Student Loans: Pay as You Earn

On January 10, 2013, in Student Loans, by Robbie L. Vaughn, Esq.

Pay as You Earn Student Loan Program

What is a Pay As You Earn Student Loan program?

According to StudentAid.Gov, the pay as you earn repayment plan is designed to make student loan payments more affordable by reducing monthly payments based on your income and family size.

 Eligibility

In order to qualify for the program you must have partial financial hardship. This means that the amount you would be required to pay on your federal student loans is higher than the monthly amount you would owe under the Pay As You Earn Repayment plan. Your federal student loan must be eligible for the program; this includes certain types of Federal Family Education Loan Programs (FEEL Program), including Subsidized and Unsubsidized Federal Stafford Loans, Federal PLUS Loans made to graduate or professional students, Federal Consolidation Loans that did not repay any PLUS loans for parents. Borrowers must have taken out their loans as of October 1, 2007 and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. To be a new borrower that qualifies, you can’t have an outstanding balance on a Direct Loan or FEEL Program loan as of Oct. 1, 2007 or had an outstanding balance on a Direct Loan or FEEL Program loan when you received a new loan on or after October 1, 2007.

Benefits of Pay As You Earn

  • Your monthly payment amount will be less than the amount you would be required to pay under a 10-year Standard Repayment Plan, and may be less than under other repayment plans.
  • In some cases, the government will pay your unpaid accrued interest on your Direct Subsidized Loans (and on the subsidized portion of your Direct Consolidation Loans) for up to three consecutive years from the date you begin repaying your loans under Pay As You Earn.
  • Any remaining balance will be forgiven after 20 years of qualifying repayment.
  • On-time, full monthly payments you make under Pay As You Earn (or certain other repayment plans) while employed full-time in a public service job will count toward the 120 monthly payments that are required to receive loan forgiveness through the Public Service Loan Forgiveness (PSLF) Program.
  • Once you qualify for Pay As You Earn, you can continue making your reduced payments under the program even if you no longer qualify for partial financial hardship.

You should contact your loan servicer to determine if your eligible for Pay As You Earn. You can also check this calculator to see if you will likely qualify and what your payments might be.

Bankruptcy Attorneys in Long Island

Call  (516) 858-2620 for Student Loan assistance. The Law Firm of Vaughn, Weber & Prakope, PLLC is here to assist you!

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Short Sale a Must?

On January 10, 2013, in Bankruptcy, Foreclosure, by Robbie L. Vaughn, Esq.

Short Sale

I already modified my mortgage, but because of new circumstances I am late again. Must I Short Sale my home now?

Not necessarily.

You may be able to get another loan modification based on your “new circumstances.” The HAMP guidelines were recently changed to address this situation. Homeowners who have defaulted on a trial or permanent HAMP loan modification are now eligible for a new HAMP loan modification. Additionally, the bank can always offer you an in-house loan modification if they want to. You may have several other options you can explore before doing a short sale. One of your options may be a chapter 13 bankruptcy. We have developed several strategies to assist distressed homeowners. A Short Sale is never the first option! It may be a good idea to consult with an attorney before making a final decision.

Foreclosure Defense Attorneys

Call  the Law Firm of Vaughn, Weber & Prakope, PLLC at (516) 858-2620 to discuss your options. 

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The Mortgage Forgiveness Debt Relief Act Extended

On January 2, 2013, in Foreclosure, Message/News Board, by Robbie L. Vaughn, Esq.

Mortgage Forgiveness Debt Relief Act

The Mortgage Forgiveness Debt Relief Act Extended Through 2013

Congress has voted to extend The Mortgage Forgiveness Debt Relief Act of 2007. This act allows taxpayers to exclude income earned from a discharged debt on their principal residence, etc. Without this act, debt that has been forgiven under short sales or loan modifications would possibly be treated as taxable income. However, if the debt was discharged in bankruptcy then it would not be a taxable event.

For a homeowner that is already struggling, having to pay taxes on a short sale property or loan modification would be akin to “pouring salt on an open wound.” In all likelihood, the current housing recovery would have slowed significantly if the The Mortgage Forgiveness Debt Relief Act were not extended. Continuing the relief that the Act provides will likely spur more short sales and hopefully speed up the recovery of the housing market.

Foreclosure Attorney in Mineola

If you have questions about this or other legal issues, call the Law firm of Vaughn, Weber & Prakope, PLLC at 516-858-2620 today to schedule a free consultation.

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Hurricane Sandy Hardship Distributions

On November 19, 2012, in Estate planning, Message/News Board, by Robbie L. Vaughn, Esq.

Hurricane Sandy Hardship Distributions

Hardship Distributions to Sandy Victims

The Internal Revenue Service recently announced that 401(k), and similar employer-sponsored retirement plans, can make loans and hardship distributions to victims of Hurricane Sandy and members of their families who live or work in the disaster area. Hardship withdrawals must be taken by Feb. 1, 2013.

From the IRS Press Release:

401(k) plan participants, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, and state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.

Retirement plans can provide this relief to employees and certain members of their families who live or work in the disaster area. To qualify for this relief, hardship withdrawals must be made by Feb. 1, 2013.

The IRS is also relaxing procedural and administrative rules that normally apply to retirement plan loans and hardship distributions. As a result, eligible retirement plan participants will be able to access their money more quickly with a minimum of red tape. In addition, the six-month ban on 401(k) and 403(b) contributions that normally affects employees who take hardship distributions will not apply.

This broad-based relief means that a retirement plan can allow a Sandy victim to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.

Long Island Foreclosure Attorneys

The Law Firm of Vaughn, Weber & Prakope, PLLC is here to assist you. Call 516-858-2620 to speak with an attorney.

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