Heaps of Navient Private Student Loans May Be Voided and Refunded in Nationwide Class Action Suit

In a suit filed in 2016 by Evan Haas and Michael Shabazi against Navient Solutions and Navient Credit Finance Corporation an interesting position was taken that myself and others have previously presented. While many assume incorrectly all student loans are protected from discharge in bankruptcy, that does not appear to be a factual statement. If a loan was not protected and discharged in bankruptcy then the continued collection of those loans would create a massive liability for Navient, refunds for consumers, and possibly legal awards and attorney fees.

The suit was filed by a number of attorneys and firms. One of those attorneys is our friend Austin Smith with Smith Law Group. Full information on all the attorneys involved will be below.

I’ve written about the underlying problems with many of the Navient, and other, private student loans. The suit filed in this case sums it up best by saying, “For the last ten years, Defendants have been engaged in a massive effort to defraud student debtors and subvert the orderly working of the bankruptcy courts. Specifically, Defendants have been originating and servicing dischargeable consumer loans and disguising them as non-dischargeable student loans. Defendants have done this in order to discourage debtors from seeking their constitutional right to relief under Title 11 and to allow creditors to continue to collect on discharged loans after a debtor’s bankruptcy. In order to effectuate this illegality, Defendants have appropriated a legal presumption for a class of debt that they know is not entitled to that presumption, thereby using the authority of the bankruptcy courts to cloak their fraud in the color of law and escape detection. Defendants are willfully and maliciously engaged in a pattern and practice targeted at some of society’s most vulnerable persons that they know defiles the proper workings of the bankruptcy process. Plaintiffs bring this action to enforce their rights and the rights of those similarly situated under law.”

From an open eyed look at the facts, Navient has known some of their private student loans were not protected in bankruptcy, even though they argued otherwise. In some written filings Navient told investors the loans were not Title IV loans and thus not protected.

The suit is primary about student loans that are non-qualified education loans and the suit seeks to have the following types of loans consumers included in a previous bankruptcy, eliminated private educational loans made to students attending non-Title IV accredited schools. If you’d like to search for a specific school, or verify whether a school is Title IV, you can do that here.

The suit sheds some additional light on these disclosures, “During the same time, student lenders were securitizing these debts for sale on the secondary market. Lenders were rightfully concerned that if they represented to investors that all private student loans were non-dischargeable in bankruptcy, sophisticated investors would easily enough discover the misrepresentation (based on a plain reading of the statute), and issuers would be liable for securities violations. Major lenders and underwriters thereafter included in student loan asset-backed securities’ prospectuses language warning investors that, pursuant to section 523(a)(8), only private loans made for qualified expenses were excepted from discharge.12 In addition, Navient has been warning shareholders in investor presentations that Career Training loans—i.e., one form of non-qualified loans made to students at unaccredited colleges and high schools — are dischargeable in bankruptcy.”

The loans targeted in this suit are non-qualified educational loans. And Navient wasn’t the only lender to make these kinds of loans.

“Non-qualified education loans” include:

  • Private loans that were not made for “qualified educational expenses,” meaning that the funds were not used for a traditional four-year college. These loans include career training loans and loans made to students for some post-graduate programs such as:
  • Airline Training School Student Loans
  • Flight Schools Student Loans
  • Tractor Trailer School Student Loans
  • Culinary School Loans
  • Bar Exam Loans
  • Study Abroad Loans
  • Caribbean/Foreign Medical School Loans
  • Cosmetology School Loans
  • Paralegal School Loans
  • Heavy Equipment Operation School Loans
  • Tutoring Loans
  • K-12 Student Loans
  • Medical Billing School Loans
  • Medical School Residency Loans
  • Dental School Residency Loans
  • Art School Loans
  • Fitness School Loans
  • Holistic Health School Loans
  • Mechanic School Loans

This current class action case allows people to joining the suit “who filed for bankruptcy protection since 2005 in the various Judicial Districts of the United States with educational loans originated and/or serviced by Defendants or their predecessors that do not meet the definition of a qualified education loan in IRC 221(d) and 11 U.S.C. § 523(a)(8) and were subject to attempts to induce payment on those loans after discharge.”

This lawsuit further alleges that debtors who have already repaid debts to Navient which should have been discharged in their bankruptcies may be entitled to a refund of all or some of the money they have repaid Navient since their bankruptcy discharges.

If you think you may be covered by the class action lawsuit you should contact one of the firms below and find out how you can participate.

