Keywords: student loans . Chapter 13 plan .
Tax refunds are disposable income. Court allowed the debtor to retain a portion of the money for reasonable expenses -- remainder of the refund goes to trustee.
Student loan claim should be paid through the plan and prorated with all unsecured claims.
Student Loans > Chapter 13 > Creditor Classifications & Discrimination Student Loans: Handling of payments Debts in Chapter 137 Cases , IssueID 29 |
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Ch 7 Means Test |
Ch 13 Means Test |
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Topic Description:While student loans are nondischargeable, they generally can't be given preferential treatment under the plan, compared to other unsecured creditors. However, there are legal ways to maximize payments on nondischargeable student loans. In court districts that hold that Form 22C determines PDI, any excess "actual" income is considered "discretionary" and can be used any way the debtor wishes. Lines of Cases:
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The court allowed the debtor to continue her student loan repayments during the plan because failure to do so would have jeopardized her optometry license. The license was what enabled debtor to pay anything towards the plan, and the court ruled that this circumstance justified such discrimination.
The court said that "under the circumstances of this case, the Debtors have satisfied their burden of showing that the proposed discrimination is fair under Section 1322(b)(1) because there is a basis other than non-dischargeability for the discrimination, and the very creditors who are being discriminated against benefit from the arrangement. Additionally, Section 1322(b)(5) explicitly allows maintenance of payments while a Chapter 13 case is pending on an unsecured claim 'on which the last payment is due after the date on which the final payment under the plan is due.'"
Debtors with incomes of 130,000 cannot separately classify student loans as a special class of unsecured creditors who get 53% vs only 18% for other unsecured creditors.
The debtor's proposed plan was not confirmed because it unfairly discriminated against other creditors in favor of the debtor's repayment of debtor's student loans.
Proposed treatment of the student loan creditors does NOT unfairly discriminate among unsecured creditors (three separate cases discussed)
Student loan claim should be paid through the plan and prorated with all unsecured claims.
Chapter 13 debtors do not need to wait till end of plan to seek discharge of student loans.
Debtors with incomes of 130,000 cannot separately classify student loans as a special class of unsecured creditors who get 53% vs only 18% for other unsecured creditors.
The debtor's proposed plan was not confirmed because it unfairly discriminated against other creditors in favor of the debtor's repayment of debtor's student loans.
Proposed treatment of the student loan creditors does NOT unfairly discriminate among unsecured creditors (three separate cases discussed)
The court allowed the debtor to continue her student loan repayments during the plan because failure to do so would have jeopardized her optometry license. The license was what enabled debtor to pay anything towards the plan, and the court ruled that this circumstance justified such discrimination.
The court said that "under the circumstances of this case, the Debtors have satisfied their burden of showing that the proposed discrimination is fair under Section 1322(b)(1) because there is a basis other than non-dischargeability for the discrimination, and the very creditors who are being discriminated against benefit from the arrangement. Additionally, Section 1322(b)(5) explicitly allows maintenance of payments while a Chapter 13 case is pending on an unsecured claim 'on which the last payment is due after the date on which the final payment under the plan is due.'"
Student loan claim should be paid through the plan and prorated with all unsecured claims.
Chapter 13 debtors do not need to wait till end of plan to seek discharge of student loans.
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When you read a case, check to make sure that the case's decision applies to your local district. Do this by looking at which court has decided the case -- either the U.S. Supreme Court, a court of appeal (listed here in large type), or a district court (listed in small type). Your local district court judge is not bound to follow the opinion of judges from other district courts, but often they look to these cases for advice. Your local district, however, is bound to follow decisions in cases from it governing circuit court. You'll see fairly few Supreme Court case here, but those cases are also binding on all districts."
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