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ANOTHER REASON TO FILE CHAPTER 13: IT CAN HELP WITH ONGOING BILLS SUCH AS MEDICAL COSTS AND STUDENT LOANS PAYMENTSReason to File Chapter 13: Ongoing Medical Cost and Student Loan Payments

Another reason why our clients choose to file Chapter 13 is due to ongoing credit bills and expenses.  Sometimes our clients will anticipate that they will be incurring high medical bills due to a medical condition that is ongoing.  Other times certain bills – such as student loans – can be impossible for our clients to pay for a short period of time due to financial strains.   Chapter 13 can sometimes offer a short-term solution to these ongoing problems.

MEDICAL BILLS THAT WILL BE ONGOING: CONSIDER CHAPTER 13

Chapter 7 can only be filed every 8 years.   Although Chapter 7 is a powerful option for debt relief, it cannot address situations very well where medical bills will be ongoing.   Ongoing illness and recovery needs can produce medical bills for multiple years to come.

Chapter 13 can help with ongoing medical bills because it can be filed more often then Chapter 7 – even multiple times if necessary.   In addition, when you file Chapter 13, you are not “barring” (making impossible) your ability to file Chapter 7.   Unless you complete a Chapter 13 plan in entirety and receive a discharge, there is NO restriction as to when you can file Chapter 7 in the future.  When your medical or recovery situation is resolved, you could possibly then file Chapter 7 if it is still impossible for you to repay your medical debts.

STUDENT LOANS: CHAPTER 13 COULD BE TEMPORARY RELIEF

Student loans (if they are sufficiently large) are classified as long-term debts.  Chapter 13 bars all form of collection while the Chapter 13 case is open.  Although most student loans cannot be paid in Chapter 13 due to their long term nature, your student loan creditor will not be able to collect against you during the bankruptcy case.

However, filing Chapter 13 to temporarily stop the payment requirements of student loans is NOT a solution to your student loan problems.   We do not recommend filing a Chapter 13 to suspend the payment requirements of student loans because this is only a very temporary solution to your payment problems.  After the completion or dismissal of your Chapter 13 plan, your student loans could acquire large amounts of interest (if they are not paid during the plan).