Nothing can be more frustrating to a person who needs to make a payment on their student loans than their inability to work with the student loan servicers. (FedLoan, Navient, Great Lakes, NelNet) More often than not, the servicers want far more per month than they can afford. That is when seeking the advice of Chris Bush, San Diego Bankruptcy Lawyer, becomes so necessary.
When a client wishes to pay their student loans, I help them arrive at a monthly payment they can afford. Often times I assist them in getting into the best available repayment plan, such as an Income Driven Repayment Plan, IDR.
However, to be in an Income Driven Repayment Plan, IDR, the client must not be in Default. Often times, I need to assist the client in getting out of Default, and then into a repayment plan based on their income.
Sometimes clients are ineligible to cure the default status of their student loans. This happens quite often, especially when dealing with old or long ignored student loans. That being the case, I can use the Chapter 13 Bankruptcy process to accomplish a reasonable payment per month to address the student loans. I review all their reasonable expenses and all their income, and assist them with developing a solid payment plan that they can fit into their household budget. This is the disposable income that can be used to fund a monthly Chapter 13 plan.
Not everyone can be in a Chapter 13 Plan because there are limitations to the amount of money that is owed. These debt limitation are spelled out in the Bankruptcy Code at 11 USC 109(e), Chapter 13 Eligibility.
At first glance, these limits seem beyond any limitation a typical person contemplating a Chapter 13. We often see the amount of Student Loan Debt, coupled with all the other unsecured debt, may go beyond these limits. Read more here about Student Loans.
I have been following the developments in this area. There are two recent Bankruptcy cases that have been decided which ease the Chapter 13 debt limitation if there is substantial student loan debt. One Judge from Illinois issued a ruling indicating that there should not be any debt limit where the vast majority of unsecured debt is student loans.
This issue has yet to be decided in the 9th Circuit, so we can only wait and see how the Judges in the Southern District of California would view this issue. The leading cases involving somewhat similar facts, albeit not student loans, some Courts have ruled that Chapter 13 eligibility may be granted, despite the fact that the total debt limits exceed the amount stated in the Bankruptcy Code.
What this means is very simple. As the cost of Higher Education rises, more debt will likely be incurred as a result. If a student loan borrower struggles to make the student loan payments at some point, they may be eligible for Chapter 13 Bankruptcy Relief.
Do you wonder how these developments will affect your student loan status? Call a San Diego Student Loan Lawyer at (619) 295-3322 to schedule a free initial consultation.