Treatment of Interest on Nondischargeable Debts

26 Oct Treatment of Interest on Nondischargeable Debts

During a Chapter 13 bankruptcy case, interest continues to accrue on nondischargeable debts, such as priority tax claims and student loans. See Internal Revenue Service v. Cousins (In re Cousins), 209 F.3d 38 (1st Cir.2000).

Due to the automatic stay, a debtor often does not realize this until their case closes and an updated loan balance is obtained. Even a debtor who proposes to pay 100 percent of the nondischargeable claim through his plan must be wary of this result.

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