Although Chapter 13 will not allow you to discharge all of your student loan debt, it can be an effective tool at reducing your student loan payments for five years and giving yourself time to increase your income and afford to pay the regular monthly student loan debt. If you have little or no disposable income, you may not have to pay anything towards your student loans in your repayment plan. However, interest will continue to accrue on your student loans during bankruptcy and you will still be required to pay them back after your case is closed. But it will give you five years of breathing space to be able to afford the payment.
You can still pay back a portion of your student loans through your Chapter 13 plan. The benefit of Chapter 13 is that you only pay back what you can afford. If you cannot afford your regular student loan payments, you can lower your monthly payment by paying a smaller amount through your Chapter 13 plan. Since Chapter 13 bankruptcies can last as long as five years, this can allow you time to increase your income and more easily afford your payments after bankruptcy.
When you file for Chapter 13 bankruptcy, an automatic stay goes into effect that prohibits almost all creditors (including student loan lenders) from trying to collect their debts. This means that Chapter 13 bankruptcy will stop all collection activities including all student loan companies from contacting you, suing you, or harassing you during your bankruptcy during the bankruptcy period.
To schedule a free consultation, please call Hedtke Law Firm today at our Upland office at: 909 579-2233 or Chino office: 909 457 0183 or Moreno Valley office at: 951 746 1722.