Why include a Non-Dischargeable debt?

[lostandconfused]

Greetings,
My wife and I are currently in the process of filing a chapter 13 and are feeling very overwhelmed. For starters, we both have student loans through Sallie Mae that we have been paying on forever. Currently, we have an incredible rate and a very low monthly payment and honestly don't have a problem paying this debt. However, the reorganization plan is going to include these debts and in five years will not be discharged. My question is this, why include a debt that is not defaulted and is non-dischargeable? Furthermore, due to hard times in the past, I took them up on "intrest only" for only 12 months and it added a lifetime to the loan. So this raises a great deal of concern to how much longer I'll be paying these people once my "discharge" is complete. Do I have a choice as to which debt(s) are included? Please note we're in Louisiana, don't know if that makes a difference or not.
We are trying not to freak out here, any help will be greatly appreciated...

[HHM]

The word "include" gets very confusing in the BK context, so lets clarify. There are really three words that are useful, "List", "outside", and "inside".

With regard to non-dischargeable debt (or any debt you owe with a chapter 13), here is how it works.

1. ALL debts are "Listed" in your bankruptcy filing. This is the schedule of creditors and you "list" ALL creditors here regardless if the debt can be discharged.

With regard to the repayment plan...
2. You can pay a debt "outside" the plan. Paying "outside" the plan means YOU will continue to make the regular monthly payment to the creditor. Paying "outside" the plan is most common for secured debt (i.e. car payments, mortgages, etc), and student loans.

3. You can pay a debt "inside" the plan. Paying "inside" the plan means the trustee makes the payments for you and all you do is send a monthly payment to the trustee. You typically pay case admin fees (i.e. your attorney's fees, and trustee fee), arrears on secured debt, unsecured debt, etc, "inside" the plan.

I hope this helps, if not, simply clarify your question.

[Elf]

My trustee paid student loans out of my monthly payment. The full student loan payment was paid before anyone else got a dime.

At discharge-- I began paying again on my own. It was a real blessing. Think about it-- you've got an amount that you can afford to pay, and your student loans get pulled out in full off the top. I suspect that it's a courtsey-- studetn loans are like taxes. The gov gets their cut first.

That's a great deal. Stop fussing.

Elf

[Granny]

My trustee paid student loans out of my monthly payment. The full student loan payment was paid before anyone else got a dime.

That's a great deal. Stop fussing.

Elf

Except you are paying the trustee fee on top of your student loan debt, thereby increasing the total by up to 10%. Better to pay it outside the plan if at all possible.

[CindyLou]

My brother just confirmed his 13 in Louisiana. He is in 100% payback. He has 12000 in student loans. He was required by the trustee to include them inside the plan b/c he didn't have many creditors make claims (around 30,000 out of possible 85,000) LUCKY DOG!!!! So he will be done with every thing at the end! The trustee felt he would have too much disposable income to be in a 13 without including them in the 13. he had about 1200 disposable. He was expecting all of them to file claims and was expecting to pay the entire 1200 in the plan. He was pleasantly SHOCKED at the outcome! I say if you can include them do so. If you are paying out all of your disposable income anyway then you will be paying the trustee the same fee regardless. The only difference is the nonpriority unsecureds will get less and you will have smaller balances on your student loans in the end. A win win for you and no less money out of your pocket.

[CityGirl]

So, Cindylynn, both you and your brother filed? Wow, I think I'm the only one in the history of my family to file. We have a goody two shoes family. If they ever found out, I'd die!!!! I agree on the student loans. I'm puttng them in my plan because they are deferred right now until 2011. I won't finish school until 2010 at the end so the $7K I have so far will be put in the plan and more will come. I may as well get it paid before I get done.