Tuition Debt and Student Loans
Hello All!
Anyone who has the time to read and understand this well enough to assist; I will GREATLY appreciate any nuggets of wisdom from you! :D
I petitioned for Chapter 7 Bankruptcy in MI and was recently discharged. Included in my petitoin was a Tuition Debt owed to my alma mauteur. Upon calling to request a copy of my offical transcript in lieu of my newly received discharged, I was sadly informed that this debt was not dischargeable.
Before deducing based on what you may know of the ever complicated,11 U.S.C. S 523(a)(8), I should sum up the history on this.
I registered for classes in 2003-2004 and was awarded:
$2K+ Federal Pell Grants
$1K+ in Perkins Loans
$4K+ in Subsidized Loans
Because I was not a full time student; the tuition was prorated.
I received a letter from my College explaining "Title IV" procedures and how monies not earned by semester credits were returned to the Government entity from which they came; and I would be responsible for any balances. As a result of this; my Perkins loan was adjusted to $800+ from the $1K+ leaving me with a $600+ balance.
Two months later I received a notice from the university stating that I owed a total of $3K+ for 2003-2004 school year! They stated that I owed for monies returned from the Pell Grant ($2K+) & Perkins Loan ($1K+)
I fought the college on this issue for approximately 2 years before having to deal with the collectors that they transferred the debt to (a total of 3 collections agencies in 16 months) The last one made threats of legal proceedings and this along with other financial issues forced me into Bankruptcy. :eek:
Now; I read the NSLDS guidelines to Title IV money as well as several court proceedings similar to my circumstance. Here's my findings:
1. Once the college returns the monies to the Govt Agency; the debt then becomes that of the College. This in turn would no longer be considered an Educational Benefit because the governmental obligation was severed and there is no promissory note / loan agreement issued with myself and the school to classify this as a "Loan"
2. The college has listed this on my student records as a Debt Write-Off and not a Loan Write-Off because it has no documentation supporting it as being such
3. Under the Title IV School Code; "Perkins Loans that have already been disbursed cannot be backed off of an account; it can only be deducted off of future Perkins Loans. Federal Pell Grants must be adjusted as well from future installments.
4. The college did not object to the petition and are listed as a discharged creditor.
So now that you have the basics; how should I go about rectifying this matter? I have a Bankruptcy Attorney, but will I need a Litigator to address this?
Anything from Anyone is Appreciated :confused:
~Mill~
Re: Tuition Debt and Student Loans
It seems that you have done a lot of the footwork already. Your bankruptcy attorney is the one to talk to regarding this. It would probably help if you presented some of the case law you have, though some attorneys get offended if you think you know more than them. My friend is a bankruptcy attorney and is very happy when people know enough to be interested. It means that they might be punctual. For whatever reason most of his clients are not very punctual in returning their paperwork.
It may require some additional fees to your attorney, but they would be the one to handle it.
Re: Tuition Debt and Student Loans
I read your post. I was not aware that any type of student loan or monies could be dismissed in a bankruptcy. In Illinois, they told me that I would have to be responsible for paying back my student loans. How were you able to get this dismissed through bankruptcy?
Re: Tuition Debt and Student Loans
It sounds like the college returned financial aid to the lenders, then made a claim for tuition owed. Then the tuition debt, not the student loans, was discharged.
Re: Tuition Debt and Student Loans
contact the student loan co and get on a rehabilitation program. It is a 9 month program that allows you to make a payments at a certain rate. Once the 9 months is over 12 for a perkins loan, it is completely removed from credit, you are allowed title IV, meaning you can get student loans again, you can not have your wages garnished or your taxes taken. It is a good program.
Student loans are not dischargeable at all unless you can provide proof that this would put you into a serious hardship. You would also have to be collecting social security or disability.