The Servicemembers Civil Relief Act is a law designed to provide extra legal protections for servicemembers entering the service, being deployed or otherwise called to active duty. The law also requires a cap on the interest rate charged on student loans during a servicemembers active duty period (6%).
A recent audit of leading student loan provider Sallie Mae, revealed that only 7% of servicemembers otherwise eligible for the interest rate cap, were actually granted the cap. Out of this revelation, and potential litigation, came a settlement between Sallie Mae and the Department of Justice to the tune of $60 million. The settlement provides refunds to 60,000 servicemembers, including refunds for unfairly charged late fees as well as substantial civil penalties for Sallie Mae’s alleged violations.
The settlement is pending approval from a Judge but thereafter, a system will be put in place for aggrieved servicemembers to make their claims against the settlement fund. For servicemembers experiencing other financial turmoil, the value of their claim against the settlement fund should be closely evaluated. If you are contemplating bankruptcy, you need to disclose your estimated share of the settlement fund as an asset in your bankruptcy case and work closely with a bankruptcy attorney to determine whether your right to monies is exempt under applicable State or Federal law.
It should be noted that Sallie Mae is still being investigated by the Consumer Financial Protection Bureau. Further lawsuits, followed by subsequent settlements, could stem from the CFPB investigation as well, which in turn could mean additional settlements and funds for affected servicemembers.
-Factual details derived from HuffingtonPost.com & NY Times
-See full story here.
Tiffany Franc is an attorney in PK Law’s Corporate and Business Services Group. She provides Chapter 7 and Chapter 13 legal advice and representation to individuals, and advice on bankruptcy alternatives, including debt restructuring and rehabilitation, to consumers facing debt collection, garnishment, liens and foreclosure and is trained in handling short sales and mortgage loan modifications. Ms. Franc can also assist businesses and individuals with navigating bankruptcy as a creditor.
In addition, Mrs. Franc represents clients in adoption proceedings (adult, step-parent, 2nd parent, interstate (ICPC) and finalizations in MD of out-of-state or out-of-country placements), child custody/access and child support matters, absolute and limited divorce hearings, prenuptial agreements and settlement negotiations in family law matters.
Tiffany can be reached at 410-832-5450 or firstname.lastname@example.org.