How are student loans and retirement loans figured into payment plan--Please help!!

[bobbyquefour]

I know student loans and retirement loans are not dischargeable, but they are also not allowed to be written down on my schedule J of expenses in my area. How will this affect my payment plan if I am forced into a chapter 13 instead of a chapter 7? I have to pay them anyway, so it seems unfair to me that they would be disregarded when figuring out what my payment would be.....

I can't seem to get much information about student loans and bankruptcy. Are you allowed to defer them by law to help in your payment plan?

I have no more forbearance time left on them and unless they are deferred they MUST be paid, or else, of course.....very frustrated....any help would be greatly appreciated.

[lrprn]

I know student loans and retirement loans are not dischargeable, but they are also not allowed to be written down on my schedule J of expenses in my area. How will this affect my payment plan if I am forced into a chapter 13 instead of a chapter 7?

First, how realistic is it that you could be forced into Ch 13? What issues are you facing in your Ch 7 that makes Ch 13 a possibility?

For the sake of argument, let's say you are forced into a 13. First, you'll want to file a 13 with an experienced lawyer who frequently files both Ch 7 and Ch 13 cases. That lawyer can tell you what your options are around your student loans if you end up in Ch 13.

I have to pay them anyway, so it seems unfair to me that they would be disregarded when figuring out what my payment would be.....

Thank your 2005 congressional representatives who created the student loan "black hole" in Ch 13. Can't discharge the loans, and not allowed to list them as an expense in some (but not all) local courts. Sorry yours appears to be one that won't allow them to be listed as an expense.

I have no more forbearance time left on them and unless they are deferred they MUST be paid, or else, of course.....very frustrated....any help would be greatly appreciated.

Chances are the bankruptcy court can force your student loan lender to put the loans "on hold" in some manner. No lender likes to go up against the federal bankruptcy court.

Check with your Ch 7 lawyer (or if you don't have a lawyer yet, ask during your 3-4 free initial consultations with experienced bk lawyers in your area) to see what to expect regarding your student loans no matter which chapter you file.

[ccfriend]

I wanted to be able to pay on my student loans while in my ch 13. It was even stated on my plan I would pay them outside the plan but when I called to see where to make my payment I was told that student loans are automatically defered for the duration of the chp 13. They still collect interest but I can't pay on them.

[lrprn]

I wanted to be able to pay on my student loans while in my ch 13. It was even stated on my plan I would pay them outside the plan ....

So your lawyer listed your student loan payments on the Means Test and Schedules as an monthly expense?

...but when I called to see where to make my payment I was told that student loans are automatically defered for the duration of the chp 13. They still collect interest but I can't pay on them.

Many student loan lenders will accept voluntary payments during an active 13 - ours does (we have federal Parent Plus loans). Do you have private or government student loans? Private lenders are less likely to allow payments during a 13.

First inform your lawyer your student loan lender is refusing to accept payments and see how he/she wants to proceed. If your laywer agrees, call your student loan lender again and this time ask to speak to the person's manager or supervisor. Try to get your lender (or their representatives) to agree that you can pay at least the interest every month, although there may be months when that is impossible. As long as the payments are voluntary, there is no violation of your automatic stay.

If your student loan lender agrees to accept voluntary payments, then you *MUST* make certain that the lender is applying your payments sent to the loan immediately. There have been isolated cases where lenders use your bk as an excuse to accept the payments but then they don't apply them to your loan, stating they will hold the money and apply it when you complete your 13. In the meantime, the interest continues to build. Don't allow this to happen to you! Keep a close eye on your lender and ensure they are posting your payments regularly against your balance, and that your balance is going down as expected.

[bobbyquefour]

I wanted to be able to pay on my student loans while in my ch 13. It was even stated on my plan I would pay them outside the plan but when I called to see where to make my payment I was told that student loans are automatically defered for the duration of the chp 13. They still collect interest but I can't pay on them.

You must mean they were in a type of forbearance. Deferred means no interest accrues. At this point I am just concerned for me that I will not be able to claim them as an expense but yet still be forced to pay them while in chapter 13.....so it will 1) Look like more money I have to pay into my plan and 2) Still have to pay the loans as well since they are not dischargeable. That is just not going to be possible if that is the case. My student loans are $350 a month and that is about 15% of my net income every month!!

I don't want to have interest accrue but I would take that instead of going into default and being garnished any day!

[NoTomatoCan]

With $140k of student loans between my wife and I, I have done a bit of homework on the matter...

While you may be out of the allowable "optional" forbearance months, you will not be forced to pay them while in BK. Most lenders allow you to call them up, tell them you are having a hardship, and they will give you a forbearance. I believe that is what you are referring to when you say you have no more forbearance months left. In BK, that is not what happens (so no need to worry about being out of "forbearance time")

As lrprn points out, the way your student loans are treated will depend on your local court rules. Some (few) are generous and allow you to include them in your plan, others treat them as any other unsecured creditor and throw them in the mix to pay them whatever % you are paying to unsecured, most just put the payments on hold (while interest accumulates) and you begin paying them after your case is completed.

Talk with an attorney in your area who is familiar with Student Loans in BK to give you the specifics on your case, but I would not fret about this. If the court is not allowing you to pay them as part of your plan (either to the trustee or to the lender directly), then the lender can not come after you while you are in BK for payment.

[ccfriend]

My loans were originally consolidated from the Dept of Ed to my credit union. When I filed BK they went to Michigan Guaranty Agency. The loans were not figured into the the means test but they were on the schedule J. It was added to the end of my plan as a little comment that I would pay on them. I called the Guaranty and they would not guarantee that the payment would not just sit in an account until after my discharge. I mentioned it to my lawyer who basically said not to worry about it. On my credit report it says that the loans are in deferment.
It is kind of frustrating because I would love to still be paying on them so I am not accuring loads of interest but everytime I call the agency no one seems to be able to help me.

[bobbyquefour]

With $140k of student loans between my wife and I, I have done a bit of homework on the matter...

While you may be out of the allowable "optional" forbearance months, you will not be forced to pay them while in BK. Most lenders allow you to call them up, tell them you are having a hardship, and they will give you a forbearance. I believe that is what you are referring to when you say you have no more forbearance months left. In BK, that is not what happens (so no need to worry about being out of "forbearance time")

As lrprn points out, the way your student loans are treated will depend on your local court rules. Some (few) are generous and allow you to include them in your plan, others treat them as any other unsecured creditor and throw them in the mix to pay them whatever % you are paying to unsecured, most just put the payments on hold (while interest accumulates) and you begin paying them after your case is completed.

Talk with an attorney in your area who is familiar with Student Loans in BK to give you the specifics on your case, but I would not fret about this. If the court is not allowing you to pay them as part of your plan (either to the trustee or to the lender directly), then the lender can not come after you while you are in BK for payment.

Thank you for your response, and CC for yours as well. Though the idea of interest accruing is not a pleasant one, I will take it to the alternative of having to be in a payment plan AND pay the full amount of my loans each month, which is not possible with the amount of my loans each month. So thank you both very much for the info.

[indebt00]

we are in similar boat...just posted about it.

our lawyer is trying to get the student loan as paid outside the bk and did list it as an expense. he said it was worth a try...the Trustee may require it to be inclued with the unsecureds....so while we are in confirmation limbo we just apy the payment.

I did try to call today to see if they are actually applying my payments but the place was closed.