You can read the suit filed here.

Attorneys Pursuing This Class Action Case on Behalf of Consumers

Jason W. Burge (admitted pro hac vice)
Kathryn J. Johnson (admitted pro hac vice)
201 St. Charles Avenue, 46th Floor
New Orleans, Louisiana 70170
Telephone: (504) 586-5252
Facsimile: (504) 586-5250

Austin Smith (admitted pro hac vice)
3 Mitchell Place
New York, New York 10017
Telephone: (917) 992-2121

Catherine E. Lasky (admitted pro hac vice)
Kerry Murphy (admitted pro hac vice)
601 Poydras Street, Suite 2655
New Orleans, Louisiana 70130
Telephone: (504) 523-2500
Facsimile: (504) 523-2508

Joshua B. Kons (admitted pro hac vice)
939 West North Avenue, Suite 750
Chicago, Illinois 60642
Telephone: 312-757-2272

Mark Douglas Myers
7700 San Felipe, Suite 550
Houston, Texas 77063
Telephone: 713-626-1700
Facsimile: 712-623-6014

Adam Corral
Susan Tran
Brendon Singh
440 Louisiana St, Suite 2450
Houston, Texas 77002
Telephone: (832) 975-7300
Facsimile: (832) 975-7301

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

Be Radical, Get Rich!

Have you ever noticed that lots of “radical people” get rich, while lots of average people just stay average? And in our economy, average usually means in debt, living paycheck to paycheck, and on the verge of financial collapse depending on the whim of the economy. Here are some ideas for becoming financially radical (and rich in the process):

  1. Pay cash for everything. Yes, I know that people don’t use cash much anymore, but there are some good reasons to do this, namely you will never go into debt if you only use the cash you have on hand for your wants and needs (be sure to get a receipt for all of your purchases). Plus it’s fun to watch people who rarely take cash any more struggle with the concept of giving change.
  2. Stop using credit cards and cut them up. Such an idea may be considered blasphemy in our credit-obsessed society, but (see number one above) if you never use credit cards, you will never be subjected to the interest, late fees, over limit fees, random reduction of credit limits, etc. imposed by the credit companies.
  3. Buy the minimum that will satisfy your needs. If you aren’t an astrophysicist or a compulsive gamer, consider buying the least computer you need. The same is true for trucks (Do you really need one that could pull a semi out of the ditch?), diamonds (If your girlfriend won’t marry you because you gave her a half karat ring instead of something resembling the Hope diamond, here’s your sign.), and most other things.
  4. Live on half of your salary and bank the rest. Impossible you say? Actually there are people in our country who actually do such a crazy thing, and eventually they become crazy rich.
  5. Become debt free. This means the only bills you have coming in each month are for the phone, water, gas, sewer, and other utilities. Close your eyes and imagine what your life would look like if your paycheck was all yours and not already spent before you get it. Amazing thought, huh?
  6. Take care of your own needs. Mow your own lawn, clean your own gutters, color your own hair, and fix your own plumbing problems. Basically any service the “average person” would pay for can, and should, be done by you. You will save a lot of money and gain some very valuable skills that you can then sell to others who aren’t nearly as radical as you.
  7. Participate in the underground economy. Should your plumbing experiments go awry (see #6 above), do the next best radical thing and barter for the services you need. The underground economy also includes shopping garage sales, shopping thrift stores, buying from farmer’s markets, and the like.
  8. Be self-employed. I cannot rave about this method of earning a living enough. Set your own hours, be as creative as you want, and work more/make more. All of these are good reasons to employ the best person you know, yourself!
  9. Learn from other financially radical people. The Internet has been a boon to knowledge hungry people who don’t want to follow the status quo. Want to learn how to retire by 30? There are people who have done it and you can find them online. Want to know what it is like to live cash-only? There are plenty of blogs and newsletters to tell you all about this as well.
  10. Don’t be afraid to be weird. You can be weird by having five part-time jobs that you love instead of one job that you can barely tolerate. You can be weird by working double time, living in your truck, then paying cash for a house after a couple of years of doing this. One man actually did this some years ago. He also made the front page of many newspapers for his non-conventional, but ultimately quite successful way of doing things.

You will never get ahead by doing what the masses do because the masses are broke. If you really want to succeed, you need to look at your situation in a whole new way and be willing to do some radical, according to society, things to launch you into the financial stratosphere.

This article by April Borbon first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.

