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. § 1322(b)(1) and that the Chapter 13 plan could be confirmed over the trustee's objection.
