Legal Question in Bankruptcy in Virginia
Students Loans in a Chapter 13 Bankruptcy
When a student loan is involved in the filing of a Chapter 13 Bankruptcy Plan does the interest on the loan stop? In other words, is whatever the student loan company filed as its claim amount the only amount owed?
Asked on 1/23/00, 4:04 pm
1 Answer from Attorneys
Daniel Press
Chung & Press, P.C.
Re: Students Loans in a Chapter 13 Bankruptcy
The interest on a student loan continues to accrue, even if 100% of the principal as of the filing date is paid. This is because of the fact that student loans are not dischargeable in even a Chap. 13 bankruptcy (absent undue hardship). The best solution is to provide for payment of the loan outside the plan, with interest, under 1322(b)(5), if there are more than 3 years left on the loan.
Answered on 1/24/00, 6:29 pm
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