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How Chapter 13 Bankruptcy Can Help You Deal with Student Loan Debt

Posted By Allmand Law Firm, PLLC || 23-Sep-2013

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.

Categories: Student Loans
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