Student Loans Can Be Paid Directly

Student loans can be paid directly, outside of bankruptcy.

Case Name: In re Abaunza, Case No. 10-37575-LMI (Bankr. S.D. Fla. 2011).

Issue: i) Whether the discretionary income that an above-median debtor realizes over and above the projected disposable income calculated by the means test should increase the debtor’s payment to unsecured creditors; and ii) Whether a debtor’s payment of his student loans outside of the chapter 13 plan is unfair discrimination.

Holding: Judge Isicoff stated that “where the sole allegation for unfair discrimination is the payment is separately classified creditor” with funds that are over and above the payment to creditors prescribed by the means test form, the plan does not discriminate unfairly. Congress defines ‘fair’ as the debtor’s projected disposable income as calculated by the means test.