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Student loans important considerations for Chapter 13 filings

For many people in the Cincinnati area, filing for bankruptcy may be the best option for their situation. Whether it's Chapter 7 or Chapter 13, filing for bankruptcy is often a difficult choice, but one that can allow for some semblance of moving forward while decreasing debt.

As readers of our blog will know, there are some kinds of debts that are not generally dischargeable via Chapter 13 bankruptcy. One of them is student loan debt. Federal student loan debts are notoriously difficult to discharge in bankruptcy. For many people, credit card debts and mortgages are much more pressing matters; if filing for bankruptcy means staying in one's home, the choice is pretty clear for most people.

However, student loans may not always get the payments they need when a person is in Chapter 13 bankruptcy. Payments may be restricted for three to five years, depending on the term of the bankruptcy. This could mean that minimum payments to student loans are missed; the balance could grow, and with interest and fees, a person's student loan debt could be considerably higher at the end of bankruptcy than at the beginning.

But, again, if it's a choice between putting off student loan payments and keeping one's house, the better choice is almost always the house. Every person's situation is different, of course, which is why it's important to consult with an experienced Cincinnati bankruptcy attorney if these are options you are taking under consideration. An attorney can explain the options and ramifications to someone considering filing for bankruptcy.

Source: The Wall Street Journal, "How Bankruptcy Can Send Your Student Loans Soaring," Katie Stech, Oct. 1, 2013

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