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Loren
Loren, Attorney
Category: Legal
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Experience:  30 years experience representing clients.
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I am in graduate school. My school pulled my financial aid

Customer Question

I am in graduate school. My school pulled my financial aid in the middle of this session and I now owe them 6,000. I was set to student teach in 5 weeks. However, I will not be able to unless I pay off this amount. I am seriously thinking of filing bankruptcy. Not just because of this issue, but this issue has ruined my finances. The tuition that I owe has nothing to do with federal student aid or loans. It is straight tuition owed to the university and I have not agreed to a payment plan. I read that the tuition can be included in my Chapter 7 filing. Is this true? And once I file, the university will have to stop blocking me from registering for my fall class? Is this true? Finally, what happens to my utility debt other bills like cable? Will they immediately cut me off?
Submitted: 1 year ago.
Category: Legal
Expert:  Loren replied 1 year ago.
Thank you for using JustAnswer. I am JudgeLaw and I will do whatever I can to answer your question and provide excellent service.

I am sorry to hear of your dilemma. I realize how frustrating this is for you, but I believe I have information which you will find helpful.

Generally, the answer on whether an unpaid tuition bill or other college charges will be dischargeable or non-dischargeable in a Chapter 7 or Chapter 13 bankruptcy depends upon whether the Debtor (person who files for bankruptcy) signed a promissory note (an agreement signed on or about the same time providing for a definitive amount to be repaid, in specified installments, by a certain time, and at a certain interest rate) with the college or other institution.

If the Debtor did not sign a promissory note, the tuition bill or other college charges will likely be dischargeable in bankruptcy. The key issue is whether the unpaid tuition bill is considered a (educational) loan, or whether it is just a contractual obligation. If it is considered a (educational) loan, then it will likely be a non-dischargeable debt pursuant to 11 USC 523(a)(8) of the US Bankruptcy Code, and numerous courts have held that a tuition bill for which a Debtor has executed a promissory note is evidence that the debt is a (educational) loan.

However, in the absence of a promissory note or other evidence that the debt is in fact a (educational) loan, courts have held that a tuition bill is a contractual obligation which can be discharged in a Chapter 7 or Chapter 13 bankruptcy.

Unfortunately, unless leave is granted by the bankruptcy court, they do not have to allow you to enroll in new classes. They only need to cease collecting on the charges already accrued.

If you owe back payments on utility services and you file for bankruptcy, the utility company cannot alter, refuse, or discontinue your service. This prohibition, although similar to bankruptcy’s automatic stay, is actually found in a different section of the bankruptcy code, at 11 U.S.C. §366. This section also prohibits utility companies for shutting off or refusing to provide service just because you filed for bankruptcy.

Although the prohibition on utility shut-offs kicks in as soon as you file for bankruptcy, it won’t last forever without further action from you. Within 20 days of your filing, you must provide the utility company with “adequate assurance” that you will pay future utility bills. If you don’t comply with this requirement, the utility company can terminate your service. If you do provide adequate assurance of payment, the utility must continue your service, even if back utility payments are discharged through the bankruptcy.

I am sorry. I realize this is not the answer you were hoping for. As a professional, however, I am sometimes placed in the position of having to deliver news which is not favorable to a customer's position, but accurately reflects their position under the law. I hate it, but it happens and I ask that you not penalize me for having to deliver less than favorable news.

It is my privilege to assist you. Let me know if you need further information.  I hope I have helped you beyond your expectations in the service I have provided to you.  I am here for you.

Please remember to rate my answer when our communication is completed so I will be compensated for my time in providing you with the information you requested.

If you feel the need to provide a low rating, please stop and reply to me via the REPLY button with whatever issue or clarification you may need. I will happily answer your follow-up questions and assist you until I am able to explain the answer to your satisfaction. Please also remember that I cannot control whether the law is favorable to your situation, so please do not penalize me for having to deliver bad news.

Thank you.

JudgeLaw
Customer: replied 1 year ago.

No, it is good information. Just for clarification, if I file bankruptcy...the school can kick me out for good? I am not clear on that part.

Expert:  Loren replied 1 year ago.
Thank you, XXXXX XXXXX following up.

No, you can not be penalized for filing for bankruptcy and any collection activity by the school is stayed while the bankruptcy is pending.

Obviously, you will want to sit down with a local bankruptcy attorney to review your particular situation in detail before you take any action.

I hope this is helpful.

JudgeLaw
Loren, Attorney
Category: Legal
Satisfied Customers: 20843
Experience: 30 years experience representing clients.
Loren and 7 other Legal Specialists are ready to help you
Expert:  Loren replied 1 year ago.
Thank you for your positive rating of my service to you. Let me know if you need more help or have future questions. I will be here for you. Just ask for me by name at the start of your question - "JudgeLaw" or use the following link (which you can bookmark in your browser):  http://www.justanswer.com/law/expert-JudgeLaw/
          

Best wishes and good luck to you.

If it is not too much trouble, Ros, when you receive a Customer Satisfaction Survey from JA/Pearl in a day or two, please do rate me highly (9 or 10). It affects my ability to continue to assist you and other customers on JA/Pearl and would be most appreciated.
Expert:  Loren replied 1 year ago.
Hello Ros

I'm just following up with you to see how everything is going.
Did I answer your question?

JudgeLaw

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