Chapter 13 Debtors Now Get Credit Toward Student Loan Forgiveness Under New Rule
If you’re struggling with debt and considering Chapter 13 bankruptcy, you might also be dealing with student loans. Thanks to a major change that took effect on July 1, 2024, the Department of Education has made it easier for Chapter 13 debtors to qualify for student loan forgiveness—even while they’re in bankruptcy.
Let’s break down how this works and why it matters.
What’s the Big Change?
Under a new federal regulation (34 C.F.R. § 685.209(k)(4)(iv)(K)), Chapter 13 debtors now receive credit toward student loan forgiveness for each month they make plan payments under a confirmed bankruptcy plan—even if their loans are in forbearance and they aren’t making direct payments on the loans themselves.
In Plain English: What This Means
If you’re in a Chapter 13 case and:
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Your plan has been confirmed by the court
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You are making your monthly Chapter 13 payments as required
Then:
✅ Each month you pay counts toward your 20 or 25 years of income-driven repayment (IDR) forgiveness,
✅ Even if your federal student loans are in bankruptcy forbearance during the case,
✅ You don’t need to be separately enrolled in an IDR plan at the time.
Why This Is a Game-Changer
Before this rule change, months spent in Chapter 13 didn’t count toward loan forgiveness unless the borrower continued to make separate payments under an IDR plan. But this wasn’t realistic for many debtors who were already paying into a court-supervised repayment plan.
Now, with this rule:
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Every month of your Chapter 13 plan counts
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No duplicate payments are needed
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You’re actively moving closer to loan forgiveness just by staying compliant with your bankruptcy plan
Does It Apply to Everyone?
This new rule applies to federal student loan borrowers who:
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Are in a confirmed Chapter 13 repayment plan
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Are making payments as required by that plan
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Have loans that qualify for IDR forgiveness (most federal student loans do)
Even if your loans are in administrative forbearance because of the bankruptcy, you still get credit.
What Should I Do Now?
If you’re in Chapter 13 or thinking about filing, here are a few steps to consider:
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Tell your bankruptcy attorney about your student loans.
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Check with your loan servicer or the Department of Education to confirm your eligibility.
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Keep records of your Chapter 13 plan payments—these months may be credited automatically, but having documentation helps.
Bottom Line
This is a huge win for debtors trying to regain control of their finances. With this new rule, filing Chapter 13 no longer delays your progress toward student loan forgiveness. It keeps you on track—without extra effort.
If you’re overwhelmed by debt and don’t know where to start, we can help. At the Law Office of William Waldner, we specialize in helping New Yorkers find smart, strategic solutions to complex financial problems.
📞 Schedule a free consultation today at www.midtownbankruptcy.com to learn how Chapter 13 can help you tackle both your debt and your student loans.
