Student Loans and Chapter 13 – Federal Student Loan Debt in Bankruptcy: Recent Movement Towards Income-Driven Repayment Plans in Chapter 13

By Jeff Kellner, Chapter 13 Trustee (Dayton, OH)

Over the past several years, Chapter 13 and Student Loans have not played well together. Student loans were generally nondischargeable due to the courts following Brunner, and most courts were not going to allow separate classification of the student loans due to ‘unfair discrimination’.

While ‘hardship discharge’ of student loans is still bound by the harsh 3-element requirements of the Brunner test, there is a growing trend of the bankruptcy courts to allow ‘separate classification’ of student loans.

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An Argument in Favor of the Mid-Case Audit: B.R. 3002.1 Proposed Changes

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If you put your ear to the ground you may hear the rumblings regarding a change to Bankruptcy Rule 3002.1 requiring the institution of a mid-case bankruptcy audit. This mid-case audit would be like the Notice of Final Cure but would be performed by a trustee’s office in the middle of a pending Chapter 13, rather than at the end,...

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