Separate Student Loan Payments in a Massachusetts Chapter 13 Plan
By L. Jed Berliner, Massachusetts Bankruptcy Attorney on Dec 29, 2007 in Bankruptcy Cases & Legislation, Chapter 13 Bankruptcy, Massachusetts
U.S. Bankruptcy Judge Robert Somma ruled in In re Machado that a Massachusetts Chapter 13 plan may provide for separate payments to a student lender, depending on the particular facts of the case.
This opinion approved a below-median income debtor’s 60 month plan where the regular unsecured creditors at $26,000 shared $276 per month, a 4% dividend, and the student lenders at $21,000 shared $250 per month. (All figures are rounded off.) My colleague, Attorney Nicholas F. Ortiz, successfully argued that long term debts may be paid differently under the Bankruptcy Code, that bankruptcy’s fresh start policy encourages favoring payment of nondischargeable student debts, and that the voluntary 60 month plan shows good faith where only a 36 month plan was required.
In comparison, an alternate plan where all the payments went to all the unsecured debt, but merely for the required 36 months, would have only increased the 4% dividend by 2%, to 7%; a small $700 difference.
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