Q: Filing Chapter 7 in Vermont and just approved for student loan refund is this protected?
I am currently filing chapter 7 bankruptcy via the internet through Upsolve and to keep the story short I was charged out of state tuition for two semesters totaling just over $10,000 maxing out my loans for the school year so I can not return until fall next year without out of pocket pay. I was supposed to be charged in state so they have to refund me basically half the tuition but my loans stay maxed out! So to attend in the winter or spring these upcoming semester I would need to pay for school with this money from the refund is this money safe?
A:
If you are holding this money in your bank account or as cash then it usually will not matter what the funds represent. You must even disclose the fact that you are owed the money even if school is still holding the money.
While these funds represent your tuition money from your perspective, it is most likely that the law will view these proceeds simply as cash (or a bank balance) once you have possession of it. Most states have a list of property that you can keep when you file bankruptcy. If property is protected from your creditors then it is considered "exempt". Exemptions are controlled by state law and I am not licensed in Vermont, but I would predict that it is very unlikely that there is an exemption that would apply specifically to tuition refunds. If Vermont provides an exemption for cash, bank accounts or wildcard (anything) then you could claim that exemption up to its limit once you have possession of the money. If you are under the exemption limit then you should be able to keep the money. If you are over the exemption limit, the difference would be subject seizure by the bankruptcy Trustee.
If you already have the money, it would probably be best to wait to file bankruptcy until 90 days after paying the tuition. Alternatively, you could ask the school to return the money to the lender rather than sending it to you.
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