The attorney general of Illinois has sued five companies that it claims broke state law when it demanded upfront fees in exchange for assistance with student loan repayment problems. The companies named in the lawsuit reportedly asked for as much as $1,250 to provide services, and none of the amount paid went toward the borrower's student loan balances. One of the main goals of the lawsuit is to help victims regain their money.
However, there was no specific plan in place to help those effected get a refund. In almost all cases, borrowers should be able to get information about debt relief or student loans without having to pay for it. Additionally, borrowers in any state may be able to negotiate a flexible repayment plan with their loan providers. This is often true whether the loan is a private or a federal loan.
Such schemes have previously targeted those who are behind on their mortgages or credit card debt. As student loan debt grows and it becomes harder for many to stay current on their payments, those who have these types of obligations have become more vulnerable to less than ethical debt relief companies. A hotline and website have been setup in Illinois to help educate borrowers, but some of the information may be relevant to borrowers in Texas and other states.
Those who are looking for a fresh financial start may wish to consider filing for bankruptcy. Bankruptcy may allow for certain unsecured debts to be discharged, which means creditors can no longer pursue them. As soon as a petition is filed and approved, a stay may be granted by the judge and creditors cannot continue with any legal or collections efforts against the debtor. An attorney may provide more information about the eligibility and other requirements associated with a personal bankruptcy filing.