Afraid to file... not sure where what to do

[Jupiter8]

So here's my situation. My parents are looking into filing bk chapter 13, since my mom just got laid off. With all the credit card bills, Im not sure if we can survive each month once unemployment runs out. I, their son, am back in school but still have student loans left to pay. Several years ago before my mom got laid off, my parents told me that its ok to go back to school since they will pay the minimum for me on my student loans. My dad also co-signed it. The other problem is that my dad has a 401k loan that he is repaying back.

I am concerned that if he goes ahead and file with the student loan and 401k payments, the trustee will dismiss the case. There's a $1500 up front fee that we will have to pay the attorney before filing. If the trustee dismisses our case, I'm not sure what to do.

I live in Indiana.

[falken]

401k repayments are allowed as an expense.

I'll let someone with more student loan experience answer, but shouldn't you be able to delay paying those loans until you are back out of school?

The trustee is not going to dismiss the case as long as they can propose a feasable plan, and are not attempting to defraud the court. They don't dismiss your case based on your expenses.

[falken]

I just reread your message... If your mom is currently unemployed I would wait unless there is a pressing reason to file (law suit, garnishment, etc.).

Stop paying the credit card bills and any other unsecured debt and use that money to survive.

You can file for BK after your mom returns to work, or try and propose a plan after the unemployment runs out using only your dads income (or file a ch7 if qualified).

[Jupiter8]

401k repayments are allowed as an expense.

I'll let someone with more student loan experience answer, but shouldn't you be able to delay paying those loans until you are back out of school?

The trustee is not going to dismiss the case as long as they can propose a feasable plan, and are not attempting to defraud the court. They don't dismiss your case based on your expenses.

They are private loans, and cant be deferred. I really do hope the trustee allows my dad to pay my minimum while in a chapter 13, or else Im not sure how I could come up withe the money.

[Jupiter8]

I just reread your message... If your mom is currently unemployed I would wait unless there is a pressing reason to file (law suit, garnishment, etc.).

Stop paying the credit card bills and any other unsecured debt and use that money to survive.

You can file for BK after your mom returns to work, or try and propose a plan after the unemployment runs out using only your dads income (or file a ch7 if qualified).

The problem with filing a chap7 with a current 401k loan is that the case will be labeled as "abusive." So that's not an option until the loan is paid off, which is still another two years.

[woeisme]

I think your parents have to do what is best for their own financial interest, regardless of how it affects your loans. I doubt a trustee is going to allow payments on a student loan that is not theirs, although there are a few that allow such things (Southern Ohio district was real reasonable with our student loan payments in CH 13). Yes, your parents told you that they'd pay your loans so you could stay in school, but that was before Mom lost her job. So you might have to put school on hold for a while and get a job to pay those loans yourself. So I would just hope for the best, but prepare for the worst, that you will need to pay your own way for a while. Try to be supportive of your parents through this tough time, as it sounds like they've always tried to support you. I hope it works out for you all, good luck!

[rrockinggramma]

Your parents will never again be able to get a private student loan. However you could. Their Bk will not effect you, or it shouldn't. You can apply for aid at your school and if you are denied for the subsidized stafford then you can qualify for the unsubsidized one and if your parents apply for a parent plus loan to cover the difference and are denied, YOU can then apply and pick up the difference.

Since your parents are in financial difficulty now, you need to be responsible for coming up with your own finance. Get yourself to the financial aid office at your school and start the process. Hopefully you already filed your FAFSA

You can apply for forebearance while in school. What private loans are these anyway. Even PLATO from wells fargo waited until my kids graduated to begin repayment.