The Keys to a Good Car Deal

Buying a new (or new-to-you) car from a dealership can be a harrowing experience. Your money is on the line, your ego takes a beating, and you worry about getting stuck with a lemon. It doesn’t have to be this way. Here are some tips on scoring a great deal at the dealership.

The key to getting the car you love at the price you want is to put the car in second place. You’re not shopping for the automobile. Instead, you’re shopping for the deal. There are more than enough excellent cars out there that will meet your needs. You will find one, but you are shopping for a deal, which comes with the car you want attached to it.

Before you visit the dealership, take a deep breath. Car dealers try to inject urgency into the transaction, but you don’t have to play along. Your priority is to get the car you want at the price you want to pay. Consumer advocate and former car salesman Michael Royce notes, “The car salesman’s goal is to sell you a car or a truck that is in stock at the highest possible price today.”

Be flexible. Focus your car search on several possible choices. If you know you want a reliable sedan, look for two or three different makes and models, because being flexible about the car increases your chances of getting a good deal. If the Nissan dealer knows you’re comparing his Altima to Accords and Camrys, he’ll make more allowances than if he’s just competing with his buddy at the Nissan dealer in the next town over.

Research before you buy. Doing your homework means you read reviews of the car, you check out Consumer Reports and other reputable sources, and you consider the features you want. Royce recommends getting free price quotes from local dealers via the internet or from reputable sources like Edmunds. Check out the CarFax once you’ve narrowed your choice to a specific car if you’re buying a used car.

Remember that you have the power. Don’t feel intimidated by the car dealer. You’re still in charge when he or she sends over a manager to talk to you, which is standard operating procedure in car dealerships. The bottom line is you don’t have to please them or persuade them to sell you a car. They have to please you by giving you an attractive deal.

Practice saying no. Once you’ve agreed on the price, you’ll meet the F & I guy (Finance and Insurance). This person may also be called the business manager. His or her job is to have you sign the paperwork, but there’s more to it than that. This is the upsell department. Would you like to have the upholstery treated to avoid stains? An extended warranty? Insurance to pay off the car if you die? Royce says, “Car dealerships often make more profit from the financing of the vehicle and the sale of ‘extras’ sold in the business office than from the actual sale of the vehicle itself.” Anything you agree to with F & I will cost you money. Don’t be afraid to say no.

You might have to walk. Embrace this possibility. You may have to say, “This deal won’t work for me.” You might have to get up, gather your papers, and leave. Nine times out of ten, the deal will suddenly get sweeter. If it doesn’t get sweeter to the point where you can return to the table, it’s okay. Leave in good conscience, knowing you’ll likely get a call in a day or two from a humbled salesperson who is ready to listen to you. The worst case scenario is you’ve eliminated a dealer who won’t work with you anyway and saved yourself time.

Fall in love with the car after you buy. Remember that the deal has to be right, so keep your emotions in check until you’ve gotten the deal you need.

These tips can help you to get the deal you want and find the car you can fall in love with within your budget. Happy car shopping!

This article by Nancy Rusk first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.

Catholic Priest Sentenced to Prison for Tax Evasion and Bank Fraud

A priest for the Roman Catholic Diocese of San Jose was sentenced to 36 months in prison, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Brian J. Stretch for the Northern District of California.

According to documents and information provided to the court, from 2008 through 2011, Hien Minh Nguyen stole money that his parishioners donated to the Diocese of San Jose through cash and checks made as offerings during religious services.  He deposited such checks into his personal bank account and used the funds for his benefit.  He also wrote checks drawn on church business accounts to pay for personal expenses.  Nguyen evaded paying income taxes on the money he stole, concealing his embezzlement from his return preparer.  The court found that he embezzled $1,449,365 from the Catholic Church, and evaded $582,453 in individual income taxes that were due and owing to the Internal Revenue Service (IRS).

In addition to the term of prison imposed, U.S. District Court Judge Beth Labson Freeman ordered Nguyen to serve three years of supervised release and to pay a total of $1,883,883 in restitution, including $434,518 to the IRS.  Nguyen previously pleaded guilty to tax evasion and was convicted of bank fraud following a bench trial.

Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch commended special agents of IRS Criminal Investigation, who conducted the investigation, and former Trial Attorney Gregory Bernstein of the Tax Division and Assistant U.S. Attorneys Michael Pitman and Thomas Moore, who prosecuted the case.

Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.

This article by the Department of Justice was distributed by the Personal Finance Syndication Network.

