Bankruptcy affects different debts in different ways. You might have heard that you can’t discharge student loan debt, but this is only partially true. Your attorney may recommend filing for Chapter 13 bankruptcy, which involves a debt restructuring plan that lasts three to five years. Your student loans are automatically added to this plan. They’ll continue to accrue interest during the life of the repayment plan, but your creditors can’t attempt collections actions against you.
Chapter 13 bankruptcy repayment plans classify debts. Priority debts must be paid off in full before the repayment period expires. Fortunately, student loans are a non-priority debt. If you have substantial high-priority debts, then you’ll pay less toward your student loans. It’s possible for some of your student debt to be discharged upon your successful completion of your repayment agreement.
Bring all of your questions about Chapter 13 bankruptcy to your consultation with a lawyer at Cutler & Associates, Ltd. You can get in touch with our office in Aurora or Skokie by calling (847) 961-4572.