Bankruptcy Basics

Does a Chapter 13 Bankruptcy Filing Erase Student Debt?

Posted by Craig Black | Oct 15, 2024 | 0 Comments

Student loans are a large part of debt, with the average debt balance totaling $40,681. If you're considering filing for Chapter 13 bankruptcy, though, you may wonder if you can make your student debt part of the process. While courts will require you to repay your student loan debt as part of a Chapter 13 filing, there are some provisions that can make it easier.

If you're considering bankruptcy, the Craig Black Law Firm can help. I understand the ins and outs of bankruptcy law and will work with you to come up with a plan. Give me a call at 678-888-1778 or complete this online form.

Student Debts and Bankruptcies

Generally speaking, federal debts like student loans and back taxes are exempt from the bankruptcy process. If you're filing Chapter 7, that means student loans aren't one of the debts eligible for discharge.

If you're filing Chapter 13, though, your debts will be reorganized. You'll be given a payment plan that will help you get a handle on your finances. Your student loans are part of that, so your student loan debts will be one of the obligations you'll repay after your bankruptcy filing is granted.

There is some good news, though. Under the new student loan forgiveness rules, debtors with loans are given one month of credit toward loan forgiveness for every payment made on a repayment plan. That credit counts even if the payment is directly toward your student loan.

Student Debt Treatment in Bankruptcy

Although student loans still require repayment in bankruptcy, they are considered nonpriority debt. This means your student debt will be treated similarly to credit cards and medical bills. Priority debts like child support, some income taxes, and criminal fines will be paid first, and then you'll start paying on your nonpriority debts.

Why is this good news? Priority debts have to be repaid in full after bankruptcy. The repayment plan simply seeks to reduce your monthly burden to make things easier to manage. Nonpriority debts don't have to be paid in full, so you'll get a temporary break from the pressure to make higher payments on your loan.

That brings even more good news. Your Chapter 13 filing means creditors can't contact you to demand payment. This is due to something called an automatic stay that's issued when a bankruptcy is granted. The automatic stay usually prohibits creditors from suing, garnishing wages, or contacting you to demand payment during the time the stay is in effect.

The Craig Black Law Firm and Student Debt

The Craig Black Law Firm specializes in helping debtors navigate the murky waters of bankruptcy law. I regularly work with clients who have student loan debt and can help you set realistic expectations. I can also help you review your finances and decide the best course of action, whether it's Chapter 13 bankruptcy, Chapter 7 bankruptcy, or another option.

If you're considering bankruptcy, give me a call, and we'll discuss your situation. Call me at 678-888-1778 or fill out this confidential online form, and I'll be in touch.

About the Author

Craig Black

I had never thought much about bankruptcy law, but after graduating from law school, I moved to Chicago. My first job as an attorney was with a law firm that specialized in bankruptcy. Within a few years, I went from being the youngest attorney in the firm to a managing attorney. During my time t...

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