Chapter 13 Debtors Can Pay Student Loans Outside of Plan

Chapter 13 debtors can make student loan payments as they normally would to the servicer and “outside” of the restructuring plan without discriminating against other unsecured creditors, a South Carolina bankruptcy judge held.

The payments were approved even though the student loan creditor would get more money, Judge David R. Duncan, Chief U.S. Bankruptcy Judge for the District of South Carolina, concluded Nov. 1 (In re Kindle, 2017 BL 392657, Bankr. D.S.C., 17-01245-DD, 11/1/17).

Duncan stressed there were good reasons for the different treatment. Student loans can’t be discharged, or wiped out, by the bankruptcy. These student loans ...