Confused about Ch 13

[cyn5]

We were focused on filing ch 7, but in order to get our student loans off our our backs we are considering ch13 to put them into deferment for 5 years. I just haven't really looked at what a ch 13 involves and am worried that we will not enough money for our normal expenses.

What things can you claim on your budget plan? Does it completely go off of the federal guidelines/limits? For instance, do we have to get rid of our cable/internet bill since perhaps that is not a necessity? What about emergency expenses, can you budget for that or perhaps savings? Can I continue contributing to my 401k and if so, can I increase the amt I contribute? What about our cell phones? Can we have both a home phone & cell phone?

I guess I am just worried that our plan would make it look like we have more disposable income than we really do. We do not go out to eat, thus have a higher grocery bill than the allowed amounts. We both take our lunches to work and rarely eat out, so I am not sure how we would be able to decrease our grocery bill and plus it seems like food prices are going up, not down! ha ha.

I ordered the ch 13 Nolo book today, but I think I am just freaking myself out wondering how we will live if we have to make some huge payment to a trustee each month. We actually just switched lawyers & I need to get her our first payment in order for her to run the numbers for the ch 13....right now just a wait and see and I am trying to figure out if we should even try to go the ch 13 route instead.

[woeisme]

doing a CH 13 due to student loans is not a good idea. They will be in deferment, but also ACCRUING INTEREST the entire time you are in a CH 13. So not only will you be paying the trustee monthly, but at the end, you will owe a much larger balance on those non-dischargable student loans!

If your income is really too low to pay the student loans back once all your other debt is gone in a CH 7, then you need to request info from your lender concerning sliding scales for payback based on income, etc. Just letting the loan sit there and get bigger isn't going to help!

[Billssuck]

Sorry to hijack this thread....do you automatically get a student loan deferrment once you're in a 13 or do you have to request it? I have a small one with a small monthly payment and I wasn't aware of anything like this. That could make me go from about 150 DMI to about $300 DMI. We're filing in about two weeks....

[sassiebaz]

doing a CH 13 due to student loans is not a good idea. They will be in deferment, but also ACCRUING INTEREST the entire time you are in a CH 13. So not only will you be paying the trustee monthly, but at the end, you will owe a much larger balance on those non-dischargable student loans!

If your income is really too low to pay the student loans back once all your other debt is gone in a CH 7, then you need to request info from your lender concerning sliding scales for payback based on income, etc. Just letting the loan sit there and get bigger isn't going to help!

What do you mean by "sliding scales"?

[cyn5]

Yep, I know that we will have a bigger balance in student loans when we are done if we let them sit in deferment for 5 years under ch 13. Most of our student loan debt are private loans (non-federal) and no, they have no special repayment plans based on income or anything like that...basically their repayment plans suck & are basically legalized loan sharks. Federal loans are better and have more options. We have no choice but to put them into deferment if we do ch 13, as are min payment on all our loans is more than our mortgage payment. There are absolutely no consumer protection laws on private student loans anymore due to the lovely 2005 BK reform act, classifying ALL types of student loans under one unbrella.

What my lawyer told me is that basically your school loans go into automatic deferment (while still accuring interest, etc). I am not sure if you can include your student loan payments within your budget plan or not...it is really confusing to me. Perhaps what she said was your student loans cannot be part of the payment you make to the trustee for your unsecured debt. Not sure.

[DUMBAGAIN]

I have a student loan and my lawyer told me to pay them outside of the plan. However I'm going to be in school during my plan so my loans will be deferred anyway.

[liz417]

It depends on your district and/or Trustee, we were told by our attorney that our student loans would be on "hold" and collecting interest for 5 years! There are a few posters here that have said that their Trustee let them include payments in their expenses...

[woeisme]

My trustee let me include my student loans in my plan, but even still, the student loan company put the status of my student loans as "default" because of the CH 13. So I pay on them but have them reported as in default, but I guess considering that my trustee could have said no payments included, and they earn all this extra interest in the meantime, I shouldn't complain.