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Keywords: student loans . Chapter 13 plan .

Topic #29:: Student Loans: Handling of payments Debts in Chapter 13

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  • 7 Cases on This Topic
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Student Loans > Chapter 13 > Creditor Classifications & Discrimination

Student Loans: Handling of payments Debts in Chapter 13

7 Cases , IssueID 29

Ch 7 Means Test
Form 22A, Line 53
Ch 13 Means Test
Form 22C Line 57

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:

A:

Cannot discriminate vs. other unsecured creditors

B::

No discrimination found where student loan paid pro-rata with other unsecured creditors in addition to payments outside of plan

  • Type A = Cannot discriminate vs. other unsecured creditors
  • Type B = No discrimination found where student loan paid pro-rata with other unsecured creditors in addition to payments outside of plan
  • Type E = "Everything Else"
  • Cases for Zip
  • All Cases By Date
  • Cases A - Z

Cases for Zip , California Northern District Bankruptcy Court

Ninth Circuit Cases

� In re Coleman

9th Cir. - 560 F.3d 1000 - 2009-03-25 - 13 ,

Google ID#: 15235306040222987981
(Type : )

Chapter 13 debtors do not need to wait till end of plan to seek discharge of student loans.

Other Circuits

� In re Edmonds

Bankr.E.D.Wis - 444 B.R. 89 - 2010-11-05 - ,

Google ID#: 2367288828529126234
(Type A : Cannot discriminate vs. other unsecured creditors )

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.

� In re Parrott

Bankr. E.D.Tenn. - Case No. 09-15726 - 2009-12-29 - 13 ,

Google ID#: 1141779844882767789
(Type A : Cannot discriminate vs. 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.

� In re Sharp

Bankr.D.Colorado - 415 BR 803 - 2009-10-06 - 13 ,

Google ID#: 5981819377675867139
(Type B : No discrimination found where student loan paid pro-rata with other unsecured creditors in addition to payments outside of plan )

Proposed treatment of the student loan creditors does NOT unfairly discriminate among unsecured creditors (three separate cases discussed)

� In re Kalfayan

Bankr. S.D.Fla. - 415 B.R. 907 - 2009-09-25 - 13 ,

Google ID#: 804880110808816026
(Type E : )

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.'"

� In re Kruse

Bankr. N.D. Iowa - 406 B.R. 833 - 2009-06-11 - 13 ,

Google ID#: 12773372234510609843
(Type A : Cannot discriminate vs. other unsecured creditors )

Student loan claim should be paid through the plan and prorated with all unsecured claims.

� In re Johnson

Bankr.D.Colorado - __ B.R. __ - - ,

Google ID#:
(Type B : No discrimination found where student loan paid pro-rata with other unsecured creditors in addition to payments outside of plan )

� In re Edmonds

Bankr.E.D.Wis - 444 B.R. 89 - 2010-11-05 - ,

Google ID#: 2367288828529126234
(Type A : Cannot discriminate vs. other unsecured creditors )

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.

� In re Parrott

Bankr. E.D.Tenn. - Case No. 09-15726 - 2009-12-29 - 13 ,

Google ID#: 1141779844882767789
(Type A : Cannot discriminate vs. 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.

� In re Sharp

Bankr.D.Colorado - 415 BR 803 - 2009-10-06 - 13 ,

Google ID#: 5981819377675867139
(Type B : No discrimination found where student loan paid pro-rata with other unsecured creditors in addition to payments outside of plan )

Proposed treatment of the student loan creditors does NOT unfairly discriminate among unsecured creditors (three separate cases discussed)

� In re Kalfayan

Bankr. S.D.Fla. - 415 B.R. 907 - 2009-09-25 - 13 ,

Google ID#: 804880110808816026
(Type E : )

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.'"

� In re Kruse

Bankr. N.D. Iowa - 406 B.R. 833 - 2009-06-11 - 13 ,

Google ID#: 12773372234510609843
(Type A : Cannot discriminate vs. other unsecured creditors )

Student loan claim should be paid through the plan and prorated with all unsecured claims.

� In re Coleman

9th Cir. - 560 F.3d 1000 - 2009-03-25 - 13 ,

Google ID#: 15235306040222987981
(Type : )

Chapter 13 debtors do not need to wait till end of plan to seek discharge of student loans.

� In re Johnson

Bankr.D.Colorado - __ B.R. __ - - ,

Google ID#:
(Type B : No discrimination found where student loan paid pro-rata with other unsecured creditors in addition to payments outside of plan )

All Cases A to Z

  • In re Coleman, 560 F.3d 1000 , (9th Cir. ) 2009-03-25, #15235306040222987981
  • In re Edmonds, 444 B.R. 89 , (Bankr.E.D.Wis ) 2010-11-05, #2367288828529126234
  • In re Johnson, __ B.R. __ , (Bankr.D.Colorado ) , #
  • In re Kalfayan, 415 B.R. 907 , (Bankr. S.D.Fla. ) 2009-09-25, #804880110808816026
  • In re Kruse, 406 B.R. 833 , (Bankr. N.D. Iowa ) 2009-06-11, #12773372234510609843
  • In re Parrott, Case No. 09-15726 , (Bankr. E.D.Tenn. ) 2009-12-29, #1141779844882767789
  • In re Sharp, 415 BR 803 , (Bankr.D.Colorado ) 2009-10-06, #5981819377675867139

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