CFPB’s First National Survey on Financial Well-Being Shows More Than 40 Percent of U.S. Adults Struggle to Make Ends Meet

The Consumer Financial Protection Bureau (CFPB) released the results of a first-of-its-kind national survey on the financial well-being of U.S. consumers that showed that more than 40 percent of U.S. adults struggle to make ends meet. The survey provides measurements and insights on the financial well-being of specific groups of consumers as well as the population as a whole. In addition to the survey, the Bureau also released an interactive online tool allowing consumers to measure their level of financial well-being.

“These survey results are beginning to measure and examine the financial well-being of consumers,” said CFPB Director Richard Cordray. “And the new tool we are releasing allows consumers to measure their own financial well-being and helps them take better control of their financial futures.”

National Financial Well-Being Survey

The National Financial Well-Being Survey was conducted by the CFPB in 2016. Using the 10 question scale developed by the CFPB, the survey provides the first-ever national data directly measuring the financial well-being of U.S. consumers. Upon answering the 10 questions provided, consumers were given a score from 0-100. In the survey, the average consumer score was 54. The consumer sample used to conduct the survey was designed to be representative of U.S. households. In addition to responding to the questions which are included in the financial well-being scale, people participating in the survey answered questions about a host of other measures. These measures include individual, household, and family characteristics; income and employment; savings and safety nets; financial experiences; and money behaviors, skills, and attitudes. Major findings from the report include:

  • More than 40 percent of adults report struggling to make ends meet: Of the nationally representative sample of consumers surveyed, 43 percent of consumers report struggling to pay bills. Additionally, over one third—34 percent—of all consumers surveyed reported experiencing material hardships in the past year. For the survey, examples of material hardships include running out of food, not being able to afford a place to live, or lacking the money to seek medical treatment.  
  • Certain financial and demographic characteristics are associated with financial well-being: Educational attainment, income, and employment status all appear to have a strong relationship with financial well-being. Additionally, the survey showed that financial well-being is higher for older adults, especially those aged 65 and older, whose average score was 61. On the other end of the spectrum, younger adults, those 34 and younger, tended to have the lowest financial well-being score with an average of 51. 

The Financial Well-Being in America report can be found at: http://files.consumerfinance.gov/f/documents/201709_cfpb_financial-well-being-in-America.pdf

Financial Well-Being Tool

The CFPB is also releasing an interactive online tool to enable people to evaluate their own financial well-being and explore ways to take control of their finances. This new tool is based on the CFPB Financial Well-Being Scale, which was released in 2015 for use by financial education professionals working with consumers. The tool allows consumers to use the financial well-being scale themselves, and see their resulting financial well-being score online. Consumers can track their financial well-being score over time, or see how they compare to other consumers nationally, including by income, age, and employment status. Additionally, consumers can access CFPB resources to help take control of their finances and make progress towards financial goals, and find free or low-cost help from financial professionals. 

The Financial Well-Being Tool can be found at: www.consumerfinance.gov/consumer-tools/financial-well-being


The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

This article by was distributed by the Personal Finance Syndication Network.

Seven factors that determine your mortgage interest rate

If you’re like most people, you want to get the lowest interest rate that you can find for your mortgage loan. But how is your interest rate determined? That can be difficult to figure out for even the savviest of mortgage shoppers. Knowing what factors determine your mortgage interest rate can help you better prepare for the homebuying process and for negotiating your mortgage loan.

Your lender knows how your interest rate gets determined, and we think you should, too. Our Explore Interest Rates tool lets you plug in some of the factors that affect your interest rate. You can see what rates you might expect—and how changes in these factors may affect interest rates for different types of loans in your area.

Even saving a fraction of a percent on your interest rate can save you thousands of dollars over the life of your mortgage loan, so it definitely pays to prepare, shop around, and compare offers. 

Armed with information, you can have confident conversations with lenders, ask questions, and understand your loan choices. Interest rates, just like gasoline prices, can fluctuate from day to day and from year to year. While movement in the interest rate market is outside of your control, it makes sense—just like with gasoline prices—to gain awareness about what’s typical. This way, you’ll have a sense of whether an interest rate quote you receive appears to be in the range of typical rates, or if you should ask more questions and continue to shop around. 

Here are seven key factors that affect your interest rate that you should know

1. Credit scores

Your credit score is one factor that can affect your interest rate. In general, consumers with higher credit scores receive lower interest rates than consumers with lower credit scores. Lenders use your credit scores to predict how reliable you’ll be in paying your loan. Credit scores are calculated based on the information in your credit report, which shows information about your credit history, including your loans, credit cards, and payment history. 

