Chapter 13 bankruptcy is a repayment approved by the bankruptcy court based on your income.
While student loans are almost impossible to get discharged in bankruptcy,
you can use the filing to help you reduce the amount you pay or you can
delay making payments during the Chapter 13 repayment period.
Students loans can be discharged when a debtor proves repaying it may cause
hardship (also referred to as an undue hardship). You can include the
loan in your bankruptcy but you may still be required to pay it after
your case is completed. Yet, Chapter 13 may allow you to tackle the student
loan debt differently. In Chapter 13, student loan debts are treated similarly
to medical bill debt or credit card debt. Its priority isn't as high
since it is an unsecured debt.
Some jurisdictions may not allow debtors to make payments on their student
loans while in an active bankruptcy case. This may depend on your ability
to make payments and other necessary expenses you have. If you are required
to pay other creditors a specific amount during your Chapter 13 case,
you may be able to have your student loan payment reduced or even delayed
if you meet income requirements.
Chapter 13 has an
automatic stay that goes into effect when you file. This prevents further collection
attempts from creditors including student loan lenders. If you have no
disposable income left after making payments according to your repayment
plan, you may be able to delay making loan payments until your case is
completed. Or, your payments may be reduced based on your ability to pay.
Review your situation with a bankruptcy lawyer in Dallas / Fort Worth.