Legal Question in Bankruptcy in California

Re: bankruptcy and student loan

Your question suggests that you may be under the misconception that the amount of dischargeable debt significantly affects your eligibility for Chapter 7. In fact, it is only a small factor if your average income over the past six months exceeds the median in California for your family size ($3,708/mo for a single person, e.g. - nearly $5,000/mo for a couple). Your Chapter 7 will discharge all of your dischargeable debts, and the non-dischargeable ones will remain.

Re: bankruptcy and student loan

You must include student loans as an unsecured non-priority debt in your chapter 13 bankruptcy. If the lender of your student loan files a proof of claim, and you have a 100 percent plan, then you will pay off 100% of your student loan without any interest. If you have a 70% plan, you will pay off 70% without interest, but interest will continue to accrue on the 30% that you are not paying off. You will owe the remainder with interest after you get your discharge. However, it is unusual for a lender to file a proof of claim for a student loan. Usually, lenders of student loans are content to wait out your bankruptcy and just let interest accrue while you pay your other debts are being paid off. After your bankruptcy is discharged, then the lender will send you a big bill for the balance due that has been accruing interest the last 3 to five years. At that time, I suppose you could threaten the lender that you will simply file another chapter 13 bankruptcy petition unless the lender will consolodate the accrued interest and let you start making payments again. The moral of the law: student loans never ever go away, you may as well accept the fact you will be paying them until the day you die. I look at it this way: If I die owing student loans, then I win and my lender loses; but if I live long enough to pay off my student loans (which at this point appears to be in my late 70's), then my lender wins and I lose; but hey, I got to live a long life in exchange.