Debt Relief Law Offices of Tampa Bay

Tampa Bankruptcy Attorney 727-849-3328

Student Loans, Old Debts and A New Marriage

Posted on Jun 11, 2014

Host: Well hello and good afternoon. Debt relief program on marriage and old debts, with us is always attorney Ziona Kopalovich. How are you young lady you get caught in the rain?

Ziona: I did, you know there is one big cloud just above Brooksville, just above Brookesville actually I should say say over the station.

Host: Right now, it’ll leave here by on o’clock trust me it’ll be gone by then. One big cloud hanging over the town there is no metaphor it is what it is.

Ziona: Right it is what it is, so I got drenched.  It’s the first time I’ve gotten drenched.

Host: Well you’re here now and that’s what is important to help the people you know with their with their debt crisis situations and this is about debt relief and you know we often spend a lot of time talking about different aspects of what can you, how you should do it, that sort of thing.  Well we speak in general terms but the specificity is king and if there is something going on, anything, going on with your debt and how to fix it, how to leave it, how bad is it, and how not so bad is it well the best way is to let us know. It’s tough to air your business sometimes on the air and we understand that, but this is your invitation is for the next 20 25 minutes or so 796-7272 if you have any questions whatsoever regarding your debt or identifying a mystery flower. You can do that as well. But we will first of all about the fact that you have you have a couple of offices you have one here the one located down in Pinellas.

Ziona: I have an office here. I have an office in Pasco, my main office is in Pasco. I have an office in Lakeland, yes I see people in Tampa and Saint Pete. And Springhill obviously.

Host: This is the reason why really see once every other week is just you’re too busy.

Zion: I’m just running around taking care of people’s financial problem, exactly.

Host: Are we getting that, I’ve asked this question before, but it’s been about you know couple of months or are we getting better are you seeing a turn up or turn down when it comes to people who are just in that place and just trying to find a way out.

Ziona: Well people always file bankruptcies. People always get into financial problems because somehow life gets you there. If you don’t get yourself there, life will. But everybody, but there is always a certain percentage of the population who’s going to be in some financial distress. So some years we pointed to the economy right? I mean we just came out of or hopefully were coming out of the housing crisis so a lot of people get caught in that and then every day accidents happen, people get sick, people lose jobs so life happens. So you don’t have to do anything active in order to be in financial distress and you add to that some bad financial decision. So there always somebody needs some help, good advice, and if not to filing bankruptcy.

Host: I think part of that is the good advice from somebody who has literally the proverbial you know been there, done that, this is what we do all the time, this is our job.

Ziona: This is our job and I love doing it I love looking at clients who come to my office. They’re so stressed and their skin has this tint of green in it because they’re not breathing. Fully, they’re just holding their breath and then I explain how to solve that financial situation they’re in. There is this release and they take a deep breath. They actually breathe, they turn pink. I love that moment I look forward to it. To see that relaxation that yes we know now. We have a plan, there is a way out of this nightmare. Because the phone is ringing the letters that coming in and you know as adults we want to think that we always pick up the phone right? You know someone calls us and we pick up the phone. We want to think that we opened the letters, but it’s a very I think humbling experience or diminishing experience when you don’t answer your phone, you don’t open letters.

Host: Right, you know that knock on the door. Like oh God don’t, it’s terrible.

Zion: Right and you’re not facing, at that point you’re not facing what you ought to be facing. Just take care of it.

Host: And it again there’s I don’t think there’s a universal point for people when it comes down to you know don’t necessarily have to feel the thump of hitting rock bottom. But there is that universal feeling of know I can handle this, I can handle this, but their just comes a time when you got to cry uncle and call time. And I think too that when it just gets overwhelming and that time when you actually feel like I have nowhere to go. That’s usually when they show up at your door.

