What does it really take to get funding for an idea, startup or business?
Submitted by the Bond & Botes Law Offices - Wednesday, June 23, 2021
Great corporations all started with one bright idea. The companies we know and shop with everyday were not overnight successes. In fact, there were years of trial, error, and rejection before many were funded. This week on Facebook Live, we sit down with IP, Patent & Trademark Attorney, Michael Melfi who has served countless startups as an advisor on their journey to success.
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.
Share This Page
At Bond & Botes, we now offer full service bankruptcy consultation and filing over the phone or by video from the comfort and safety of your home or office. Please call 1-877-581-3396 or click here to setup your free phone or video consultation.
The lawyers at the Bond & Botes affiliated offices serve clients at offices in Anniston, Birmingham, Mobile, Montgomery, Opelika, Decatur, Huntsville, Florence, Haleyville and Gadsden, Alabama; Vicksburg, Hattiesburg and Jackson, Mississippi. Read our disclaimer here. You can view our Privacy Policy here.