Student loans

[karm43]

Has anyone payed their student loans while in a chap 13? Talked briefly to a attorney and he said I could pay them outside of plan. However been reading that alot of them will not take your payment.

[HHM]

Here are the ways you can pay student loans in/during chapter 13.

1. You are in a 100% payback plan for your regular unsecured creditors (typically class IV) and designate your student loans as a different class, then you can put a line item in the budget to pay the student loans outside the plan. This relates to 1322(b)(1)
1(a). Your chapter 13 means test shows that unsecured creditors would receive no dividend (meaning, you have no disposable income); then in most districts, you can pay your student loans outside the plan (but this scenario begs the question as to why you are in chapter 13 in the first place?) A variation on the above, again related to 1322)(b)(1).
The argument is that your other unsecured creditors are not unfairly discriminated by you making payments to student loan debt.
2. This scenario relates to section 1322(b)(5), if you are in default of your student loans, that section purportedly allows you to cure the default and make payments if the term of your student loan (the length of time left for repayment) is longer than the 5 year chapter 13 plan. Again, not all districts agree.
3. The practical approach, the debtor spends less than the amounts budgeted in the plan, and pays student loans with the difference. I.e. you budget $800 per month for food, but only actually spend $550.
4. If you do nothing, your student loans get paid their pro-rated share of whatever goes to unsecured creditors, but that amount is usually not enough to even pay the accumulating interest.

Note, that options 1 and 2 are not accepted in all districts, and within option 1, there are variations. The most accepted version of "re-classifying" student loans and allowing payments is when other unsecured creditors are paid 100%, but some districts allow reclassifying and paying less than 100% to other unsecured creditors under specific circumstances (In re Kalfayan, SD Fla, 2009, allowed payment of student loans, if it didn't, debtor would have lost optometrist license and would be able unable to fund any plan).

So, the question is not so much "can" you, it is, can you take a budget deduction with your student loan payments, options 1 and 2 allow it, but not everyone agrees, option 3 is the practical approach; debtor cannot take a line item deduction for student loans, but does not need to spend the full amount in all budgeting areas. (incidentally, that is how you generate savings in chapter 13's)

[Nicollette]

Has anyone payed their student loans while in a chap 13? Talked briefly to a attorney and he said I could pay them outside of plan. However been reading that alot of them will not take your payment.

My student loans were automatically added to be paid through my plan. If it was an option to pay outside the plan, I was not informed of it.

[karm43]

So basically if i am not 100 percent, then I basically will cut back on say food or clothes and pay on it. Just worried they will not except the payment when time comes.Nicollette were your payments up to date?

[karm43]

HHM Just reread once I did get behind and they did threaten to take my license not a Dr. but do have a state license. I do not work wthout it.

[Nicollette]

Nicollette were your payments up to date?

At the time I filed, I think my student loans might have been in a forbearance?