We share some of the most commonly asked questions submitted by readers so that everyone can benefit from the answers.

Student Loan Debt

Help with Student Loan Debt?

Does Chapter 13 Bankruptcy help with student loan debt?

In most circumstances, a bankruptcy court will require repayment of student loan debt. Chapter 13 bankruptcy rules treat student loan debt similar to priority debt–it is payable in full like back taxes and child support payments. Prior to 2005, student loan debt was only dischargeable when funded by a private lender. With the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act, however, privately funded student loans are now treated the same as student loans guaranteed or issued by the federal government. This means that all student loan debt is only dischargeable upon a showing of undue hardship. It is difficult to convince a bankruptcy court to discharge student loan debt.

A bankruptcy court will consider such factors as poverty, the inability to pay the loan due to a permanent disability, and a debtor’s good-faith effort to repay the loan for a long period. To have a student loan debt dismissed, a debtor must file a separate action in bankruptcy court called a Complaint to Determine Dischargeability of a Debt.

Joint and Co-signed Debts

If a joint or co-signed debt is being paid in full...

How are joint or co-signed debts treated in Chapter 13?

If a joint or consigned debt is being paid in full under a Chapter 13 plan, the creditor may not collect the debt from the other person. If a joint debt is not being paid in full under the plan, the creditor is allowed to collect the unpaid portion of the debt from the other person. This applies only to consumer debt.

Who can file a Chapter 13?

The requirements for eligibility to file a Chapter 13...

Who can file a Chapter 13? Are there income requirements?


The requirements for eligibility to file a Chapter 13 are that the debtor is an individual who resides in, does business in, or owns property in the United States, has regular income, has unsecured debts of less than $336,900, has secured debts of less than $1,010,650, is not a stockbroker or a commodity broker,has not intentionally dismissed another bankruptcy case within the last 180 days, and has received a briefing from an approved credit counseling agency with the last 180 days.

I need help now!

The moment a Chapter 13 is filed...

Will filing for Chapter 13 Bankruptcy help me right now? Or do I have to wait until the plan is underway?

The moment a Chapter 13 is filed, the automatic stay comes into effect. The automatic stay is kind of like a restraining order against creditors. All lawsuits, attachments, garnishments, foreclosures, and other actions by creditors against you or your property must immediately stop.

How many court appearances are required in my Chapter 13 Bankruptcy?

Most debtors have to appear in court ...

How many times will I have to appear in court?

Most debtors have to appear in court at least twice, and the attorney will appear with the debtor, then usually the attorney will make all other appearances. The first appearance in which both the debtor and the attorney must appear is the meeting of the creditors. The meeting of the creditors is for the most part a formality that happens about a month after the case is filed. At the meeting of the creditors the debtor will take an oath and be asked some standard questions by the trustee. Creditors have an opportunity to appear and ask the debtor questions as well, but that does not happen often. The next court appearance is the confirmation hearing in front of a judge, which happens about a month after the meeting of the creditors. Only the debtor’s attorney is required to atteng the hearing

What happens if I am temporarily unable to make my Chapter 13 payments?

If you are temporarily out of work, injured...

I have had an unexpected situation come up that's taking a lot out of what small financial cushion I have every month. What happens if I am temporarily unable to make the Chapter 13 payments?

If you are temporarily out of work, injured, or otherwise unable to make the payments, the plan can usually be modified so that you can resume the payments when you’re able to continue. However, if it appears that you will no longer be able to make the required payments the case either will be converted to a Chapter 7 or dismissed.

How will a Chapter 13 Bankruptcy affect my credit rating?

Your credit score will...

How will a Chapter 13 Bankruptcy affect my credit rating?

Your credit score will likely be worsened in the short run by filing a Chapter 13. If most of a person’s debts are ultimately paid off under a Chapter 13 plan, credit reporting agencies take that into account.

What happens to the arrear of my mortgage in a Chapter 13 Bankruptcy?

If you want to keep your home...

Do I have to pay it all back?

If you want to keep your home, you’ll have to pay back all of your mortgage arrears by the end of the repayment period. Many people choose chapter 13 over chapter 7 because it gives you 3-5 years to make up the arrears.

What about my second mortgage?

If you have a second mortgage that's no longer secured...

Will my second mortgage be covered under my Chapter 13 payment plan?

If you have a second mortgage that’s no longer secured by the equity in your home, you can strip it off through Chapter 13 bankruptcy. The stripped off loan becomes part of your unsecured debt, which is paid off through your Chapter 13 plan. At the end of the repayment, any remaining loan amounts on the stripped off mortgages are discharged.