Ziona: Right, so I mean two nights ago I spoke to a gentleman. And he waited and waited and waited and I’ll quote him. He said “Oh I should come to you a year ago,” yes you should’ve come to me a year ago. Because he came, he’s getting ready to get married. And his wife is making good income, his future wife, is making good income. So now he went from a position of being able to file a Chapter 7 to just get rid of about $100,000 in debt. To a position where it’s like hun you know, we have to start paying my bills. You know who wants to do that? He doesn’t want to face that, he doesn’t want to tell his future wife that she is going to have pay his debt. She I’m sure is going to be mortified when he tells her that. So we spoke a little bit and I told him you know what you need to do is actually postpone the wedding. And I mean his face became [???] because he said you know we’ve been postponing that for so long. Now he is afraid to tell her and she’s going to think he doesn’t love her or he’s you know he’s backing out. Which he is not, I mean his lawyer said you got to do that so as not to involve your new wife in your past life. So that’s what he is going to do, is postpone the wedding. So I’m sorry. But you know in the long run it will work better for both of them, absolutely.

Host: And being perfectly mercenary you know to take the emotion of which is difficult, but you know for her she has to understand that this is only going to benefit her.

Ziona: I think they had a talk and she agreed. So she agreed so they are on the same page. They will postpone but they will get married and they will hopefully have a happy life.

Host: Well the other part of it to. I mean you’re walking into your marriage with $100,000 of debt and that is not a good way to start a marriage.

Ziona: That is not a good way to start a marriage, and it was pride I can do it, I can do it, I can do it. And you know what, you can’t do it.

Host: But what do you think is the biggest factor in people for no when it comes to marriage or other things.

Ziona: I think it’s pride. I mean it’s not false pride or bad pride, it’s just that we don’t want to think of ourselves as having failed and we set out to do.

Host: Well I think though that you can kind of almost forgive that, well not forgive that, but certainly to understand that. Because especially you know you didn’t anticipate having to be in hospital for X amount of time. And how much how much bankruptcy it is the precursor is a medical whatever.

Ziona: I mean oh my God, countless. Just about every kind that debt that they have, there is big chunk of medical debt.

Host: Sure. Well let me ask you this in relation to I know it varies from state to state I’m sure it does. You know in that situation you know should they not have decided to postpone this? Once that wedding would’ve happened then that would’ve been her debt as well. Is that true? How does that work.

Ziona: No. It is not her debt, so creditors cannot come after her. But they call the phone number at home so she’s at home, so here’s the headaches she has to deal with. Okay now in terms of the bankruptcy, the debt is not hers but the court looks at the household income and expenses. So this is where her money comes in, and they look at the money come in and the theory behind it is now he does if she’s paying the mortgage or the rent now he doesn’t have to pay. Or let’s say his expenses for the home have cut in half so he can use it rest of it to pay creditors okay? So that’s where it comes in now in some cases where a couple had just gotten married and the husband came in saying my wife is going to divorce me if she has to pay a penny toward my debts. And he was really worried that she would do that. And we were able to plead with a trustee to let him find us and his income proving that all the debt was his and it had nothing to do with her. They allowed him basically to get away with that.

Host: Well that’s more of an exception to rule.

Ziona: More for an exception yeah. I had to plead in you know. We try to control it before we file so that we have good outcomes and that’s what we’re looking for. We are looking for a good outcome it doesn’t make any sense to going to it and end up in the same place.

Host: And that’s true. There is a uniformity to it when going through the entire process but it definitely does have its nuances based on your particular situation.

Ziona: Correct, I mean you are looking at income, expenses, we are looking at family size, I mean you can make the same income but you have one child, no children, or five children on the same income. It is a huge, makes for a huge difference in the outcome. Also we look at assets, you can’t just have a whole bunch of assets and not pay your debts. That is not going to happen.

Host: No, no, no not going to happen. The golden rule that I’ve learned out of this and I’ve actually read a couple of other different things that are supported in in terms of finances and such is that $4000 credit card limit for them. Because I think that’s the other thing that gets a lot of people into trouble is just your credit card debt.

