Sandra L. Hibsch, P.A.

Tackling Student Loan Debt in Chapter 13 Bankruptcy

Make Your Student Loan Payments More Manageable

Are you struggling with overwhelming student debt? You’re not alone. Roughly 43 million Americans over the age of 18 are also struggling to make payments on federal and private student loans. As of 2019, about one-sixth of the American population owes approximately $1.5 trillion in federal student loan debt – and that’s not to mention the estimated $119 billion in private student loan debt.

As the student loan bubble inflates, this national problem continues to spiral out of control, leaving hard-working Americans with bills they cannot afford. For many debt-ridden adults, student loans are just one part of the equation as they struggle simultaneously with credit card debt, mortgages, and other forms of crushing debt.

If you are feeling trapped by debt and stuck in a financial rut, bankruptcy might be the answer. Unfortunately, student loans generally cannot be discharged in bankruptcy. By filing for Chapter 13, however, you may be able to delay or reduce your monthly student loan payments.

How Chapter 13 Can Help with Student Loan Debt

Because student loan debt is nondischargeable – meaning it cannot be wiped out through bankruptcy – filing for any type of bankruptcy will not completely eradicate the problem.

The good news, however, is the Middle District of Florida Bankruptcy Court has launched a program similar to the Mortgage Modification Mediation program whereby debtors can work with their attorney and the student loan creditors to get the debtor into the appropriate repayment plan based upon their income. Some debtors may qualify for plans that could result in loan forgiveness.

Automatic Stays to Prevent Student Loan Collection

One way filing for Chapter 13 can benefit a student loan debtor is that the bankruptcy triggers an automatic stay. This prevents creditors – including student loan lenders – from collecting debts, which protects you from creditor harassment.

Delayed Payments

Thanks to the automatic stay, individuals in Chapter 13 are not required to make regular payments toward their student loans. This buys you time and gives you a moment of relief from high monthly bills. Keep in mind, however, that interest will continue to accrue even during your bankruptcy.

Lower Monthly Payments

Implementing a Chapter 13 repayment plan can help you lower the amount you pay toward your monthly student loan bill. With smaller and more manageable monthly payments, you’ll have extra income to put toward other debts and daily necessities.

To learn more about how filing for Chapter 13 bankruptcy can benefit student loan debtors, call Sandra L. Hibsch, P.A. at (813) 446-5761.