10-32528 In re Johnson

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Bankruptcy
Student loans

Student loan obligations are not a special circumstance under 11 U..C. 707(b)92)(B); but a debtor may separately classify the loan obligations and maintain regular payments on them.

“The Debtor has failed to demonstrate that the repayment of her student loan obligations constitutes a special circumstance under § 707(b)(2)(B). Although an involuntary or unexpected event which requires a debtor to pursue new or additional training could qualify for such a deduction, the Debtor has not persuaded the Court that her pursuit of a legal degree was the result of a special circumstance as required by the statute. Further, the Debtor’s ability to maintain the full monthly payments associated with her student loans under § 1322(b)(5) shows that the Debtor is not without a ‘reasonable alternative’ to the classification of the student loan debt as a special circumstance.”

“In her brief, the Debtor argued in the alternative that she should be allowed to separately classify the student loan obligations and maintain her regular payments to the student loan creditors. The Court agrees.

Section 1322(b)(5) expressly permits a debtor to cure and maintain payments on a long-term debt; and the Debtor’s student loans qualify. In this case, the separate classification does not unfairly discriminate against the class of general unsecured creditors whose claims are not long-term debts.”

10-32528 In re Johnson
E.D.Wis., Kelley, Bankr. J.