Before you start mortgage shopping, your first step should be to check your credit, and review your credit reports for errors. If you find any errors, dispute them with the credit reporting company. An error on your credit report can lead to a lower score, which can prevent you from qualifying for better loan rates and terms. It can take some time to resolve errors on your credit reports, so check your credit early in the process. 

Enter your credit score range into our Explore Interest Rates tool to get information on the rates available to you. If you don’t know your credit scores, there are many ways to get it.  

You can also experiment with the tool to see how you might save more on your mortgage interest rate with higher credit scores. Learn more about things you can do to raise your credit scores

2. Home location

Many lenders offer slightly different interest rates depending on what state you live in. To get the most accurate rates using our Explore Interest Rates tool, you’ll need to put in your state, and depending on your loan amount and loan type, your county as well. 

If you are looking to buy in a rural area, our Explore Interest Rates tool will help you get a sense of rates available to you, but you’ll want to shop around with multiple lenders, including local lenders. Different lending institutions can offer different loan products and rates. Regardless of whether you are looking to buy in a rural or urban area, talking to multiple lenders will help you understand all of the options available to you. 

3. Home price and loan amount

Homebuyers can pay higher interest rates on loans that are particularly small or large. The amount you’ll need to borrow for your mortgage loan is the homeprice plus closing costs minus your down payment. Depending on your circumstances or mortgage loan type, your closing costs and mortgage insurance may be included in the amount of your mortgage loan, too. 

If you’ve already started shopping for homes, you may have an idea of the price range of the home you hope to buy. If you’re just getting started, real estate websites can help you get a sense of typical prices in the neighborhoods you’re interested in.

Enter different home prices and down payment information into the Explore Interest Rates tool to see how it affects interest rates in your area. 

4. Down payment

In general, a larger down payment means a lower interest rate, because lenders see a lower level of risk when you have more stake in the property. So if you can comfortably put 20 percent or more down, do it—you’ll usually get a lower interest rate. 

If you cannot make a down payment of 20 percent or more, lenders will usually require you to purchase mortgage insurance, sometimes known as private mortgage insurance (PMI). Mortgage insurance, which protects the lender in the event a borrower stops paying their loan, adds to the overall cost of your monthly mortgage loan payment. 

As you explore potential interest rates, you may find that you could be offered a slightly lower interest rate with a down payment just under 20 percent, compared with one of 20 percent or higher. That’s because you’re paying mortgage insurance—which lowers the risk for your lender.

It’s important to keep in mind the overall cost of a mortgage. The larger the down payment, the lower the overall cost to borrow. Getting a lower interest rate can save you money over time. But even if you find you’ll get a slightly lower interest rate with a down payment less than 20 percent, your total cost to borrow will likely be greater since you’ll need to make the additional monthly  mortgage insurance payments. That’s why it’s important to look at your total cost to borrow, rather than just the interest rate.

Make sure you are factoring in all of the costs of your loan when you are shopping around to avoid any costly surprises. You can use our Explore Interest Rates tool to see how different down payment amounts will affect both your mortgage interest rate and the amount of interest you’ll pay over the life of the loan. 

5. Loan term 

The term, or duration, of your loan is how long you have to repay the loan. In general, shorter term loans have lower interest rates and lower overall costs, but higher monthly payments. A lot depends on the specifics—exactly how much lower the amount you’ll pay in interest and how much higher the monthly payments could be depends on the length of the loans you’re looking at as well as the interest rate.  

Learn more about your loan term, and then try out different choices with our Explore Interest Rates tool to see how the length and rate of your loan would affect your interest costs.

6. Interest rate type

Interest rates come in two basic types: fixed and adjustable. Fixed interest rates don’t change over time. Adjustable rates may have an initial fixed period, after which they go up or down each period based on the market.

Your initial interest rate may be lower with an adjustable-rate loan than with a fixed rate loan, but that rate might increase significantly later on. Learn more about interest rate types and then use our Explore Interest Rates tool to see how this choice affects interest rates. 

7. Loan type

There are several broad categories of mortgage loans, such as conventional, FHA, USDA, and VA loans. Lenders decide which products to offer, and loan types have different eligibility requirements. Rates can be significantly different depending on what loan type you choose. Talking to multiple lenders can help you better understand all of the options available to you. 

Learn more about the different types of mortgage loans in our Owning a Home tool.

