Your Student Loans And Chapter 13 Bankruptcy: What You Should Know
When you are struggling with your finances and in your attempts to pay your debts, you may find yourself considering filing for chapter 13 bankruptcy. However, in your attempts to get your finances back in order, you may not fully understand what to do with your federal student loans. In order to avoid making any mistakes that could cause you trouble with your bankruptcy case or your finances going forward, get to know more about your federal student loans and chapter 13 bankruptcy -- and how you can handle the situation.
Federal Student Loans Are Not Automatically Included In Your Chapter 13 Filings
In order to have federal student loans discharged during bankruptcy, you will need to specially request that. You and your bankruptcy attorney will need to prove that paying your student loans causes you undue hardship. This can be difficult to prove due to the numerous options for repayment of student loans as well as the many options for delaying payments.
You May Be Able to Suspend Payments While You Pay Your Bankruptcy Discharge
What often happens with federal student loans that are not eligible for inclusion in your bankruptcy settlement is that they are put on hold temporarily. At the minimum, while your bankruptcy is being filed, you can have your federal student loan payments put on hold in what is known as an administrative forbearance.
This administrative forbearance will be placed only if you contact your student loan servicing company and let them know you are filing for chapter 13 bankruptcy. You will need to provide them with the fact that it is a chapter 13 filing as well as your case number and your attorney's contact information. This will give them the information necessary to put your loan payments on hold.
On top of this temporary hold, you may be able to have payments postponed for the full 3 to 5 years that you are paying off your chapter 13 settlement. Talk to your student loan servicing company about forbearance and deferment options for your student loans during this time as well as lower monthly payment options for you once your settlement payments are complete.
Now that you have a better idea of what will happen with your federal student loans when you file for chapter 13 bankruptcy, you can be sure that you take care of your student loans in the right way while going forward with your bankruptcy. To learn more, speak with an attorney like John G Rhyne Attorney At Law.
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