How Chapter 13 Affects Student Loans

If you're considering filing for Chapter 13 bankruptcy, you may be wondering how your student loans will be affected. The good news is that all collections on your student loans will stop immediately upon filing for bankruptcy. This includes any garnishments or lawsuits that may have been filed against you. Your account will also be placed into forbearance, meaning you won't have to make any monthly payments during the bankruptcy process. 

However, there are some things to keep in mind about student loan debt assistance and Chapter 13 bankruptcy. 

First, interest will continue to accrue on your loans during the bankruptcy process. A high-interest rate means that, by the time you're able to declare bankruptcy, you could owe thousands more than what you originally took out as a loan. 

Additionally, there is no credit for loan forgiveness in Chapter 13 bankruptcy. If your plan does not let you keep making student loan payments outside of bankruptcy, you cannot earn any credit towards the "Public Service Loan Forgiveness Program" or "income-driven repayment plan" forgiveness for the next three to five years. 

Finally, your cosigner will be protected under Chapter 13. The automatic stay will stop any lenders from demanding payment or filing a lawsuit against your co-signer. Additionally, their credit score should not be affected by your bankruptcy. 

After a Chapter 13 bankruptcy discharge, what becomes of student loans? 

After a person's Chapter 13 bankruptcy ends, they are discharged from their unsecured debts but will still owe money for child support, alimony, and student loans. After your bankruptcy case is closed, student loan creditors will start contacting you for payment. See if your loan servicer can help you set up a payment plan based on your income. If you have wage garnishment or pending lawsuits before filing for bankruptcy, they will continue after your case is over. 

Chapter 13 bankruptcy can be a helpful tool for those struggling with debt, including student loan debt. If you're considering filing for Chapter 13 bankruptcy," speak with an experienced bankruptcy attorney to understand how your student loans will be affected.

Lewis and Jurnovoy is a local law office serving the Florida Panhandle. We specialize in bankruptcy law, including Chapter 7 and Chapter 13 bankruptcy. We will work to achieve the best financial remedy for your outstanding debts. 

Lewis & Jurnovoy PCB 
2714 West 15th St 
Panama City, FL 32401 
(850) 913-9110 
https://www.LewisandJurnovoy.com