Q: Are debts (not student loans) owed directly to a college dischargeable under Chapter 7 BR?
I filed Chapter 7 in TN, and my case was discharged appropriately. My student loans weren't discharged, which I knew going into the bankruptcy. Two of the other debts listed were unsecured debts that I owed to two different colleges; these are not student loans, but amounts owed directly to the schools themselves. Even though they were listed properly in the bankruptcy, the colleges are both stating that since the debts were for a college, even though they aren't student loans, that they can still collect. I have already paid several thousand dollars and have more to pay. Is that correct? Do I have any recourse? Do colleges have the right to not accept a chapter 7 ruling and still collect? Thanks for your assistance.
A: Generally speaking, yes. Because they aren't protected student loans pursuant to 523(a)(8). You should go back to Court and file a violation of discharge action.
Student loans are not dischargeable in bankruptcy because of Bankruptcy Code 523(a)(8), which defines those type of nondischargeable student loans as:
(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;
Tuition owed to a college would not fall under that definition. As prior answer suggested, if you believe the debt does not fall within this definition, then you should file a violation of discharge.
Timothy Denison agrees with this answer
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