Student Loans In Chapter 13 Bankruptcy

The Bankruptcy Code does not provide much relief for student loan debt. This is unfortunate, because it is often the greatest burden for debtors, in some cases the only major debt. In general, student loan debts are not dischargeable in bankruptcy. Student loans will only be completely dischargeable if they meet the "undue hardship" standard which is quite difficult to meet under bankruptcy law.

In a Chapter 13 bankruptcy, some payments can be made towards student loans, allowing the debtor to reduce their student loan burden while eliminating unsecured debts such as credit cards, medical bills, unsecured bank loans, etc. It is an important component of bankruptcy planning.

In most Chapter 13 bankruptcies, student loans can be paid at the same rate as other general, unsecured creditors (such as credit cards, etc.). So, if your Chapter 13 plan requires your credit cards and other unsecured debts to be paid at 50% of their total value, you can allocate student loans to get paid at the same rate for the duration of your Chapter 13 bankruptcy plan. This allows you to reduce your student loan burden, while lowering the amount you are required to pay other unsecured creditors. It's a win-win situation for bankruptcy filers.

Now, it should be made clear, the balance owed on your student loans not paid through the Chapter 13 bankruptcy plan is not discharged at the end of your case. You will be required to resume making payments in the likely scenario that there is still a balance. But, as stated above, at least this balance will be reduced by 3-to-5 years of payments. And it will be done by paying less money to your credit cards, medical bills, and other unsecured debts.

If you are having trouble with student loans in addition to other debts, contact us to see if you qualify for relief by setting up a completely free consultation. I am an experienced Pittsburgh Chapter 13 bankruptcy attorney who can help explain your rights and options.