Chapter 13 Can Forebear Student Loan Payments
You do not have to make payments on your student loan payments during Chapter 13 bankruptcy. A portion of your student loans will be paid through your Chapter 13 payments according to the terms of your plan. If you have little or no disposable income, you may not have to pay anything towards your student loans in your repayment plan. However, keep in mind that 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. You’ll have to have a plan after the five years is up.
Chapter 13 Stay Stops Student Loan Collection
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 can stop the collection agency or your student loan company from contacting you, suing you, or harassing you during your bankruptcy during the three or five year period.
Chapter 13 Can Reduced your Monthly 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.