It is common for students to pay for their education through loans. During the process of attempting to find a loan provider that will lower a student’s monthly loan payments, many students encounter companies offering fraudulent deals. If you have student loan debt, it is critical to be aware of various common refinancing scams. While bankruptcy courts have traditionally not allowed students to discharge student loans through bankruptcy, the landscape has changed significantly over the last few years. If your student loans have led you to pursue bankruptcy, you should not hesitate to speak with an experienced bankruptcy lawyer.

Advance Fee Scams

Advance fee scams involve companies who claim that they can help you receive the best interest rate and loan terms in exchange for a small fee, which can range from 1% to 5% of your total loan. These offers exist in stark contrast to other types of student loans, which do not require upfront fees. The only type of acceptable fee that comes with student loans is a default fee for federal loans or a disbursement/origination fee associated with private loans. A company that offers to help with your student loan debt should never require an upfront free unless this fee is used to pay an escrow account or third party.

Loan Consolidation Scam

If a person has multiple student loans and wants to simplify payments, it is sometimes a wise idea to consolidate loans. The most common type of consolidation scam occurs when a company asks for a fee to perform the loan consolidation and then takes no action to actually consolidate the loans.

Warning Signs

If a company intends to scam you regarding your student loan fees, there are some important warning signs, which include the following:

  • A company claims that it is associated with the Department of Education
  • The company promises debt forgiveness of an established debt amount even though your income might potentially change
  • A company claims that it will buy your loan and settle it for a fixed amount
  • The company notifies you that because your educational institution is being sued, you now qualify for debt forgiveness

Speak with an Experienced Bankruptcy Attorney

While student loans are often not dischargeable in bankruptcy, this is not always the case. If you have encountered financial difficulties after attempting to repay your student loans, it can help to speak with an experienced bankruptcy attorney. Contact attorney Jim A Lyon today for assistance.