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I owe a state college tuition. These are NOT student loans. They want to garnish my wages. If I file Chapter 7 do I still owe?

Columbus, OH |
Filed under: Chapter 7 bankruptcy

Eight years ago I worked for a public (state) university. One of the perks as an employee was 1 free class a semester. I was taking one of these classes when I was let go. I called to try to withdraw but was told it was too late. Since I was no longer an employee they billed me for it. No loans were involved. They're now threatening to garnish my wages. I make $21,000 a year & cannot afford the 25% they would take from my paycheck. I own no property or houses that can be sold, except a 12 year old car that I use to get to work. I qualify for Chapter 7 in Ohio as I fall well below median income for one person. Since the Univ is a state institution is it the _same_ as owing the state of Ohio? Would it fall under the same Ohio statutes as owing taxes? Would it be discharged in Chapter 7?

Attorney Answers 6

  1. Whether a debt is dischargeable is controlled by federal bankruptcy law, not state law. Generally, past due tuition is a dischargeable debt. Even though the state may be collecting (because it was a public school), the debt should be dischargeable in bankruptcy.

    HOWEVER, you would really need an attorney to look over the specifics of the situation. Your situation is fairly unique.

  2. I agree with the other answer. You need to have an attorney take a look at your contract with the school. If it is not a loan, it is likely dischargeable, but someone would need to review your documents with you.

  3. I likewise agree with the above. Further (assuming you file bankrutpcy), you should note that the school cannot withhold your college transcript in an effort to collect the debt. Such ac act will be a violation of the automatic stay or discharge injunction.

  4. I may be the dissenting opinion here, but there are many cases holding that unpaid tuition constitutes a "loan" for purposes of discharge under Section 52(a)(8) of the Bankruptcy Code. You will want to consult with an experienced bankruptcy attorney in your area to determine whether or not this line of case law will apply to you.

  5. (1) First, you MUST start with the law. The law is :

    (8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for—
    (i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or

    (ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or

    (B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;

    (2) secondly, in looking at the law, you must know that is deemed a "Loan" as set forth in the statute. I am NOT at my law firm right now. There is an excellent court case that I have at my law firm that analyzes that issue and ruled it was a dischargeable debt and not a loan but carefully scrutinizes the facts. If you do NOT see that provided by another attorney on here before Monday email my office and I will reply to you and post on here! I have filed over 40 student loan lawsuits myself in last 23 years and try and watch for those important cases and gladly forward that to you out of my brief bank but don't have at home. Sorry.

  6. I tend to agree with Mr. Blaskowsky. The 2005 amendments excluded from discharge "educational benefits". Courts in different parts of the country have interpreted this provision differently. You need to seek the advice of an attorney in your area.

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