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Scam debt relief companies target desperate graduates

Each year, many Kentucky college graduates are scrambling for enough income to repay their student loans. For a great many of them, it is a distant goal, and their finances may suffer due to entry-level jobs and the cost of living. Enter debt relief companies looking to capitalize on debtor desperation. A Forbes article outlines the national significance of debt relief scams and warns people about how to spot and avoid them.

Companies often advertise having the ability to relieve or eliminate student loan debt. Only the creditor can do those things, and the creditor in the case of government-backed loans is the U.S. Department of Education. The companies promising to reduce or eliminate debt are actually charging to fill out paperwork for debtors that can be found for free on the Department of Education website.

The problem persists due to desperation and marketing. The scam companies, which are not yet regulated, pay to have their websites promoted by popular search engines. These websites may contain some truthful information, but it is distorted in an attempt to get already indebted graduates to pay money for otherwise free debt relief options. Options to consolidate and reduce payments based on income level are already offered for free by the creditor.

The federal government offers several tactics for limiting personal exposure to student loans, but this is not always enough given other bills and financial challenges. Government student loan debt can not be discharged in a Chapter 7 bankruptcy unless the debtor can prove extreme financial hardship, and this is often difficult. People who have a regular source of income and who can otherwise qualify for Chapter 13, however, may see a measure of relief if the monthly amounts are reduced pursuant to the court-approved repayment plan. Attorneys will point out that the balance remaining after the completion of the plan will still need to be paid.

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