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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37824
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Bankruptcy/college tuition

Customer Question

My husband and I filed a personal Chapter 11 due to significant irs/tax debt. We obviously had to include all of our debt, even though we did not want to. One of those debts is tuition (not financial aid/loans) from my college. Does the college have to release my transcript because of the bankruptcy protection or are they allowed to hold it until the bankruptcy is paid off...5 years from now?
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 4 years ago.
Difficult question.

Withholding the debtor's school transcript for nonpayment of a dischargeable debt violates Bankr. Code § 525(a). See In re Dembek (BC ND OH 1986) 64 BR 745, 746, 747; Lee v. Board of Higher Ed. in City of N.Y. (SD NY 1979) 1 BR 781, 787–789. However, a college may withhold debtor's transcript where debtor owes college a nondischargeable debt. Johnson v. Edinboro State College (3rd Cir. 1984) 728 F2d 163, 166.

In short, if the tuition cost was loaned to you as part of a nondischargeable education loan, then the school can withhold the transcript until the loan is ordered discharged at the completion of the bankruptcy plan.

Note: The above analysis is based on extremely limited case law. There is actually no specific case directly holding that a school can withhold the transcript during the pendency of the bankruptcy plan. However, since the loan is not discharged until the plan is complete, the logic that the school can withhold seems sound.

Hope this helps.

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