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The new Bankruptcy IDR will work great for many – but there are two limitations!

Christie_1We’ve confirmed through the NCLC that the new regulation allowing credit for IDR for anyone in bankruptcy will NOT apply to FFEL loans.  Or Perkins loans, or unconsolidated Parent Plus loans.  So it’s best to consolidate to Direct Loans before filing, but now that the 4/30 deadline has passed, it’s best to wait until 7/1 to obtain the IDR credit through the IDR Audit which will average the credit between all of your loans.  If you consolidate in the next two months – 5/1 through 7/1, you may not receive any former IDR credit that you’ve built up, nor any through forbearances and deferments that may count via the IDR audit.  Also, keep in mind the double consolidation window remains open for those with Parent Plus loans through July 2025.  And before you say it, it’s a lot to know – our heads are swimming too!  .

Also, you will NOT receive credit for plan payments made before July 2024.  But if your case is pending, you will receive IDR credit for any plan payments made thereafter.

It’s important to know these rules to get the most student loan debt discharged in bankruptcy.  If your bankruptcy attorney isn’t able to help you with this, make sure to talk with student loan counsel — before filing!!

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