Student Loans And Chapter 13 Plans
Student loans cannot usually be discharged through bankruptcy cases. The only possibility is if the person can prove undue hardships and the court believes it. Only then it could be discharged. However, one can always try to discharge the student loan through Chapter 13 of bankruptcy. |
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In some cases, attorneys distribute a slightly higher percentage of the debtor’s income to student loans. By doing this, they establish in the court that the debtor is using the income to pay off student loans instead of allowing the trustee to disburse it.
Even after filing for Chapter 13, the debtor can make regular payments to student loans. However, if the student loans have been taken from federal financial institutions, then they cannot be discharged and they have to be repaid through regular payments. Before filing for bankruptcy, the debtor can try various other options like debt consolidation. If it is too late, then filing for Chapter 13 does not insulate them from a few types of loans.
Technically most attorneys would ask you to consider paying off the student loan on your own and discharging all the insecure debts, if any. However, if you want to file for bankruptcy for the sole purpose of discharging student loans, then it is more complicated and sometimes impossible.
Chapter 13 follows a specific plan for discharging the debt by using your assets to pay off the creditors. It is possible to arrange for paying the student loan outside the plan. Talk to your lawyer about the various options regarding student loans to get a better perspective.
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