Student Loans – New Ways to Reduce or Eliminate Student Loan Debt in Chapter 13 Bankruptcy

“Save for mortgages, student loans makes up the largest component of household debt for Americans.  And our collective debt keeps growing. At the end of the first quarter of 2018, total outstanding college-loan balances disclosed on credit reports stood at $1.41 trillion, according to the Federal Reserve Bank of New York.” Source:  Wallethub

Student loan debt is a national problem and individuals in Michigan may have it worse than most states.  In a recent study, Wallethub compared all states on 11 key measures of indebtedness and earning opportunities.  From their analysis, they ranked Michigan as the number 7^th nationally, as one of the worst, for student debt compared to income by state.

So what are your options if you are struggling with student loan debt?  While student loan debt is non-dischargeable in a bankruptcy filing, there are ways of decreasing your student loan debt obligations under a Chapter 13 Bankruptcy while also consolidating and eliminating other debts.

Chapter 13 Plan and Student Loan Debt

With recent changes to the Eastern District of Michigan’s model Chapter 13 plan, we are able to prioritize the payment of student loan debt over your other general unsecured creditors, such as credit cards, medical bills, personal loans, loan deficiency debt, etc.  What does this mean?  You can focus your repayment efforts in a Chapter 13 bankruptcy to paying down or eliminating your student loan debt while still consolidating and eliminating any remaining unsecured debts that are unable to be paid through the Chapter 13 Plan. 

Some other unique benefits of resolving student loan debt through the use of a Chapter 13 reorganization plan: 

• If you can pay your student loans in full over the course of the 36 -60 month plan, you will enjoy 0% interest repayment terms.
• If you are struggling to pay student loan debt because of other debts such as credit cards, medical bills, personal loans, loan deficiency debt, etc., we can prioritize the student loan debt before any monies go towards the other unsecured debts.  Any balances owed on unsecured debt is legally eliminated at the completion of the chapter 13 Bankruptcy.
• The Chapter 13 plan can also help resolve issues such as:
  • Home foreclosure
  • Vehicle repossession
  • Property tax and unpaid income tax

By filing a Chapter 13 bankruptcy plan you will also benefit from court protections from your creditors, 0% interest repayment on all unsecured debt obligations and the possibility of restructuring other debts such as the interest rate on your vehicle loan.

Acclaim Legal Services offers free comprehensive consultations to discuss your best debt resolution options.  If a Chapter 13 debt consolidation is not the correct solution for your circumstances, we will evaluate if you can benefit from filing a Chapter 7 bankruptcy to eliminate your unsecured debt obligations. 

Call us today at 866-261-8282 for a free consultation for dealing with your student loan and other debt.  We have 6 convenient office locations in Michigan:  Ann Arbor, Detroit, Dearborn, Flint, Southfield and Warren.