Student Loan Revolt: What Happens If I Don’t Pay?

A recent New York Times op-ed piece discussed one man’s decision to not pay back his student loans. It seems a growing number of graduates are choosing to follow suit. The reasons vary, but regardless of the justification there are still consequences, and ultimately graduates must make an informed choice.

There is certainly a moral debate to be had about whether a graduate is entitled to refuse to pay back what they promised to borrow, but what are the actual ramifications of simply refusing to pay, and more specifically, not seeking out any discharge options either?

Refusing to pay your student loans means facing lifelong financial ramifications in virtually every area of your life. Defaults on student loans are reported to the credit bureaus, and as a result, your credit score will be negatively affected. A negative credit score can affect your ability to start your own business, obtain a job, rent an apartment, or buy a house.

In addition, when you refuse to pay your loans, both federal and private lenders will attempt to collect the debt. You will face endless calls from collection agencies attempting to extract payments, and the cost of the collection can be added to your outstanding balance. Further, the Education Department can withhold money from your tax refund, social security, and other federal payments in an effort to collect on this debt.

Both federal and private lenders also have the option to garnish wages. The federal government does not need a judgment to garnish wages, but a private lender must initiate a lawsuit in order to proceed with garnishment.

While refusing to pay your student loans certainly is your choice, the consequences of that choice will be far reaching, making it incredibly difficult to lead a financially stable life.

 

RG-3Rachel Gallegos

Lead Consumer Advocate, Steve Harvey Law

 

Supreme Court Rules in Favor Of Muslim Woman Who Wore Head Scarf to Job Interview

Employers must continue to ensure that applicant’s religious practices are not a factor in hiring decisions. So said the Supreme Court this week. The Court ruled Monday in favor of a Muslim woman whom Abercrombie & Fitch refused to hire because she had worn a hijab—a traditional Muslim head scarf—when she interviewed for a salesperson position at a retail store in Tulsa.[1] Then-17-year-old Samantha Elauf did not mention the hijab or her religion in her interview, but the interviewer assumed she was Muslim and that she wore the hijab for religious reasons.  Evidence suggested the hijab influenced the decision not to hire her because it conflicted with Abercrombie’s “look policy,” which required sales persons to wear “classic East Coast collegiate style of clothing.”

The EEOC initially won summary judgment on Ms. Elauf’s behalf, but the Tenth Circuit Court of Appeals reversed that decision, reasoning that Ms. Elauf had failed to notify Abercrombie of her need for a religious accommodation.

Writing for the majority, Justice Scalia confirmed that an applicant need not make a specific request for religious accommodation to obtain relief under Title VII of the Civil Rights Act of 1964, which prohibits religious discrimination in hiring: “Title VII forbids adverse employment decisions made with a forbidden motive, whether this motive derives from actual knowledge, a well-founded suspicion, or merely a hunch.”

Justice Scalia called it a “really easy decision.”

The decision reconfirms that an employee’s religious practices may not be a factor in employment decisions—whether or not the employer has actual knowledge, or merely presumes or suspects, that those practices are based on religious beliefs.

The Court’s vote was 8-1, with Justice Clarence Thomas dissenting. The decision is in line with the Court’s recent broad view of religious rights, following last year’s Burwell v. Hobby Lobby[2] decision in which the Court found broad religious freedom rights for corporations, and Holt v. Hobbs,[3] in which the court found that a ban on beards infringed on the religious rights of prisoners earlier this year.

 

Therese K. Dennis

Counsel, Steve Harvey Law

 

 

[1] EEOC v. Abercrombie & Fitch Stores, Inc., Docket No. 14-86 (June 1, 2015)

[2] Docket No. 13-254 (June 30, 2014).

[3] Docket No. 13-6827 (January 20, 2015).

Survey Shows Mortgage Servicing Still a Problem

For those facing foreclosure, problems persist in dealing with servicers. A recent National Consumer Law Center survey of consumer advocates and housing counselors about their experiences with the mortgage servicing industry revealed ongoing problems. These problems have been present since the financial crisis began in 2008 and unfortunately continue on today.

Successors in interest (heirs, widows, and orphans) often have trouble getting even basic information about the loan as the lender does not view them as valid parties of interest. There are unnecessary hurdles in place that prevent these cases from reaching simple resolutions that would allow the successor to resume payments, keep the home, and ensure that the loan remains performing. Resolving this problem is a win-win situation for the lender and successor, and it can be accomplished with basic changes to the system and more education to all stakeholders about current regulations and requirements.

Repeated requests from servicers for documents from the homeowner is another consistent complaint. It can be an endless cycle for the homeowner and can prevent resolutions for homeowners with the capacity to pay. The definition of a “complete package” can vary depending on a borrower’s financial circumstances, and it can be difficult to get a clear answer from a servicer about which documents are needed. Servicers often ask for documents in a piecemeal fashion, or ask for the same document repeatedly with no explanation as to why.

Mortgage foreclosure suffers from issue fatigue, but it’s important that we continue to work on this problem in an effort to stabilize families and communities. A homeowner dealing with foreclosure should seek help from an experienced advocate (housing counselor or lawyer) to assist in navigating what still proves to be a complicated process.

 

RG-3Rachel Gallegos

Lead Consumer Advocate, Steve Harvey Law