Pell Grant / Ch 13

[ineedinfo]

Hi,

I am in Ch 13 repayment now and have qualified for a Pell Grant and Stafford Loans. I have not accepted anything yet and assume I CAN'T accept the loans, since I'm supposing that is new credit.

My question is, can I accept the grant? If there is any left over after expenses will that be taken by the trustee? Do I report it?

I don't want any issues in my case and am almost tempted to wait on school, but I'm older and really need to improve my financial situation with a better job because I am struggling now. Just don't want to cause any problems for myself because completing this 13 is my priority.

Thanks!

[kornellred]

The Pell Grant is a grant and not a loan - you could not possibly use it for anything but it's intended purpose. The Stafford Loans may be another matter. A loan is a debt, no doubt about it.

[Flamingo]

Debt incurred after filing a Chapter 13 is your own responsibility. Stafford Loans are loans to be repaid and, therefore, is a debt that is your responsibility if you accept any Stafford Loans offerred to you. You would have to pay them back as specified so if they are to be repaid at any time during your Chapter 13 they would have to be repaid in addition to any of your other bills and your Plan payment.

Pell Grants are another matter and can be viewed as income. I suggest thoroughly educating yourself on grants accepted from a college as to being taxable by the IRS (go to IRS.gov and research Pell Grants). Discuss with your attorney.

[ineedinfo]

Unfortunately, my attorney wasn't much help.

I don't plan on using the loan and almost the entire grant will be for tuition and fees and books. There will be little, if any, left over after that, so there won't be much taxable income. (Based on what I understand from the IRS site.)

Thanks for the info.

[lrprn]

If you do decide to go ahead with the grant, please keep every receipt related to it as you spend the money for school. That way in the unlikely event it ever does become an issue, you can prove you spent all the grant dollars legitimately to pay for school costs only, not to pay your personal living expenses.

[Exployer1234]

I would make sure that you do not need to have your trustee permission to accept the loan for school. Since you are in a chapter 13 I believe you may need permission to accept new debt.

Your school should ask you to have the trustee sign a statement you can have the loan for school. I am in school and was going through a chapter 7 while trying to get my student loans and grants. I had to have a statement from my lawyer and the pacer report stating things about my bankruptcy case. Since I was past the 341 meeting and my bankruptcy was discharged prior to the loans being distributed I did not have to have the trustee sign something. Since you are in an active Chapter 13 your school will normally ask for the trustee to sign something stating you can have these loans and grants.