Ziona: Okay so you have $4000 in credit card debt and how many cards can you have?

Host: Well how many should you have? Or can you have?

Ziona: You see what I am saying, if you’re going to limit the amount on the card. Now I don’t think it’s right to penalize the whole country for a certain percentage of individuals who cannot control the spending on credit cards. Because there are people who use credit cards for travel, for different purchases and have paid or able to pay it off in full more than $4000. So why penalize people who can do it? So I think credit is individual and we all handle credit differently and we take a risk. I mean any time you take a loan for your home, you are taking a risk. You can clearly consider who can only buy homes or borrow up to $20,000 on a home. I mean you can’t do that.

Host: Beyond one of the things that’s been in the news a little bit lately is the president’s been going on about you forgiveness of debt for student loans and such. Student loans are an interesting.

Ziona: New up-and-coming disaster.

Host: It really is, it really seems to be but it’s always been part of if you get a bankruptcy, if you get a discharge that stays.

Ziona: Yeah, so that stays. You may remember two weeks ago in which we were talking and I said how I was going to Washington DC. To go to a seminar on student loans. That will was a whole day of it felt like sitting in the mud. Very complicated area, very sore area. Let me just give you an example of how bad things are in the student loan area. This country is mired in the discussion of the high rise of medical expenses right? So in the last 10 years, 5 to 10 years, medical expenses went up 40% and everybody is up in arms 40% of medical of rising medical costs. Is just too much. Give me a guess of the difference in student loans, and student, and in books for college. More than it was from 10 years ago?

Host: Oh my gosh. 10 years ago well yeah because 10 years ago my daughter was my eldest daughter was in school and now my youngest is, yeah.

Ziona: So it’s higher?

Host: Oh sure.

Ziona: By how much do you think it rose on the average?

Host: A percentage? Or in dollars?

Ziona: A percentage. For the whole country the average.

Host: The whole country? Wow, okay I didn’t know math would be involved but 20%.

Ziona: Okay you’re wrong.

Host: Well I’d thought so.

Ziona : Are you sitting down? Because I don’t want you to fall.

Host: No, no, no I am leaning. And I am very anchored.

Ziona: Okay 80%, 80%. Double the medical cost rise. 80%. And the debt is sitting who? On mostly our youngest citizens, kids coming out of high school. So innocent, we talk about the face of innocence a few minutes ago. The face of innocence high school and they want to go to college, they want to get a good education, and they signed those papers and they have no idea what they’re getting into. So you have you know if Obama wants, you know president Obama wants to forgive students. Fine, but I don’t see this government or any you know going toward doing that anyhow. In the last thing I think four years or so the US government made. Are you sitting down? $99 billion in student loans. They made that money.

Host: Wow, wow, wow, wow. That is racket right there. You know we were just we would with my daughter you know she is in order. She took a $10,000, she probably used may be maybe $3000, she’s going into her junior year. And the rest of it is still sitting there, that part isn’t collecting interest thanks God. The other part of it is we were talking about yesterday, she goes like I just want to do everything I possibly can to not take another loan and not use what’s there. It’s a life sentence for me for a lot of these people, if you’re getting into a high-grade education you’re be paying that off for 40 years.

Ziona: And you’re never going to be able to pay it off. Not going to get a job to pay it off, and you know it can happen to your credit and credit score? What happens to your ability to partake in the financial life of this country? Buying a home, buying a car getting insurance you know because they often the base your insurance rate on your credit rating. A total disaster and another thing that they do and kudos for your daughter.

When as soon as you graduate or if you drop out of school and that happens anything you want to study something and two years later you know two semesters later you know let me drop out your student loan becomes due after six months, right? But during those first six months it accrues interest sometimes it accrues interest while you’re still in school. And you know it happens that interest? That capitalize on it. In other words they added to the principal. So instead of borrowing having borrowed let’s say $10,000 to go to school to do it whatever.

