Utah Bankruptcy Clinic Wins Court Approval For Payment of Student Loans in Chapter 13.

Last week before Utah bankruptcy Judge Mosier, and again this week before Utah bankruptcy Judge Marker, I was able to successfully argue that my chapter 13 clients should be permitted to pay off their student loans through their bankruptcy repayment plans.  Why is this a big deal?  Because historically, the bankruptcy judges and trustees have been very reluctant to allow student loans to be paid through bankruptcy payments plans.  The judges and trustees want people with student loans to put their loans into deferment while they are in a chapter 13, so that all the extra money can go to unsecured creditors like credit cards, medical bills, and payday loans.  The problem is, the interest on student loans continues to compound even while it is in deferment so that when you emerge from bankruptcy you've got a nasty surprise of increased student loan debt.  In the two student loan cases I had confirmed in the last two weeks, my clients will emerge from bankruptcy with their student loans paid and their unsecured debts discharged!  A good result and hopefully a new trend that will be allowed here in the Utah district.