Good News on Student Loans under Income Driven Payment Plans!
By Stephen Behrends, Feb 4 2020 03:10AM
If you have to file Chapter 13, will you be able to keep making the payments on your income based repayment plan while you are in Chapter 13? The answer from the US Trustee's office is yes!
It is very difficult to discharge student loans in bankruptcy.
Many people have set up Income-Driven Repayment Plans. While there are a confusing array of different IDR plans, the number of people enrolled in them has significantly increased in recent years.
Generally, when someone with student loans has to file bankruptcy, the loans go into an administrative forbearance status that suspends collection and communication activity while the bankruptcy is pending. With Ch 13, that can be up to 5 years. However, the interest continues to accrue and so the balance on the student loans can be much higher at the end of the case than it was at the beginning.
The US Trustee has a template for Ch 13 plan provisions that will allow, under certain circumstances, the person in Ch 13 to continue to make monthly IDR plan payments while they are in Ch 13.
While it is complicated, it is good news for people with IDR plans who have to file Ch 13.