student loan..auto forebearance period after C7 bk???

[sjades]

Quick question…do federal loans go into some kind of forbearance status after filing bk?

Before filing C7, my student loans were in forbearance for a year and expired at the end of December 2010. We had filed C7 in early December and I fully expected to begin re-paying the loan at the end of January 2011. I got an email from Direct Loans that the forbearance was expiring and payments were to resume at the end of January so all seemed “on target”.

Went online to set up payment through direct loans’ site and noticed that my account was now suspended and it says that my first payment is not due until the end of April. I am appreciative of the extra time to begin paying, but didn’t know if this was the start of anything odd or is it standard procedure to give the debtor some time to begin repayments. I’ve never been behind on the payments etc, but when I called, the automated systems said that I was a day late but all of the notices said that it’s not due until the end of January). Live help is not open at the moment and I plan on calling on Monday, but didn’t know if anyone has had this happen with Direct Loans or not. thanks again. shel.

[KeithDoxen]

Yes they do. It's called bankruptcy forbearance. You'll begin paying again after discharge. This is perfectly normal.

[sjades]

NICE! thank you!

[researchnerd]

I asked my attorney about this after we filed, and he said that forbearance is common but not automatic for those in BK. When I initially filed Ch13, my Sallie Mae online account access was shut down, my auto-payments stopped and I couldn't get anyone there to tell me anything. When I converted to Ch7 a few months later, the automatic forbearance kicked in. It was scheduled to last for 1 year or until discharge, whichever came first.

After discharge I did indeed get my online access back, but my balance had dropped to about $300 (from $68k!). I could just pay this off, but decided to make monthly payments for a year instead to help rebuild my credit. I suspect the balance of the loan is back with the loan originator (USA Funds), but they are reporting it to the CRAs as IIB, with a $0 balance and current status. USAF have not contacted me at all, and while they are shuffling things around I don't want my payments getting lost, so I'm just going to wait until they let me know what they want me to do.