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Paying Student Loans outside a Chapter 13 Plan
Hello All,
ISSUE: I need a pointer on Chapter 13 practice. I have a MOMOD with a Nancy case (Judge VZ), and in order to make it feasible I have to pay the student loans outside the plan at the regular installment rate. We're about 3 years in to a 5 year plan, and the percentage to general unsecured creditors is high enough, and the amount of the student loans high enough, that there would be far less cash outlay if paid outside the plan. There's no way they could actually swing the higher payment in real life if they paid inside the plan. We also wanted to keep the percentage the same in the MOMOD to the non-student loan general unsecured creditors.
ANALYSIS: Amrane's office allows this discrimination, not sure about Kathy's office.
So Nancy's office objected - I learned their position is only 100% plans can pay student loans outside the plan. That's impossible for us in this case. Rationale of Trustee written under Disapproval: the proposed modification provides for unfair discrimination amongst the unsecured creditors in violation of 11 U.S.C. 1322. Student Loans may not be paid outside of the plan while other unsecured claims are paid a lower percentage of 24%. See In re Bernal, 189 B.R. 507, 510 (Bankr. S.D. Cal 1995).
The case cited above is over 20 years old. It's a Judge Bowie decision not binding, and refers to a BAP decision, also not binding.
What I cannot wrap my head around is that the student loans aren't discharged, so who cares what % is paid during the plan? Or put differently, that's a pretty good basis for discrimination.
QUESTION: Does anyone has an opinion of the likelihood of prevailing if I find contrary decisions either in the 9th Circuit, or elsewhere in the country, which will likely also not be binding on the court?
Law Offices of Steven B. Lever
Steven B. Lever
* Tel. (562) 436-5456 ext. 1
* Fax (562) 485-6886
* sblever@leverlaw.com
www.leverlaw.com
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Hello All,
ISSUE: I need a pointer on Chapter 13 practice. I have a MOMOD with a Nancy case (Judge VZ), and in order to make it feasible I have to pay the student loans outside the
plan at the regular installment rate. We’re about 3 years in to a 5 year plan, and the percentage to general unsecured creditors is high enough, and the amount of the student loans high enough, that there would be far less cash outlay if paid outside the
plan. There’s no way they could actually swing the higher payment in real life if they paid inside the plan. We also wanted to keep the percentage the same in the MOMOD to the non-student loan general unsecured creditors.
ANALYSIS: Amrane’s office allows this discrimination, not sure about Kathy’s office.
So Nancy’s office objected – I learned their position is only 100% plans can pay student loans outside the plan. That’s impossible for us in
this case. Rationale of Trustee written under Disapproval: the proposed modification provides for unfair discrimination amongst the unsecured creditors in violation of 11 U.S.C.
1322. Student Loans may not be paid outside of the plan while other unsecured claims are paid a lower percentage of 24%. See In re Bernal, 189 B.R. 507, 510 (Bankr. S.D. Cal 1995).
The case cited above is over 20 years old. It’s a Judge Bowie decision not binding, and refers to a BAP decision, also not binding.
What I cannot wrap my head around is that the student loans aren’t discharged, so who cares what % is paid during the plan? Or put differently, that’s a pretty good basis
for discrimination.
QUESTION: Does anyone has an opinion of the likelihood of prevailing if I find contrary decisions either in the 9th Circuit, or elsewhere in the country, which
will likely also not be binding on the court?
Law Offices of Steven B. Lever
Steven B. Lever
(
Tel. (562) 436-5456 ext. 1
(
Fax (562) 485-6886
*
sblever@leverlaw.com
www.leverlaw.com
******************************************************
This Internet e-mail contains confidential information
which is intended only for the addressee and which may
be privileged under applicable law. Do not read, copy
or disseminate it if you are not the addressee. If you
have received this message in error, please notify the
sender immediately and delete it. Thank you.
******************************************************
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