headed to 13/... Stu Loan & lots of questions...

[trying2getby]

We have been unable to work out an affordable DMP, so it looks like we'll be filing Ch 13 in a few weeks. We will be getting an attorney, but have not yet.

I have been doing lots of reading & research but have some questions I haven't found answers for.


1. Student Loan -- I owe ~ 18K, and I know it is non-dischargeable. My question is: I am several payments behind, about $800 past due. Will this past-due amount be included in my BK plan so that it is eventually considered current? I have resumed making a monthly payment, but I can't catch up the past-due part.

2. Student Loan -- Also, I've read in a few places that people's student loans were placed in forebearance until the chapter 13 was completed. How does this work? I've already exhausted my forebearance allowance.

3. Vehicles -- I owe 24 payments on my car, which is upside down about $3000-4000. I can't sell it or trade it, and I don't know how I could possibly buy another one with my credit already awful and deteriorating daily. I know it should qualify for the cram down. Will I continue to make my payment (almost $600) for 24 months and then finally have it paid for? Or will they take the cram down balance and stretch it out over the 60 months? My car has 85K miles, so I doubt it will last the whole 60 months. If it was paid for in a couple of years, I would have the $600 freed up for repairs that it would start needing, so I would prefer to do it that way.

Thanks for your help.

[lrprn]

We have been unable to work out an affordable DMP...

Very typical. Trying debt management only puts off what 90% of the time you should have done instead - file bankruptcy. We paid $800/month on a DMP set up by a reliable CCC firm only to find after nine months that our debt had gone down a whopping $900 overall. Total waste of time and money.

1. Student Loan -- I owe ~ 18K, and I know it is non-dischargeable. My question is: I am several payments behind, about $800 past due. Will this past-due amount be included in my BK plan so that it is eventually considered current? I have resumed making a monthly payment, but I can't catch up the past-due part.

Student loans are considered non-secured debt in Ch 13. If you file with payments in arrears, they won't be caught up by your trustee - they aren't secured. Since the SL lender can't require payment during your Ch 13 bankruptcy, the loans will most likely sit there with the interest piling on until your 13 plan is finished and discharged. Not a pretty picture.

2. Student Loan -- Also, I've read in a few places that people's student loans were placed in forebearance until the chapter 13 was completed. How does this work? I've already exhausted my forebearance allowance.

Since our student loan lender did file a claim in our Ch 13, by the end of our case our trustee will pay them the same amount all our non-secured creditors will get - in our case 30%. The rest of what we owe them once we're out of Ch 13 we'll have to finish off ourselves.

See if this same situation can be arranged in your Ch 13 plan. It's better than doing nothing and allowing the interest to pile up. Some courts are ok with this, some are not. Your lawyer can tell you what to expect in your court.

3. Vehicles -- I owe 24 payments on my car, which is upside down about $3000-4000. I can't sell it or trade it, and I don't know how I could possibly buy another one with my credit already awful and deteriorating daily. I know it should qualify for the cram down.

If you bought this car more than 910 days before you file, then it will qualify for a "cram down" to its true market value.

Will I continue to make my payment (almost $600) for 24 months and then finally have it paid for? Or will they take the cram down balance and stretch it out over the 60 months?

Whether you or your trustee makes your car payments depends on which option works best in your situation. Both are possible. Many filers opt to have their trustee make the payments and stretch them out over five years - this makes your Ch 13 payment lower. Not knowing more about your situation, it's impossible to say whether this is best for you or not.

This is a good question to ask during your lawyer interviews.