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Student Loan Repayment Question

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  • Student Loan Repayment Question

    This is my first post. Glad I found this forum!

    I am going through the chapter 13 paperwork and figuring out our monthly budget before our next meeting with the attorney. After that meeting hopefully we can file?

    Question- I have a consolidated student loan on an Income Based Repayment Plan (IBR). We currently pay zero per month on our student loan debt. This monthly payment was based on our income at our annual time of renewal which was November 2017. I was not working.

    Do I need to reapply for the IBR annually during our Ch13 or does Ch13 include an Automatic stay for student loans? I know the student loans aren’t or won’t be forgiven during our Bankruptcy.
    03/16/18 - Filed Ch 13
    04/23/18 - 341 Meeting
    06/26/18 - Rcvd letter - Motion for Confirmation of Plan

  • #2
    Student loans appear to go into a forbearance during the bankruptcy process, then at some point become due again.

    courts are coming around to discharging student loans for both totality of circumstances and the Brunner undue hardship test. Sometime they are discharged or settled during a bankruptcy, but, you have to ask for it through an adversarial proceeding. Otherwise, the answer is no, and despite even a chapter 13 bankruptcy, you are still on the hook for them.

    perhaps you should find out what happens if you change your repayment plan to something else, would it reduce the amount paid to unsecured creditors while paying your student loans through the chapter 13? Check with real lawyer(s) first as I don't know the answer.

    Comment


    • #3
      Ok thank you for responding. I am learning a lot from the forum. Good to know the loans go into forbearance during Chapter 13. I wasn’t sure?
      03/16/18 - Filed Ch 13
      04/23/18 - 341 Meeting
      06/26/18 - Rcvd letter - Motion for Confirmation of Plan

      Comment


      • prindia
        prindia commented
        Editing a comment
        Mine are also in income based repayment and I filed on 1/15. I just checked on fedloans and they are listed as in bk and payment is not required but I can make one if I want to.

    • #4
      Mine filed a claims and a large portion of my monthly payment for the chapter 13 goes to them, at the end of the chapter 13 I will still owe what is left but it will be a much lower amount. They do still accrue interest during the chapter 13.

      Comment


      • #5
        I typed that wrong, they go into forbearance while the Chapter 13 is pending. That's only a few months. Most of them still charge interest during that time as well. Once the "stay" is over, it's back to payment time.

        Comment


        • #6
          Mine are still in forbearance and will remain in forbearance until discharge. Our lawyer said to file paperwork for the IBR plan when we have one payment left.

          Comment


          • #7
            It really would be preferable to have your student loan paid in the plan if anything is going to unsecured creditors because a student loan is unsecured debt. If the creditor does not file a claim, I am pretty sure that you can file one for them so that the student loan gets a portion of the payments to unsecured creditors. Ask your attorney about this.
            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

            Comment


            • lvmilizia
              lvmilizia commented
              Editing a comment
              I agree, mine filed the claim and get a good portion of my payment, I would rather my payment go to them to lower what I owe at the end since it won't be discharged. If you make no payment during the 5 years you will owe a lot more at the end since interest keeps accruing.

          • #8
            Everybody's situation is different. In my case it would have increased my time in chapter 13 from 2 years to 5 to include my student loans. And we wouldn't have been in 100 percent which means our chapter 13 payment would have been 1800 dollars a month instead of 1080, which would have been awful for us.

            Our combined student loans are almost 180000. They are the reason we filed chapter 13. With that amount and our income, our loans will be eligible for cancellation before we can pay them off. We will have to pay on them through an income based payment plan until the balance can be canceled. (Through the public loan forgiveness program or for 15 years if that program goes away)

            We couldn't pay our other debt and student loans. This way our debt will be paid off and we can enter the public loan forgiveness plan and the income based repayment plan and have our loans canceled in 10 years without the burden of also paying credit card debt.

            Comment


            • #9
              Originally posted by Kwiris View Post
              Everybody's situation is different. In my case it would have increased my time in chapter 13 from 2 years to 5 to include my student loans. And we wouldn't have been in 100 percent which means our chapter 13 payment would have been 1800 dollars a month instead of 1080, which would have been awful for us.

              Our combined student loans are almost 180000. They are the reason we filed chapter 13. With that amount and our income, our loans will be eligible for cancellation before we can pay them off. We will have to pay on them through an income based payment plan until the balance can be canceled. (Through the public loan forgiveness program or for 15 years if that program goes away)

              We couldn't pay our other debt and student loans. This way our debt will be paid off and we can enter the public loan forgiveness plan and the income based repayment plan and have our loans canceled in 10 years without the burden of also paying credit card debt.
              Yes, every situation is different and my suggestion that it would be preferable to pay the loans in Chap 13 was a bit simplistic and based on certain assumptions.

              Kwiris, I read through your posts and it is not clear why you were in a 100% plan, but I suspect that it was because your DMI was sufficient to pay off unsecured debt within 60 months and you chose to let the student loans go into deferment in order to have a lower plan payment. The other reason for the 100% plan may have been that you had non-exempt assets or had to pay arrears on secured debt, but you don't say anything about that in any of your posts.

              What I think is important to understand is that "student loans go into deferment during a Chap 13" should not be the end of the conversation. A debtor should discuss with an attorney whether it makes sense to make sure the student loan gets paid at least something during the Chap 13 (and in an asset Chap 7). Oftentimes, that simply means that the other unsecured creditors get less than they otherwise would have and the student loan gets at least partially paid down during BK. From what I've read here, it seems that some student loan lenders file claims and others don't. I suspect that when they don't some attorneys just let it be. It can't hurt for a debtor to ask his/her attorney whether it makes sense to file a claim on behalf of the lender. Unfortunately, most debtors would not know to do so.
              Last edited by LadyInTheRed; 02-24-2018, 04:33 PM.
              LadyInTheRed is in the black!
              Filed Chap 13 April 2010. Discharged May 2015.
              $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

              Comment


              • #10
                I didn't have to pay mine during the chapter 13, I was discharged in Jan and just made my first student loan payment in Feb.

                Comment

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