Thomas F. Miles, Attorney and Counselor at Law
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Beware of student loan debt reorganization offers

Many California consumers are aware of the proposed Student Aid Bill of Rights backed by President Obama. While the directive has been issued for the Department of Education to research methods for making loan repayment easier for consumers, there is no firm plan in place for how that goal might be reached. Nonetheless, that has not stopped unscrupulous companies from promoting "Obama" debt reorganization services to troubled borrowers.

Consumers who are in search of assistance for making their debt load easier to manage should be aware that many of these heavily advertised programs charge people for services that they could receive free of charge through the federal government programs that originally issued the loans. Debt consolidation is a prime example. While there are plenty of private entities that offer debt consolidation programs, these services are available for free.

Paying for loan consolidation will not make the process any easier or more effective. It simply adds an additional monthly bill to one's already strained budget. Why would anyone want to pay $30 or more for a service that can be had for free?

Even after taking advantage of federal loan consolidation programs, many in California will still face crippling debt totals. For those who need more aggressive forms of debt reorganization, personal bankruptcy may be the answer. While bankruptcy will not lead to the discharge of most student loan debt, it can eliminate many other forms of consumer debt. That gives many borrowers the financial breathing room they need to pay down their student loans while also covering their living expenses.  

Source: USA Today, "College loans won't disappear with debt relief plans", Susan Tompor, May 17, 2015

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