Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
We have to wait for the SAVE litigation to learn if a new process allowing for Income Driven Repayment credit for all debtors in a Chapter 13 bankruptcy will go into effect. It is presently enjoined as part of the SAVE litigation. Rather than penalizing a debtor by simply placing the debtor into an administrative forbearance with capitalized interest, the new Bankruptcy IDR will give a debtor a month of credit toward loan forgiveness for each month the debtor makes a required plan payment under a confirmed Chapter 13 plan. 34 C.F.R. § 685.209(k)(4)(iv)(K).
This program would be particularly valuable for those borrowers with high income who also have large mortgage debt or medical expenses which can be used to reduce disposable income in a bankruptcy to reduce or even eliminate a student loan payment. These types of expenses cannot be used to reduce an IDR payment outside of bankruptcy.
