Student loans are generally unsecured debts and are not treated any differently from debts owed to other unsecured creditors. However, Congress has passed laws that affect the balance of the student loan debt that is not paid to your Chapter 13 Plan. Unlike other unsecured debt that is unpaid in a Chapter 13 Plan with less than 100% repayment, the remainder of the student loan debt is usually NOT forgiven when the discharge is granted upon completion of your Chapter 13 Plan.
For example, if your Chapter 13 Plan requires a payment of 75% of the amount owed to your unsecured creditors, your student loan debt will also be paid 75% through the Chapter 13 Plan. When your Chapter 13 Plan is completed, you will still be responsible for the 25% of your student loan debt that was not paid through your Chapter 13 Plan, plus accrued interest.
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Still have questions about your student loan and your bankruptcy settlement? Contact Heather Moseman at Moseman Law in Mentor Ohio, and we’ll figure things out! Call today!
Source: Cleveland Chapter 13 Trustee Website