By the time you get ready to pay back its $14,000 and then after that if you get a deferment or a forbearance. Which forbearance for sure capitalizes your interest affirmance depending on the loan that you’ve taken you know after about let’s say 5 6 years, you end up with $20,000. By the time he went to pay you will have paid back approximately $35,000 on the $10,000 loan. It’s is a racket, that’s why I don’t think they’re going to eliminate it. They’re not going to forgive it.

Host: No, not if they’re making that much money.

Ziona: It’s so much of a good deal. If you are in default and to get reinstated into good graces and some of those programs they give you nine months of consecutive payments. To show that you are worthy of having your loan put in good graces again. Ad after that then you get the loan gets to be reinstated, so the collection agency you get to work it out with they get to keep those nine months payment. It does not go toward.

Host: No so you are essentially handing them.

Ziona: Basically handing them into a big black hole. And you know that’s where it goes into the proverbial big black hole. Into an abyss. And then the next thing they do is they add about 18.5% of the outstanding loan and capitalizing again.

Host: So now they know that they were tacking onto that and we’re another 18.5%.

Ziona: Almost 20%! It depends on the loan, if it’s a Perkins loans it is at 25-24%. And you know almost a quarter of a loan. And now you can start making payments.

Host: To get an education and there’s no job out there.

Ziona: Total disaster, total disaster. So this is on a $10,000 loan, so can you imagine someone goes to medical school? And they come out with hundreds of thousands of student loans. So they do have, and I don’t want to leave you or everybody despondent about it. Because there are repayment programs and they will work with you and if you make those payments you know more or less I’m going to the defendant had like 10 different repayment programs. But after it varies if you’re in the military and not in the military center there you know like I said there is 10 different programs on some of them you pay as little as zero and you pay zero every month and if you do 25 years and they forgive it. But this is only if you income is such that you cannot do it and you know they will takes $50 a month for 10 years and then if you fall into a different category they may forgive it some of those things. It extends anywhere between 10 to 30 years of having to deal with paying back those student loans

Host: Oh my God, so you have people that are forty years old paying over $10,000 loan to get a liberal arts degree to go work at subway.

Ziona: And if you if you don’t pay they can go after for example your Social Security payment, tax refunds, you know they can go after those.

Host: And you know the sad part is in the United States for an education.

Ziona: For an education that this country should be interested in educating young people, right?

Host: You think it’s not like their blowing on a powerboat or something they’re paying for their college tuition. Yikes. Welcome to college, here is your first lesson in life.

Ziona: Don’t borrow money.

Host: Now I’m going to have to go back to really look at that agreement my daughter has just get that crap taken care of immediately.

Ziona: Read it, get a job, also maybe go to school part time, or go to school full time and get a part-time job. It’s more difficult granted, but it pays off a lot so obviously I’ll be the last person to talk against education and another thing for you know for those of us who can go for scholarships if you can maintain this is for the young people. If you maintain a good grade point average and get good grades it is a gift given to you to know to get scholarships, the cheapest of education.

Host: You know I’ll tell you what I think it is, I think it’s unbelievably educational and I think it’s one of those things and people just need to be aware of this stuff. I think one of the problems is we fall into these traps because we don’t investigate it completely and you know if you start your life out if you start your credit life out with something like and yet you are that you spend the rest of your life trying to catch up. And in the end it’ll kill you.

Ziona: And when you know you’re young you have no assets, how are you going to do that now you know it financial economic situation in this country, on top of it?

Host: Well I tell you what let’s get the numbers we got about 30 seconds you know that’s how good you’ve been today I mean that’s just you got 20 seconds left to give us your phone numbers real quick.

Ziona: Okay, area code 8 I’m sorry 7 I was about to give my cell phone number.

Host: Okay you don’t want to do that.

Ziona: 727-849-3328 and in this area 352-6782265

Host: Fantastic.

Ziona: Thank you