Chapter 13 bankruptcy and student loans

When you are filling for Chapter 13 bankruptcy you arrange to pay your debts according to a payment plan. The chapter 13 bankruptcy payment plan is made under trustee supervision that also will make sure that the money paid by you will go the right creditor.

In Chapter 13 bankruptcy student loans are not dischargeable debts. They have to be paid in full and they will be part of the payment plan. According to the “Bankruptcy abuse prevention and consumer protection act of 2005” the privately student loans enter the same category as the standard student loans and need to be paid in full.

There is a single exception when is about Chapter 13 bankruptcy and student loans; you can receive a discharge for the student loan only on “undue hardship” (the undue hardship is when you unable to works and you have no chance to get a job in future.)

Student loans are loan contracts like any other and they are subject to challenge for fraud and they are not enforceable if the school has closed prior to the student finishing his training.

So if you are planning to fill for chapter 13 bankruptcy thinking that you can discharge the debts from student loans we suggest reconsidering. If you are in very serious problems and you can benefit from a “undue hardship” then you can hope for a discharge, otherwise you have to be prepared to pay back.