in NY...your school loan repayment is considered disposable income? Is that true?

[spendingbozo]

Hi,

I'm in the midst of a 13...things are going very smoothly, and the confirmation is coming up.

Anyhow, I was advised by my atty. that my payment will be higher than originally proposed due to the fact that my school loan payment must be paid in the plan along with the percentage to CC's. My atty. advised me that in NY, the amount that one pays to school loans is to an unsecured creditor, and therefore, they get the same percentage as the CC's???

I have performed a ton of research and cannot confirm the same.

With that, since my school loans will only receive a small percentage of the total plan payment, I will have to pay the rest outside of the plan to keep me current. What the heck is that all about.

I am fortunate that my loan is not off the charts, but theoretically, if my loans were 1K a month....I'd have to pay that much more in my payment?

Very very confused...any feedback would be appreciated.

[optimistic1]

My only guess is that you were behind on the loan, and only the amount that you were behind on is being incorporated into your plan, and the rest is outside of the plan. Similar to mortgage arrears.

[spendingbozo]

I wish it were that easy to explain...I have never been behind in the school loans...well, not for the past 10 years that is. Not once. I was advised that it was litigated over and over, that's just how it is. Not sure why I wasn't told the same when we were prepping my plan payment....hmmmmm....still very confused. I'm hoping someone in NY has experience with this issue.

[spendingbozo]

Also....They mentioned something about the loan being unsecured and that it can't get preferential treatment...but that I have to pay the loan anyway outside the plan, even though the equal amount is included IN the plan...even though my numbers reflect that I can't! UGHHHHHHH....I thought school loans were totally excluded...oh well.

[optimistic1]

That doesnt really make sense at all, you are paying on the loan twice somehow, both inside and outside of the plan? Are you sure?

[catleg]

Sounds to me like what he's saying is:
-- since student loan is unsecured, it gets paid same percentage as all other unsecured creditors out of the plan (say 25%)
-- since it is also non dischargeable you have to make up the difference out of your end (remaining 75%)

If it was a car loan or any other secured loan it would go to the head of the parade and get 100% ahead of the unsecureds.
Since it can't but still must be paid it has to come from somewhere.

[hgpotter]

Is this loan federal or private? If it's through a federal lender, like PHEAA in PA, you can apply for a financial hardship deferment. Give them a call and see what options you have through them.

I'm currently in deferment, although I'm taking part time classes paid for by my employer.

AC

[spendingbozo]

catleg...that's exactly correct....apparently in many other districts, this wouldn't happen...yikes. I'll do what I got to do to swing it...and thanks so much Potter...I researched the hardship issue...I think I would have an expensive uphill battle with the burden and application that would need to be made.

Has anyone else had to go thru this?

[spendingbozo]

oops...too late to edit....

Anyhow, I finally found this....seems to be applicable to others as well....I don't see any reasonable alternative to paying school loans without accruing serious interest, so I'm surprised this occurs....it's a federal loan....really scratching my head on this one. I don't think I'm even allowed to pay on the school loans to "keep current"....I gotta sit it out...wow. Guess that takes the pressure off a bit.

http://www.bankruptcyhome.com/bankruptcyblog/2007/10/26/student-loans-while-in-chapter-13-bankruptcy/

and here is the legal precedent....very inclusive. Guess it is what it is.

http://litigationcenter.bna.com/pic2/lit.nsf/id/BNAP-65JRFM?OpenDocument

[lrprn]

Welcome to the dark, black hole that is student loans in ch 13. Our 2005 Congress members agreed to make not only govt but private student loans non-dischargeable in bankruptcy but also stated that they would be treated as non-secured loans to boot.

Payment deferment works fine for Ch 7 filers who are discharged within 120 days of filing, but puts Ch 13 filers with our 3-5 years plans at a terrible disadvantage. We can defer the student loan payments for the life of our plans, but it doesn't stop the interest from accruing the entire time.

You are left with two choices really....scrimp on living expenses enough to free up and make at least the interest payment yourself every month during the length of your plan, or make no student loan payments and get out of Ch 13 owing a considerable amount more on your student loans due to the accrued interest.

Since your student loans are non-secured, your trustee will pay the lenders who make claims the same % amount the rest of your non-secured creditors will receive. It will NOT pay off your student loans unless you are in a 100% non-secured payment plan.

Talk with your lawyer to see what's going to be possible regarding your student loans in your specific situation. And curse the 2005 Congress for not seeing this huge, gaping hole around student loans in Ch 13 and leaving it wide open in such a way that creates a significant penalty on every Ch 13 filer that has them when they file.

[spendingbozo]

lrprn....you nailed it. I can't believe there isn't more info. about this subject in this forum, so I'm glad I'm making a record here. It really makes zero sense....zero. But, it is what it is...and it's still better than not having a 13 to help out. In the end, I'll still be way ahead, so I'm not complaining too much...but it did up my payment up significantly. It is so illogical, I'm baffled. I'll raise my eyebrows...but I'm stuck. Again...I'll take it in my situation. I just need to clarify what I'm allowed to pay outside the plan to stay somewhat current with the loans.