Cash left over from Student Loans

[chg]

Any thoughts?

I am going to have cash over the tuition, that is meant for depended child care while i am in school, for the remainder of the semester. this is a legal use of these moneys according to the gov

I obviously do not want it sitting in my account when I file, what is the best thing to do, to just cash the check and hold onto cash for that expense? Try to prepay them? Or put it on a debit mastercard?


CHG

[Exployer1234]

It depends on what state you are in to whether you can keep the full amount that you have left over. I filed on 4-23 and still had 2500 left from student loans. I am a no asset case so I had less then the 4000 dollar personal value that was allowed. This included the cash I had, my car, and any personal belongings. I used the loan money to pay the lawyer.

Even if you use the income as stated by the government in the manner they feel is legal it is still counted as income and they can take any excess over the allowed limit to pay off any creditors.

[chg]

It is counted as income? Or just cash on hand, did you declare the loans as income?

[Exployer1234]

On my BK papers it states the amount I have received total on student loans, but on the personal property I had to list the cash I had at that moment in my checking account. There is no way to itemize that the money is part of the student loans. The trustee is only looking at the amount of cash you have on hand and not where it is coming from.

It does count as income by the way. I know that sucks, because you need the money to pay for everyday expenses. I am in the same boat, and since I will not be discharged from my BK until the end of July I may not be able to get pell grants or any additional money to finish my degree. The amount of paperwork I am having to fill out with the school is crazy to say the least.

[Exployer1234]

Oh and student loans are not exempt, it is not like social security payments.

[chg]

I understand part about cash, if you have it on hand it is available to the trustee, i just dont understand how a loan could count as income for your means test -

so if you got 2k in pell and 3k in stafford - that 5 k was added on to your income for the means test?

doesnt make sense to me since you have to repay it - hmmm

[Exployer1234]

If you already accepted the loans and have the cash from the loans then it will count as income. On my BK it had to go into my personal property
On the summary of schedules it is listed as personal property and the amount of the personal property. Then an additional statistical sumaary of certain liabilities and related data is summited with the amount of student loans accepted ( not pell grants).

Then on your schedule B -personal property you have to list what is presently in your checking, savings, and other finanical accounts, certificates of deposits, or shares in banks, savings and loan, thrift, building and loan, and homestead associations, or credit unions, brokerage houses, or cooperatives.

The reason that you have to count student loans as income is because it is not exempt. Exempt income is social security and disability pay. The BK court can not touch that income.

[chg]

I understand -

Disposable Student Loan Money Considered Income
After the costs of tuition, fees and books are met, that portion of the student loans that remains is considered income. That income is spread over the period of time that the loan is to cover. For instance, for Fall semester, it goes from early September to late December. If there were $1600 left after school expenses, that amount would be prorated over those four months, giving an income of $400/month.

Since loan money is distributed in halves over Fall and Spring semesters, the same method would be used to figure out monthly income from student loans from January through May (or whenever Spring semester ends). Those attending Summer term may wish to hold back some of those funds until that time, stretching a smaller portion of the loans over Fall and/or Spring.

For example, using that same figure of $1600 left over for each Fall and Spring semesters, if the student planning on summer term holds back $200 from each semester, leaving only $1400 for each Fall and Spring, that would give monthly incomes of $1400/4 months, or $350 from loan money for the months covering Fall and Spring semesters.

How much of that remaining $400 is considered income depends on how much will be required for tuition, books, fees and the like. Without other financial aid for summer term, chances are that the whole thing will be eaten up in school costs and still possibly not cover it all.



Read more at Suite101: Fitting Student Loan Income into Bankruptcy: Help with Form B6I - Current Income of Individual Debtors http://universities.suite101.com/art...#ixzz0oKZQnovD

[chg]

I know Roth IRAs are exempt, I guess I could prepay a few months of child care and then put the rest in there - it will cost 10% to remove it but that is better than losing it

[Exployer1234]

You need to watch how much you spend at one time to anyone. It may depend on the state, but any payment over 500 dollars may be considered as a preferential payment.

[chg]

I dont think payment for service is the same as preferential payment, i know i can prepay my property tax for example - child care is a service, not a debt, but i will be sure to check with my attorney.

I think i need to change my loan form tho, and only take a little bit over what i need for school and books, to help with the child care expenses so it doesnt increase my income too much

thanks for your help with this - it is all confusing - I am happy I am going to a state school, at least it isnt so expensive i wont be able to repay easily enough once the cc debt is gone

[Exployer1234]

Glad I could help! I would double check with your attorney on what they consider a preferential payment. I asked my lawyer the same thing about what I could pay over 500 dollars. I would think paying child care in advance would be a good thing. I mean you have to have childcare to go to school and work.

I will be glad just to finish my degree. I just finished part of my degree at a state college and now I am transfering to a university. Things are more expensive at the university. I am worried about not having enough pell grants to cover the cost of each semester. That is not even including what the cost of books will be. I already had one degree, but it was not enough. So I had to go back and finish another degree just to go into teaching. I have two years left on this degree, but it may be extended to 4 years if I have to pay for it myself.

Good Luck with everything. I hope school goes well and your BK does not cause to much stress.

[chg]

Have you seen the info on the TEACH grant? Are you going to be teaching high school? that might be an option -

GL to you too, keep in touch, hope the loans fund after the BK is discharged, does your school think they will?

[Exployer1234]

I missed the deadline for the TEACH grant by one week. The school was slow about processing my app. I am going into secondary education. I will not miss the next deadline though for the TEACH grant.
My advisor had not dealt with BK's and said he had to do research to find out the school's policy is. I basically just keep speaking with person after person and I am hoping someone figures out what to do.

[chg]

I do not see a deadline on the TEACH?

https://teach-ats.ed.gov/ats/index.action