Pay student loans while in plan?

[flower04]

OK, so this is from my attorney,
"The student loans can’t be paid “on the side” while you are in the Chapter 13. The Chapter 13 acts like kind of a deferment, interest accumulates, but no payment is due during the chapter 13. We will make sure there is a claim on file for them and they will receive a pro rata distribution of any funds that are distributed to unsecured creditors. "

Hope that answers my original question in the first post. At least in our situation.

[indebt00]

Technically for non-govt student loans this is possible because non-govt SL lenders can do pretty much anything they want around late fees. Look at your original loan agreement to see how the lender deals with late fee collections.

However, so far in the almost four years I've been here at BK Forum, we've never had this happen to any of our Ch 13 members who successfully finished their Ch 13s. They were notified about the full brunt of the unpaid interest added to their account afterwards when their SL bill payments started up again almost immediately after receiving notice their 13 was finally discharged. (Nice of the lender, huh )

Do be sure to dispute any late fees added to your SL account while it was in forebearance. The lender can't charge late fees if the SL payment has been waived for the length of your Ch 13 plan.

that makes me feel better if it gets included...my lawyer says this trustee usually likes to include them. thx

[treehugger1]

Flower, That is what happens in my district with one twist. If you are in a 100% plan, the trustee will allow payments to SL's. But, I don't believe it is an allowable expense here. The trustee can add them in the plan. I don't make enough salary to pay on a 100% plan and SL's. Therefore, the SL's sit on the sidelines for 5 years, and in my case, the interest would add another $25K - $30K. After nearly three years, I still have not filed. I am hopeful that we might get better resolution on this matter in the future.

[flower04]

Why is it that student loans, a loan that is supposed to make your life better by getting an education, is one of the debts that is non-dischargeable through a BK?? I understand why-partially-because of abuse but it still seems like there should be some way to fix it so after we're done with the 13 we don't have a ton of debt waiting for us.....including interest!!
I'll get off my soapbox now.

[woeisme]

Had the exact same experience. Nelnet even put my loans into default, despite never missing a payment, said that was just standard because I filed CH 13 even tho my trustee allowed full expenses in my plan! Said they;d take my $, but not apply it to the loans, just keep it in an escrow account (meaning my interest would continue to compound!) until after Ch 13 ended. So I stopped paying on them too.

For my bk my lawyer calculated them into my budget. My plan states that I will pay the student loans outside the plan. Well when I went to pay them each month I was told by the student loan holder that I could not pay them because of the bk. I asked the Sallie Mae if I could just send a check anyway and the person on the phone said they were not sure if the money would even be applied to my loan. So, I haven't paid on them. I have been using the money I would have paid each month to put in a saving account and then when my bk is done I will pay a big lump sum!

[treehugger1]

And, I think this is exactly what we see happening. The BK laws need to address the fact that SL's should be treated as priority unsecured debt, just as taxes are. Everything got a bit out-of-whack once the private SL's began. But the inconsistency in how different BK districts treat SL's is outrageous!

[lrprn]

Why is it that student loans, a loan that is supposed to make your life better by getting an education, is one of the debts that is non-dischargeable through a BK??

There's a long history of gov't student loans being non-dischargeable in bankruptcy. Back in the 80s and 90s, many doctors, lawyers, and other highly paid professionals would take out enormous amounts of SLs to get through school, then when school was done they would file bankruptcy and wipe them all out even though they were perfectly capable of paying at least some of them back. Finally back in 1992 (I think), Congress changed the bk law to stop this fraudulent practice. That's how government student loans originally became non-dischargeable.

The situation we see now with private student loans joining federal student loans as non-dischargeable came about because SallieMae and other private SL lenders paid out an outrageous amount of "legal" money under the tables to our senators and representatives back in 2004-2005 when the current bk law was crafted to make sure private student loans would now also be non-dischargable and to keep all student loans unsecured but non-dischargable in bankruptcy.

It's completely unfair to 13 filers to come out of their 13s owing many thousands more on their student loans than when they filed, but no one in Congress is willing to go back and fix an obviously broken part of the law.

[flower04]

My sentiments exactly lrprn!

[flower04]

Is there something we can do about this...i.e. write a letter to a senator or something? I think it is terrible. My friend's DH has over 100K in student loans in an occupation he can't work in because of the changes made after 9/11--he graduated in december of that year and had to go to a different industry because no one was hiring in the one he had education and experience in. Now they are stuck with a monster payment every month and there is no end in sight. They foreclosed on their home and moved out of state to a cheaper state all because of the SL. It is just sickening.