One more thing to consider: The trade-off between points and interest rates

As you shop for a mortgage, you’ll see that lenders also offer different interest rates on loans with different “points.”

Generally, points and lender credits let you make tradeoffs in how you pay for your mortgage and closing costs.

  • Points, also known as discount points, lower your interest rate in exchange for an upfront fee. By paying points, you pay more upfront, but you receive a lower interest rate and therefore pay less over time. Points can be a good choice for someone who knows they will keep the loan for a long time.
  • Lender credits might lower your closing costs in exchange for a higher interest rate. You pay a higher interest rate and the lender gives you money to offset your closing costs. When you receive lender credits, you pay less upfront, but you pay more over time with the higher interest rate. Keep in mind that some lenders may also offer lender credits that are unconnected to the interest rate you pay—for example, a temporary offer, or to compensate for a problem.

There are three main choices you can make about points and lender credits:

  1. You can decide you don’t want to pay or receive points at all. 
  2. You can pay points at closing to receive a lower interest rate. 
  3. You can choose to have lender credits and use them to cover some of your closing costs but pay a higher rate. 

Learn more about evaluating these options to see if points or credits are the right choice based on your goals and financial situation. 

Now you know

It’s not just one of these factors—it’s the combination—that together determine your interest rate. Everyone’s situation is different, which is why you can use our Explore Interest Rates tool to see what you can expect based on your personal factors.

By understanding these factors, you’ll be well on your way to shopping for the right mortgage loan—and interest rate—for you and your situation. Not all of these factors are within your control. But understanding how your mortgage interest rate is determined will help you be more informed as you shop for a mortgage.

Just remember:

  • Use the Explore Interest Rates tool to help you decide what’s right for you.
  • As you consider your budget and make decisions about things like your down payment amount and home price, check the Explore Interest Rates tool often. The more you know, the more accurate the rates will be. 
  • As you start talking to lenders, compare their offers to the rates in the tool—and to offers from other lenders—to see if you are getting a good deal and to help negotiate the best deal for you.

We’ve got a lot of information to help you get started

If you’ve decided now is the right time to buy, our tools and resources can help you get started. 

  • Get a copy of Your Home Loan toolkit for an overview of the process and some tools to help you define what affordable means to you.
  • Visit Owning a Home to help you navigate the process from shopping for a mortgage all the way to closing.
  • Check out Ask CFPB, our database of common financial questions. 

Editor’s note: This post was originally published on January 20, 2015. We’ve updated it to provide more comprehensive information and to include updated links to our Owning a Home tools and resources.

This article by was distributed by the Personal Finance Syndication Network.

The Right and Wrong Kinds of Side Hustles

These days it seems the term “side hustle” is everywhere you look. This might lead some to assume that — as this Uber commercial proclaims — everyone needs one. However the truth, as it tends to be, is far more nuanced than that. Yes, there are plenty of potential opportunities in the side hustle space but there are also several instances where they’re either unnecessary or downright harmful. If you’re considering jumping on the side gig bandwagon, here’s a quick guide to when they’re worth your time and when you should stay away:

When side hustles are good

Turning hobbies into profit

Of all of the gifts the Internet has given us over the years, perhaps the greatest has been the ability to make money doing what you love. Whether you enjoy showing your creativity or sharing your knowledge by making videos for YouTube or like to create and sell crafts on Etsy, there are several opportunities to turn your passions into profit using the glorious world wide web. Better yet, many of these hobby-based side hustles don’t require a ton of capital to get started and if nothing else can help subsidize your hobby.

Setting up your next act

One of the best reasons to start a side hustle is to set up something that will hopefully blossom into a future career. Perhaps you have a great business idea you’re anxious to get off the ground but aren’t quite ready to take that leap of faith and leave your day job — why not get things started in your spare time? Granted there are certainly challenges with trying to build a business when splitting your time, but hopefully doing so will at least allow you to prove your concept and get you far enough to eventually make the transition to full-time.

Making ends meets

While making some fun money or building a business on the side can be great, sometimes you may just need a side hustle to help pay the bills and put food on the table during a rough patch. That’s where ride-share services like Uber, home rental sites like Airbnb, and other gig economy businesses like TaskRabbit have really come to the rescue for some. By leveraging your existing assets — be it your car, an extra room, or your skills — via these services and others, you may be able to make ends meet until you can get back on your solid ground.

