Chapter 13 bankruptcy is where you make monthly payments to a Chapter 13 trustee for three to five years, who then distributes that money to creditors.
There are some special rules for people in Minnesota that can help with student loans and Chapter 13 bankruptcy.
Student loans are rarely discharged in bankruptcy, and can be dangerous because they continue to accrue interest even while you are in Chapter 13.
Below are some options for dealing with them.
PROTECTION FROM COLLECTION ACTION FOR YOU, AND ANY COSIGNERS
Chapter 13 goes on for three to five years. During that time you and any cosigners on your loans are protected from collection actions.
As you may know, the government has more collection powers than other creditors, and can be quite dangerous. These collection powers are things like wage garnishment, bank levy, and taking your tax refunds.
The legal doctrines, which provide this protection, are called the “Automatic Stay,” and the “Co-debtor stay.” This protection can be very important if you have signed parent plus loans for your children but do not have enough money to make the payments.
The Chapter 13 will protect you, and your children will be able to start their careers without fearing garnishment or judgments from creditors.
Student loans are a complicated topic, and Chapter 13 bankruptcy is a complicated topic. If you have student loans and are thinking about a Chapter 13, make sure that your experienced Minnesota bankruptcy attorney discusses what can be done with them, and what will be left at the end of the case.
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