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If I have, say, $5000 or more dollars in student loans in the bank, will I Have problems filing Chapter 7?
Anonymous12 views2 answers
I understand that student loan money is exempt from garnishment and that Chapter 7 won't affect my student loans. But if I have a reserve of student loan money, like more than $5000 not yet spent, and that won't be for some time, would a bankruptcy judge look at this and say "sorry"?
A little more background: my take home pay, after child support, working part time as a full time student is about $100/week. My debt is considerable ($7000 of it is bankruptable, student loans and child support are not, and are much higher) compared to what I make and my credit is already shot to Hades.
I have judgements against me, one of which has resulted in my losing my license to drive, twice, though very temporarily.
A bankruptcy trustee would look at that $5,000 as an asset. Sorry to say, but if you want your student loan money to go to education, it needs to be paid directly to the school by the lender. Otherwise, it's your money, and (unless there's some quirk in the case law in Virginia) your creditors can get at it. Consult a bankruptcy attorney before proceeding.
Student loan proceeds are protected from garnishment and creditor attachment. As long as you can trace the funds in the account to the loan (and nothing else), it should be protected. Furthermore, Virginia has a $5,000 wildcard exemption (if VA law applies). Lastly, see a local bankruptcy lawyer because you may not have to file now.
