Chapter 13 Bankruptcy and Student Loans

Overwhelmed by debt? Call a skilled Savannah bankruptcy lawyer to learn your rights.

Student loans are not discharged during the bankruptcy process. Hence, it is important to be careful while drafting a student loan debtor’s chapter 13 repayment plan. More often than not, it is observed that student loans are not completely paid off even after complete discharge of other debts through repayment plan of chapter 13 bankruptcy.

Chapter 13 bankruptcy aims at repaying unsecured creditors. This makes many debtors to classify student loan as unsecured loan like credit card debts. The problem here is that at the end of payment plan you will find that credit card debts have been repaid but student loans are pending. If they were not classified under unsecured debts, they might have been paid off or substantially paid down. Student loans have to be treated separately and hence you can invoke section 1322 (b) (5) of bankruptcy code.

This section allows a chapter 13 bankruptcy debtor to state that certain unsecured debts have to be paid directly to creditor and be paid through repayment plan. This ensures that student loans are not in default status even after completion of chapter 13 bankruptcy repayment plan. Another advantage is that more money is directed towards student loan debt as compared to other unsecured debts.

Bankruptcy law is regulated by federal as well as state rules and hence you need to ensure that such an alternative is allowed in the state you are filing bankruptcy in.

Chapter 13 Bankruptcy

This is the individual debt adjustment bankruptcy. This allows debtor to reorganize his debts so that he is able to repay them over a predetermined period of time as decreed by court ruling. Chapter 13 allows discharge of unsecured debts so that you do not have to part with your properties like car, home etc.

Debtors with regular income are allowed to file for chapter 13 bankruptcy. The debtor can pay a smaller repayment installment towards debt in newly constructed bankruptcy repayment plan. There is no liquidation of property here. There are certain restrictions with regard to amount of unsecured and secured debts while filing for bankruptcy under chapter 13. Your unsecured debts should be less than $336,900 and secured debts should not exceed $1,010,650. There is a bankruptcy filing fee of $300 and this is taken as plight of co debtors.

A bankruptcy attorney can be very valuable while filing for insolvency. Though it is assumed that bankruptcy can be taken care of without legal advice, it is not so. Filling of forms, filing petition etc are complex matters where bankruptcy is concerned. It is of utmost importance to proceed under guidance of an experienced bankruptcy attorney so that your case is not rejected or dismissed by court.

Call a Savannah bankruptcy lawyer if you are considering bankruptcy.