There seems to be no end to the unsavory tactics employed by some lenders against consumer borrowers.
We have noted in previous posts, for example, lenders’ quick engagement of debt collectors to pursue borrowers, even when many of those consumers have not defaulted on a debt and are making good-faith efforts to repay it.
We have additionally noted the harassing and often illegal actions employed by collection agencies. We have also chronicled so-called “robo-signing” tactics engaged in by banks, the usurious interest rates demanded by some lenders and the disinclination of some lenders to work reasonably with consumers on foreclosure issues.
And the list just goes on. A recent and quite notable addition that is having a materially adverse effect on many people and leaving them scrambling for debt relief solutions is this disagreeable action: With increasing frequency, lenders are acting immediately following the death of a relative co-signer on a student loan to declare the loan in default, demanding full and immediate payment of all principal and interest owed.
What is truly disturbing about that, notes an official with the Consumer Financial Protection Bureau, is that the borrowers being targeted are often making regular and timely payments.
In other words, there is no debtor-related problem with a loan that is being accelerated and for which a lender is demanding immediate payment in full.
The CFPB states that many borrowers are unaware of contractual provisions that allow for such lender action. The bureau notes that the problem does not occur with federal student loans, but only with loans executed between students and private lenders.
The CFPB thinks that the practice “could actually increase over time,” given the country’s aging population (many co-signers are elderly) and the lengthy payback periods stipulated in some private loan documents.
An experienced Miami-based debt relief attorney can provide assistance to Florida residents facing financial challenges of any sort.
Source: Tulsa World, “Grieving borrowers often told to repay student loans in full,” Associated Press, April 23, 2014