Student loans and Ch. 13

[Help!]

Has anyone filed Ch. 7 and been forced to convert to Ch. 13 because a forbearance on student loans would fund a repayment plan? I'm thinking that because our student loan balance is so high a Ch. 13 might actually leave us in a worse position financially when all that interest is added back into our student loan balance in 5 years. We'd be trading credit card debt for student loan debt, and with the possibility of salary increases/bonuses we might end up paying 100% to our unsecured creditors anyway. BK is so complicated...

[treehugger1]

Student loans are the reason why I did not file a chapter 13 BK. I have old student loans consolidated at ~8.25%. There are no more plans available to me. I was told by every attorney I spoke with that my student loans would get put on the back-burner for 5 years. The interest would keep accruing. At the end of 5 years, I would have gained little but a clean slate with unsecured debt. However, You do get the automatic stay if you need peace of mind from ceditors/collectors.

Some states/regions allow for student loans in the payment plans, but I think this most likely occurs when you are already in a 100% payback plan and can tack the student loans on top of the payback.

I recently read a blog by a BK attorney who is arguing that student loans should be allowed to be deducted from income when calculating the means test. Thus, many folks might qualify for a 7, when the student loan payments allow them little disposable income. I'm not sure if there are any recent rulings on this. I'll try to find the blog and post the site.

But, you are correct, student loans can be a messy subject.

[treehugger1]

This is interesting.

http://www.************************/...means-testing/

[lrprn]

Student loans in Ch 13 are a nightmare.

Here's a great place to understand how student loans typically work inside bankruptcy - http://www.moranlaw.net/studentloans.htm

And here's a few good online resources that discuss what to do when you can't afford to pay your student loans inside bankruptcy -

http://www.finaid.org/questions/bankruptcy.phtml

http://www.lawhelp.org/DC/showdocument.cfm/County/%20/City/%20/demoMode/=%201/Language/1/State/DC/TextOnly/N/ZipCode/%20/LoggedIn/0/rpc/1010000/doctype/faq/ichannelprofileid/24333/iorganizationid/0/itopicID/1070/iProblemCodeID/1010000/iChannelID/199/isubtopicid/1/iproblemcodeid/1010000/iquestionid/2189

We have a $22K Parent Plus student loan that we have been paying on (at least the interest) every month we are able to keep the total from spiraling out of control over our five-year Ch 13.

We're lucky too - our local Ch 13 trustee treats student loans as unsecured debt and so he will send our student loan lender the same 30% payback just like all our unsecured cc's and other loans. So far, so good. We are much more fortunate than most in our situation.

[Help!]

Thanks for the replies and links. Our payment is over $750/mo., also consolidated at 8.5%. It doesn't seem fair to be able to treat that debt differently. The law should at least force the elimination of interest during the repayment period. "Bankruptcy protection" applies to the debtor in Ch. 7, the creditor in Ch. 13!