When a client wishes to pay their creditors back, I help them arrive at a monthly payment they can afford. I use the Chapter 13 Bankruptcy process to accomplish this. I look at all their reasonable expenses and all their income, and assist them with developing a solid payment plan that they can fit into their household budget. That is the disposable income that can be used to fund a monthly Chapter 13 plan.
Not everyone is eligible to be in a Chapter 7 Bankruptcy because of their income, or their net worth. This will make them ineligible for a Chapter 7, and leave them with no other alternative but to be in a Chapter 13 repayment plan.
Not everyone can be in a Chapter 13 Plan because there are limitations to the amount of money that is owed. These debt limitation are spelled out in the Bankruptcy Code at 11 USC 109(e), Chapter 13 Eligibility.
At first glance, the limits seem beyond any limitation a typical person contemplating a Chapter 13. We often see the amount of Student Loan Debt, coupled with all the other unsecured debt, may go beyond these limits. Read more here about Student Loans.
I have been following the developments in this area. There are two recent cases that have been decided which ease the Chapter 13 debt limitation if there is substantial student loan debt. One Judge out of Illinois issued a ruling indicating that there should not be any debt limit where the vast majority of unsecured debt is student loans.
This issue has yet to be decided in the 9th Circuit, so we can only wait and see how the Judges in the Southern District of California would view this issue. Of the leading cases involving somewhat similar facts, albeit not student loans, these Courts ruled that Chapter 13 eligibility may very well be a moving target.
Are you interested in learning how this amendment could affect your student loan status? Schedule your free initial consultation with Chris Bush today.
We have a new sister website dedicated to Student Loan Debt Resolution. Please visit San Diego Student Loan Lawyer for more information regarding options for management and settlement of your student loan debt.