Should I File Chapter 13

[ShannonO]

I am a fairly recent divorcee and have two young boys. Out of guilt and against my modified divorce attorney’s advice, I took 98% of the credit card debt. Since the divorce almost 3 years ago I have been drowning in payments and have been forced to rack up additional debt. I have been in a debt consolidation program ACCC for half of the debt for about a year and a half now. My monthly payment is $700 (this does not include additional debt payments outside of the plan). I am not feeling any reprieve from the debt. I am a nurse with a government agency and am enrolled in the Public Service Loan Forgiveness Program (PSLF). This is a 10 year (120 payment) program in hopes of having my loans forgiven after 10 years of payments. I have a bankruptcy attorney who said that I have no choice but to roll my student loans into the Chapter 13 (I do not qualify for a Capter 7). If I do this, I will lose 5 years of service credit while in the Chapter 13. I have worked with the state for 25 years am more concerned at this point with the current debt I suppose then the 5 years lost towards PSLF. In the meantime, while my student loans are rolled into the Chapter 13 the interest continues to accumulate to an amount that I will not be able to afford at the end of Chapter 13. My lawyer stated that I can pay the accumulating interest outside of the Chapter 13. Is it a good idea move forward with the Chapter 13 and will my payment be manageable? Please help!!!!! All advice and suggestions appreciated.

Shannon

[justbroke]

ShannonO I moved your post to it's own question because you posted to a very old thread. By posting to the old thread, you were likely to receive no responses.

Welcome to BKForum.

Your major question is whether your interim PSLF payments will count as "qualifying" payments in order to preserve your 10-year countdown. I can't answer that. Your attorney is correct that you can make any payment during your Chapter 13 and it could include interest. If you actually have disposable monthly income (DMI) which it appears, the Trustee would also be making "some" small payments to your student debt as well. It may not be enough to have those payments count as "qualifying" payments.

You're drowning in debt, as you say, and there are very few options. I think that Chapter 13 will give you some relief. You may want to ask your attorney but seeking to classify the college debt as a separate unsecured debt class and propose to pay them with your DMI. Some debtors have been successful in getting the Trustee and/or the judge to agree to allowing you to pay. Since you are already under the PSLF and trying to get those loans forgiven, it's worth a shot.

[ShannonO]

Thank you so much for your reply and for moving my thread to the correct location. I filed Chapter 13 last week. I received information from the PSLF through the Dept. of Education and they stated that as long as the court writes a letter stating that they can still send me a bill, I will remain in the program. This will allow me to continue to pay my student loan, while in the Chapter 13. At this point in time it seems like I might be able to handle the payment. However, it all depends on what the trustee proposes as far as my payment over the next long five years. I will let you know how it all works out in a few weeks. Thanks again. This is a wonderful site.

Shannon

[justbroke]

Thank you for the update! Let's hope that this works well for you and that you don't lose any (more) sleep over your student loans!