until the loans are paid off. To capitalize on its extraordinary collection rights, last year the Department of Education paid more than $1.4 billion to collection agencies to recover from defaulters. Debt collectors are lucky if they collect twenty cents on the dollar for "bad" credit card debt. The government, however, pulls in an incredible eighty cents on the dollar for "bad" student loan. Due to its impressive recovery rate, critics insist the government has little incentive to address a very important problem. Click here for more.
Money, Credit and the Law
What happens if you fall behind on your credit card obligations? Do you qualify for bankruptcy? Should you consider credit counseling? How can you increase your credit score? What happens if you're sued by a debt collector? These are only a small sample of the many questions we've received recently from consumers dealing with issues related to money, credit, and the law. If you're facing financial pressures, take forty-five minutes out of your day to watch these videos and you'll find yourself armed with valuable information that can make an uphill battle much less daunting. Click here for more.
Your Money
What is your tax-equivalent yield? Click here for more.
For the Lawyers
Debt collectors statement student loan is “not eligible” for discharge in bankruptcy is misleading. The Second Circuit held that it is misleading for a debt collector to tell a consumer categorically that her student loan debt is "NOT eligible" for discharge in bankruptcy. The court noted that although the debtor may face "several steep procedural and substantive hurdles" to such a discharge, she has the right to seek it and may in fact obtain it. “We think that, upon reading the Collection Letter, the least sophisticated consumer might very well refrain from seeking the advice of counsel, who could then assist her in pursuing all available means of discharging her debt through bankruptcy. The Collection Letter’s capacity to discourage debtors from fully availing themselves of their legal rights renders its misrepresentation exactly the kind of ‘abusive debt collection practice’ that the FDCPA was designed to target.” Click here for more.