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What do I do about an outstanding tuition bill that I believe should have been dischargeable in bankruptcy.
Anonymous5 views5 answers
I have an outstanding tuition expense for around 2,800 dollars to the University of Florida for a professional MBA program I took in 2012. I completed one semester, which I paid out of pocket 10,000 dollars for. However, the second semester, I withdrew past the deadline and the University billed me for tuition anyway and wouldn't forgive the bill. This a tuition expense, not a student loan. I never received funds from the school, never signed a promissory note and didn't even attend classes for the semester they billed me for. I filed for chapter 7 bankruptcy in 2020 and received a discharge in September 2020. Since filing, the University of Florida has contacted me twice monthly with a bill by email, stating that they could take collection action or litigation action against me. They were notified when I filed for bankruptcy. I assumed that this was a dischargeable debt since it was tuition and not a loan. I don't know what my course of action should be.
Go back to your bankruptcy attorney - assuming you used one. He/she should be able to deal with this squarely. If not, find a student loan lawyer who can verify it is really tuition, and help you deal with it. It sounds like it may be a discharge violation, which is why you should go back to the attorney who filed your bankruptcy.
No Attorney knows the answer w/o looking at all facts. Find an experienced student loan bankruptcy attorney who will write them letter to indicate and or threaten them with violation of the discharge. Whether that is true depends for reasons below.
I have discharged over $3 Million in student loans in bankruptcy and filed over 58 Student Loan Adversary lawsuits. And all my cases, wins, losses, settlements are posted on my website too so persons understand legal action can be taken. Federal and private loans options are treated differently too to some extent.
Federal loan options can be many of their programs and establishing undue hard ship or sometimes an option like private loans below.
On Private loans, FIRST, the creditor must establish they fall within the definition of 11 USC 523(a)(8). Both the 5th (In Re Crocker 941 F3rd 206 , 218-19 2019) and 10th (In Re McDaniel Aug. 2020) , and NOW also the 2nd (In Re Homaidan No. 20-1981 July, 2021) Circuit Appellate Courts have interpreted that Statute differently than we have done in the past all to the benefit of the debtor. As a result, most private loans must fall in a very long definition because of the various terms of the statute are further defined and complex and beyond the scope of forum. I hope other attorneys in other circuits read those cases and try to defend more often such lawsuits but in reality it is the cost of debtor’s paying, and attorneys willing to accept payment over time to allow those to move forward. I know a lawsuit here in Western Washington recently settled too on that issue too (In re Franklin Adv. Proc.No. 20-04047-BDL)(Settlement reduced debt from $55,102 to $30,000, reduced monthly payment from $838 to $250, and interest rate to ZERO % ! )
If the creditor can in fact establish their debt falls within the definition , then the debtor’s options include:
(1) do nothing. Eventually they may sue you. Then they have judgment which they can try to enforce. Can they seize your assets? We don't know what you own. But social security will be protected. Then eventually the ability to enforce the judgment will end! (When depends on the state law governing said loans).
(2) Settle. Terms of how much, monthly payments, interest, etc. are all up to you. Will they report written off portion as income to IRS and then you have taxable income? Don't know. But will it in fact be taxable at that amount of income on your tax returns is unknown as that is beyond the scope of this forum too. Any lender NOT wanting to settle for something from someone on Social Security is foolish in my eye; although again, we don't know all your assets (but they probably don't know either).
(I had a client back in 2017 I have helped file a PRO SE Student Loan adversary and on morning of trial Navient agreed to discharge over $68,000!!). Another client more recently settled with many defendants and had over $400,000 in such loans approx.). Thus, each case is different. But you cannot reach a result if you don't try! That is the lesson to learn.
The world of student loans is very complex and most bankruptcy attorneys have NEVER filed such an Adversary Case . So find a great attorney or try yourself using language referenced above. Good luck.
The answer depends on how the tuition is treated. If you signed a promissory note, the tuition will likely be treated as an education loan, which is generally not dischargeable. If you did not sign a promissory note, it will be treated as a contractual obligation which is dischargeable.
