Calculation of Deductions Allowed

[jaina]

I don't qualify for a Chapter 7 based on income alone, however, if I were to take maximum allowable deductions under Part 5 of the Means Test, I pass with more than ample room to spare. My question is... can I legally maximize my deductions? I'm going by information based on what's allowed in my state/county according to legalconsumer.com. In the questionnaire packet that I submitted to my lawyer I held back and under-budgeted my monthly expenses, which was a mistake... is it too late to change that? I would really, really rather do Chapter 7... not Chapter 13.

[Boscoe]

Unless you have signficant assets and/or something not exempted that you really want to keep, chap 7 is always preferable to everyone.

Call your attorney and say that you left a bunch of items out and would like to revise the forms before filing. Include EVERYTHING, think of everything you spend $ on. Good luck!

[jaina]

I have no assets. I'm just trying to get rid of my credit card debt. I have student loans that I'm currently deferring. If I'm shoved into a chapter13, I'll be right back here when those loans become due again in January... negative income.

[EveryDayAdam]

I have no assets. I'm just trying to get rid of my credit card debt. I have student loans that I'm currently deferring. If I'm shoved into a chapter13, I'll be right back here when those loans become due again in January... negative income.

Student loans are automatically deferred during the entire length of a chapter 13. So once you file, you won't have to pay them at all. IF they attempt to collect, then they are violating the automatic stay.

[jaina]

I'm wondering then why my attorney did not tell me to increase my deductions... is it possible that he's pushing me into a chapter 13 so that he'll be paid more? Or is he legally not allowed to tell me that?

[jaina]

Call your attorney and say that you left a bunch of items out and would like to revise the forms before filing. Include EVERYTHING, think of everything you spend $ on. Good luck!

I'm wondering then why my attorney did not tell me to increase my deductions... is it possible that he's pushing me into a chapter 13 so that he'll be paid more? Or is he legally not allowed to tell me that?

[WantToBeDebtFre]

Student loans are automatically deferred during the entire length of a chapter 13. So once you file, you won't have to pay them at all. IF they attempt to collect, then they are violating the automatic stay.

My attorney told me that in a Chap 13 your student loans become a priority debt and that they will get paid before your credit cards. Anyone know if that is true?

[jaina]

I thought student loans are considered "secured" debt and as such are not included in the bankruptcy? I mean you have to declare them, but I didn't think bankruptcy affects their status. Someone please clarify this?

[lrprn]

Student loans in Ch 13 are a horrible, swirling, big black hole. The bk law considers student loans to be non-secured loans just like your credit cards except they can't be discharged

The current bk law clearly states that both private and federal student loans are not dischargeable (except under very restricted circumstances). But the current law also states NOTHING about how to pay these non-dischargeable loans back inside a Ch 13.

If your student loan debt is small enough to be paid back in total by the end of your plan, then they can be included in your plan as a priority debt. However, since most filers owe far more than can be paid back in full within five years while making a Ch 13 payment as well, this is not a workable option for most Ch 13 filers.

The unfortunate reality is that since student loans are typically placed into deferment when you file Ch 7 or Ch 13, there's a strong tendency for Ch 13 trustees to think that there are no immediate consequences (loss of an asset for example) if you don't pay, so that they don't allow student loan payments during Ch 13 to maximize the amount available to repay to creditors. The problem is that although the payments might not have to be made, INTEREST still can be charged on the loans. That piles a large amount of extra owed once your Ch 13 is finally discharged 3-5 long years later.

This is WRONG. Everyone on the bankruptcy side knows it's WRONG. But until the bk law is amended (if ever), this is what we 13ers have to deal with. The only glimmer of even neutral news in this situation is that after 25 years, if your loans are federal , they will wipe out anything else that's left at that point.

We want to pay back the Parent Plus loans we took out for our son's college tuition. But knowing that we aren't allowed to pay even the current level of interest on them for five years while the interest continues to compound will add at least $5,000 to what we owe when we finally emerge from Ch 13. That's just plain WRONG! But it is 100% legal at the moment.

Write, email, and call your congressionsal reps and tell them how bad this is. Keep it on their radar. Maybe they'll finally do something about it. If they can get an amendment passed to allow tithing in Ch 13, let's see if we can get them to amend the law to deal with the horrible student loan situation too.