In re Pracht (11-30594)

The debtor's Chapter 13 plan proposed to separately classify a non-dischargeable student loan debt and pay that debt more than other general unsecured creditors. The debtor would be eligible for a Public Service Loan Forgiveness Program if she made 120 consecutive payments without default on her student loan. This would allow the debtor to write off $50,000 in student loans. The plan as proposed would give the other unsecured creditors a 15 percent distribution. Without the separate classification, the distribution would be 20 percent, with an additional amount of $5,000, to the other unsecured creditors. The court held that this separate classification was not unfair discrimination under 11 U.S.C. ยง 1322(b)(1) and that the Chapter 13 plan could be confirmed over the trustee's objection.

Tuesday, January 10, 2012