According to the American Federation of Teachers in New Jersey (AFTNJ) student loan rates for more than 7.4 million students with federal “Stafford loans” are scheduled to double July 1, 2013. If nothing is done, the current rate of 3.4% will increase to 6.8%. The AFTNJ article states that students in the United States currently owe nearly $1.1 trillion in student loan debt, and this amount is increasing at approximately $2,800 per second! You have probably heard that student loans are rarely discharged in a bankruptcy filing. Section 523(a)(8) of the Bankruptcy Code says that student loans cannot be discharged unless repaying them would be an “undue hardship” on the debtor or the debtor’s dependents. The good news is that there are no time limitations for pursuing the discharge of student loans in bankruptcy. The burden of meeting the standard for undue hardship is strictly applied by the bankruptcy court. While many individuals will not qualify to discharge their student loan debt in bankruptcy, it doesn’t mean that filing a case won’t help you. A Chapter 13 bankruptcy filing allows an individual to consolidate debt, including student loans, into one affordable monthly payment for a term of 3 to 5 years. This is helpful if you are being harassed by several creditors. Your Chapter 13 plan of repayment will set forth how you intend to pay your creditors. An important factor, however, is that you are only required to use your “disposable income” to pay your creditors under the plan. Disposable income is the amount left after you have paid your necessary bills. Student loans are not considered a necessary bill. This means that your student loans will be paid at a reduced amount while you are in the Chapter 13 bankruptcy. As a result, your monthly payment may be significantly lower than what is required by the lender of the student loan. By filing a Chapter 13 case, therefore, you can set up reasonable payments for your student loan debt for the term of your plan. The bankruptcy will discharge or eliminate a large portion of your debt, so when you complete your case, you will hopefully be in a much better position to pay the remaining balance of your student loan. A Chapter 13 filing can be a powerful tool for paying your student loans. If you are considering this option, it is important that you seek the advice and guidance of the attorneys at Levitt & Slafkes, P.C.. We are bankruptcy lawyers who know how to make a difference in your financial situation. We have experience you can rely on and we care about your results. Contact our New Jersey law firm online by filling out the form or by calling 973-323-2953 to schedule a free initial consultation.