Student loans deferred?

[Jammed]

I hope someone can explain what happens with student loans in ch 13. I know it's almost impossible to get them discharged - but what about the monthly payments? I've seen some postings which say the loans are automatically deferred during the 3 or 5 year ch 13 repayment period and that the lenders might not accept payments (even if the person could afford to make them outside the ch 13 payment). I've seen other postings that say the person is making the student loan payments during their ch 13.

Between me and hubby our monthly student loans are close to $1,000 a month. Depending upon if we are required to or have the option to include the loans in our ch 13 payments or to exlcude it from our disposible income, that would have a big impact on our ch 13 payment amount. I'm in PA, does anyone have experience with what happens in PA?

Also if the student loans don't have to be repaid until after the ch 13 ends, will the lender treat the loan as being delinquent and require a big payment to make-up the missed payments once the ch 13 ends?

[lrprn]

I've seen some postings which say the loans are automatically deferred during the 3 or 5 year ch 13 repayment period and that the lenders might not accept payments (even if the person could afford to make them outside the ch 13 payment).

Student loans are deferred during Ch 13. However, if a Ch 13 filer has the extra funds during their 13 to make payments (regularly or irregularly) to their student loan lender, it's perfectly fine to do so.

I've seen other postings that say the person is making the student loan payments during their ch 13.

Again, if the 13 filer is using leftover income during their 13 to make student loan payments (full or partial payments), that's fine. However, since ch 13 plans are set up to take *all* disposable income and because getting an emergency fund together is more important than payments to student loans, most filers don't pay anything on their loans during the entire length of their plan. The filers that are able to set anything aside to pay down student loans during an active 13 are few and far between.

I'm in PA, does anyone have experience with what happens in PA?

Hopefully one of our PA members with student loans will share what their experience has been.

Also if the student loans don't have to be repaid until after the ch 13 ends, will the lender treat the loan as being delinquent and require a big payment to make-up the missed payments once the ch 13 ends?

No. You start payments on the amount owed when your plan is discharged. Don't wait for the lender to contact you. Contact them immediately on discharge and get the lowdown about what is owed and start regular payments up again the first month after discharge. Some shadier/greedier lenders will charge late fees and penalties if you don't send in a payment the very first month.

[wipetheslate]

You get to put them in deferment and they sit waiting for you. Some fresh start that is!

I hope the Supreme Court rules soon on the Chapter 13 student loan case it heard on December 1.

[Jammed]

Thanks for the info! I really can't afford my student loans until my son stops going to daycare in a few years. So its good to hear that they will be deferred.

[NoTomatoCan]

Just to clarify (and not to nitpick, but the difference can be huge - at least it is in my personal situation)...

Under most circumstances in a bk, student loans go into a forbearance, not deferment. For those of us who have borrower benefits following a student loan consolidation, typically 1%-2% off your interest rate for continual on time payments, you lose those benefits with a forbearance, but not a deferment. While 1%-2% doesn't sound like much, with $146k in student loans, paid over 30 years, it will cost my wife and I about $40k.

Luckily our local custom (is that the right phrase?) is for the trustees to treat student loans like any other unsecured, so they will actually get a chunk of our monthly payment. Not enough to cover the interest that builds up, but at least it is something.

When we asked our attorney about this (we are in a large college town, so he was quite familiar with student loans in BK) he stated that if you are in a 3 year plan you can possibly get a economic hardship deferment and keep your borrower benefits (time limit for economic hardship is 3 years). We are over the median and in a 5 year plan, so unfortunately it wasn't an option for us.

End result (whether deferment or forbearance) you don't have to pay them in your BK. And if you don't have any borrower benefits everything I just wrote is moot!

[wolfkingen]

I'm located in MN and just had my 341 meeting yesterday. They took into account my student loan payments when figuring my payment to the trustees. I am to continue to make payments while in the plan.

I'm not sure if this was allowed because I was current on my payments, but I'm not complaining. It's that much less that I need to pay to the trustees and I'll have 5 years of on-time payments when I come out of Chapter 13.

[NoTomatoCan]

Wolfkingen - That is VERY fortunate. I wish our trustees allowed that - I asked!

Would much rather pay down my SLs, keep my % savings, and not pay the trustee!