I have private student loans (were not in default at the time) that I included in my Chap 13 (filed 07/31/08) & was told, which I understand, that they will not be discharged. After my case was discharged(April 2012) I received a letter from Wells Fargo stating my loan was in default and the total balance was due. When I called to verify I was told that it went into default in April 2009, but I can discuss a payment plan. When I told the rep that I was in a Chap 13 she said they knew that, but the trustee''s payments weren''t enough. The rep said that student loans aren''t included in the automatic stay/court order. Aren''t they violating the law by doing this? My understanding is that the court order has to be followed by all creditors, including student loan lenders .
You are correct, and they are wrong. It is a clear violation of the automatic stay. Usually what happens is that interest continues to accrue on the unpaid balance and then, once your bankruptcy case is completed you would need to resume payments. The fact that the debt is not dischargeable does not change the effect of the automatic stay.
I suggest having your attorney pin the student loan agency's ears back by filing a motion for violation of the automatic stay. The problem you may have at this point is proving damages.
Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
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