When side hustles are bad

Overextending yourself

Side hustles can be really great… until they’re not. At some point, you may need to ask yourself if the added workload is worth it and/or if your extra endeavors are negatively affecting your main gig, family life, or even your health. Remember: as nice as having extra money is, make sure you’re not sacrificing too much to get it.

Making money to offset overspending

I recently came across a great blog post by Holly Johnson of Club Thrifty that shared an anecdote about a friend of hers. As the story goes, this friend approached Holly saying she was looking for a side hustle to make some additional cash. The thing is, it’s not that the person in question wasn’t making enough to support herself and her family, it’s that she was merely overspending. As Holly points out, your overspending cannot be corrected by a side hustle. In fact, it could only make matters worse. Instead you should focus on the basics of budgeting and reeling in your finances before taking on more work.

When its a scam

Another important note about side hustles is that there are still a number of scams that people fall for (putting the “hustle” in “side hustle” perhaps). That’s why it’s always important to do your due diligence and think carefully before signing up for a gig that sounds too good to be true.  Even if certain “opportunities” may not rise to the level of “scam,” you may still want to think twice about different sales positions and determine if the upfront investment they often require will actually pay off.

Make no mistake, there are plenty are great things about side hustles. Whether that means driving for a ride-share company, doing freelance tasks on demand, or building your own business out of your passion or hobby, there’s certainly opportunity to make extra money and create an optimal lifestyle for yourself. At the same time, it’s important to consider your motivations for wanting a side gig and whether it’s ultimately a good idea for you. Contrary to what some might think, not everyone needs a side hustle but, in the right context, it can’t hurt to have one.

This article by Kyle Burbank first appeared on Dyer News and was distributed by the Personal Finance Syndication Network.

Black People in the South Unfairly Get Less Relief in Bankruptcy

Paul Kiel, a reporter, sent me an email and described his latest article which is fascinating in a bankruptcy kind of way. I can attest having observed similar trends anecdotally for decades but his hard work and documentation makes this far too real.

You can read the story How the Bankruptcy System Is Failing Black Americans.

Paul said:

“Black people who file for bankruptcy are far less likely than their white peers to actually successfully get out of debt. That was the stark finding from our analysis of national bankruptcy filings, and to explain why, we focused on Memphis, Tennessee, the city with the highest bankruptcy filing rate in the country.

There, most filings are under Chapter 13, a form of bankruptcy born in the South and, as we show in a U.S. map accompanying our story, still the dominant choice there. Chapter 13, unlike Chapter 7, usually requires five years of payments to creditors before any debts are eliminated, and as we detail in the story, the vast majority of debtors in Memphis don’t make it. About the Western District of Tennessee, where Memphis is located, we write:

As efficiently as cases are opened, they are closed — usually because debtors fail to keep up with payments, according to a ProPublica analysis of court data. In 2015, over 9,000 cases in the district were dismissed — more cases than were filed in 22 other states that year. Less than a third of Chapter 13 cases in the district result in a discharge of debts. And when their cases are dismissed, debtors are often in worse straits, because as they struggled to make payments, the interest on their unpaid debts continued to mount. Once the refuge of bankruptcy is gone, the debt floods back larger than ever. They’ve borne the costs of bankruptcy — attorney and filing fees, a seven-year flag on their credit reports — without receiving its primary benefit. A system that is supposed to eliminate debt instead serves to magnify it.

Our story explains how this happens – and shows how, with changes to the deeply entrenched legal culture of places like Memphis, things could be different.

Along with our story, we’ve also published a first-of-its-kind analysis of the racial disparities in bankruptcy filings, Bankruptcy and Race in America. It’s something we wrote for experts, scholars, and bankruptcy professionals – but also any interested reader who wants to understand with precision how big these disparities are and how we came to our conclusions. In particular, I recommend taking a look at the section that covers our findings on the national level.”

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

Bankruptcy Law and Student Loans

Private Student loans are very dischargeable in bankruptcy and I’m going to show you are.   These types on loans can be as dischargeable as a credit card.  Let’s take a look at the Bankruptcy Code.

Section 523(a)(8) of the Bankruptcy Code (2005) states:
unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for–(A)(i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or (ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or (B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual.

Let’s break this down in everyday English.  

Student loans can’t be discharged if the loans are:

(A)(i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; 

Are your student loans funded by the government or a nonprofit entity?   Especially if you have Tuition Answer (Direct to Consumer) loans, this would not apply.  So, strike this one off your list.


