Sometimes student loans can be a necessary evil. Problems arise when your starting income is not enough for you to be able to make your payments. AFiling for chapter 13 bankruptcy can help you to manage and pay back your student loans by creating an affordable payment plan.

Unfortunately student loans are difficult to discharge by filing for bankruptcy so it is unlikely that your debt will be forgiven with chapter 13. What this does for you instead is give you control and a means to manage your debt while paying it back. The very first thing that happens when you file is automatic stay. This means that nearly every creditor, including student loan lenders, are ordered to stop their collection processes and quit harassing you. The next step is the payment plan.

Your repayment plan is customized based on your income. Your expenses for housing, transportation, food, and other miscellaneous expenses are subtracted from your income to give your disposable income. So, if you make $3,000 a month and all of your expenses cost $2,500, then you have a disposable income of $500. With chapter 13 bankruptcy, your monthly payments are essentially your disposable income, so in this example you would pay around $500. This amount is distributed to all of the collectors for your debt, whether it is student loans, credit cards, or medical bills. The saving grace is that you will only be paying how much you can afford.

A Chapter 13 bankruptcy can last up to five years. Your loans may not be paid off completely by the end of your payment plan, but hopefully by then you will be in a better position to afford regular loan payments. Bankruptcy can be scary and confusing, but if done properly can give you control over your debts and peace of mind from collectors.