(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; 

Now this may be the first thing your lender’s lawyer will hit you with.  Let’s explain it.  Educational Benefit is not defined in the Bankruptcy code, BUT the bankruptcy code DOES say what it’s not.  It’s not a loan.  That’s a separate entity.  Let’s go back to § 523(a)(8)(A)(i).  § 523(a)(8)(A)(i) states: an educational benefit overpayment OR loan made,…”  The Bankruptcy code is clearly separating the two entities as they are not one.  The Bankruptcy code clearly adds the term “loan” in (A)(i) and leaves out the term ‘loan” in (A)(ii).  “A ‘loan’ is not an ‘educational benefit’ within § 523(a)(8)(A)(ii).” 

So, your Tuition Answer loans and many other private loans would not qualify for this one either.  Strike two.


(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual.

Okay, this is where many private student loans are gonna live.  Are your private student loans a qualified education loan?  I dug a little deep in order to answer this question. If your Private Student Loan had Cost of Attendance and Student Eligibility Issues, you’re well on your way to a discharge.  When I say Cost of Attendance issues, did your private student loan holder give you more than the school cost during your time of attendance?  Let’s say it costs $20,000 a year to attend John Doe University, but your Student loan lender gave you $30,000.  Or you weren’t actually in school when you incurred your loans.  For some reason, you  were never admitted or enrolled in classes, then your loans will run into Student Eligibility issues and will become dischargeable per the Bankruptcy code. 


This article by Private Student Loan Hell first appeared on Private Student Loan Hell and was distributed by the Personal Finance Syndication Network.

Want to See Where You Stand Financially? Start With These 10 Questions

When it comes to money, there are lots of numbers to tell you how you’re doing, like how much you have in the bank, your credit score, or the number of months left on your mortgage or student loan. 

While those numbers are important, they don’t tell the whole story about your financial situation. To help you see where you stand, we’ve created the interactive Financial Well-Being tool. After you answer ten questions, you’ll see your financial well-being score. The score is a number that helps sum up how well your financial situation and money choices are providing you with financial security and freedom of choice. The questionnaire won’t ask you for your monthly spending or account balances—it’s a different kind of tool. Instead, it asks you to think about how your money situation supports your goals. And, we never collect or store the answers you provide.

Three ways your Financial Well-Being score helps you

1. Think about how to improve your financial well-being  

As you answer the ten questions, you may find yourself mentally identifying money issues you’d like to take care of, or goals you’d like to set for yourself. After you complete the questionnaire you’ll find a list of CFPB resources that can help you get started. Whether you’re ready to take action on your own, or looking for more personalized help, our tools and resources can help.

2. Track your score to measure changes

When you’re done answering the questions, you’ll see a single number that describes your current financial well-being. The score reflects your own sense of how you’re doing, according to the definition of financial well-being:

  • Having control over day-to-day, month-to-month finances 
  • Having the capacity to absorb a financial shock
  • Being on track to meet your financial goals
  • Having the financial freedom to make the choices that allow you to enjoy life

Your score likely won’t change from day to day. But if you take this opportunity to start to make improvements in your money situation, goals, or choices, you can retake the questionnaire down the road to see the impact on your score. 

3. If you’re interested, compare your score to other U.S. adults

Your state of financial well-being is unique to you. Two people with the same financial well-being score could be in very different circumstances. (And two people in the same circumstances could have very different financial well-being scores.) If you’re curious, you can see average scores for others like you—by age, employment status, and household income.

For practitioners, researchers, and policymakers: Financial well-being survey report and data set

We recently fielded the National Financial Well-Being Survey. We asked a sample of people designed to be representative of U.S. households to answer the ten items on the Financial Well-Being questionnaire, as well as a series of questions on other personal, household, and financial topics. The results of the survey help assess the state of financial well-being in America. The survey report contains detailed tables, charts, and statistics that can help researchers, practitioners, and policymakers explore how financial well-being relates to other factors.

The first report based on this survey shows that: 

  • People’s sense of financial well-being varies significantly in ways that are not entirely aligned with differences in income, education and other commonly used economic measures.
  • People’s sense of financial well-being is grounded in real life financial circumstances.
  • Many factors associated with large differences in levels of financial well-being are currently the focus of a range of financial capability programs.

Researchers who want to do their own analysis can access a public use data set from the Financial Well-Being survey. The fully anonymized data from the national survey can be used to examine the connections between financial well-being and other factors. We hope that these resources inspire financial educators, researchers, and others to pursue new directions in supporting consumers’ financial well-being.

This article by was distributed by the Personal Finance Syndication Network.