Debt owed to college - sent me to collections!

[marzipan13]

I've already been discharged for my Ch 7 case in 10/2007.
I included 2 college debts... 1 college accepted the discharge and allowed me to enroll again and get my transcripts. The other college is still fighting the discharge and has sent me to collections!

Here is the situation:

College 1 - Attended in 2003. 1 semester I failed a class and withdrew from another, which made me no longer eligible for the unsubsidized federal student loan that I had already received. The college canceled that loan and returned it to the lender. They later filed a judgment against me. I listed them in my BK, it was discharged and they accepted it.

College 2 - Enrolled in Fall 2005 & Spring 2006. Was unable to attend either semester due to family emergencies. I had to keep leaving the state. I missed the withdraw dates and received FA for all my classes. After the Spring 2006 semester, the financial aid dept. canceled all my federal student loans and returned the funds to the lender. I listed them in my BK, but they are not accepting the discharge and have now sent me to collections.

This debt is nearly $8,000 and they want it paid in full. I'm unemployed and unable to make payments. I don't know what to do!
I filed pro se and don't have a lawyer. There was a lawyer who I spoke to about 6 months ago about this situation who said that because the loans were cancelled and now the debt is owed to the school, that it is discharged.

Should I try to file an adversary proceeding to have this discharged due to undue hardships? I'm unable to make payments, and I know that I need to show that I've tried to make attempts to pay this debt. Should I try and squeeze out a monthly payment then later file a proceeding?

[coloradomrg]

The debt is discharged (had the same situation myself) pay nothing!

[ansky0007]

Student loans are not dischargeable... I would not take the advice of do nothing.

[coloradomrg]

Student loans are not dischargeable, but debt to an educational institution is. I didn't say do nothing, I said PAY nothing.

[marzipan13]

Student loans are not dischargeable... I would not take the advice of do nothing.

The student loans were cancelled. I spoke to the lender, American Education Services, and they confirmed that the loans were cancelled and money returned to them. They agreed that the debt for student tuition, books, and fees is now with the college and not with them.

The wording in the law regarding student loans and student debts not being discharged is "educational benefits". How did I receive an educational benefit if I wasn't able to attend? I received FA for those classes - failed due to non-attendance.

But why would one college accept the discharge and not the other?

The State of Maryland Collection Unit is the collection agency for this debt. I was referred by their customer service to send a dispute letter to their attorney general's office stating that it was discharged and send my bk paperwork, which I did this week.
The customer service rep said my account describes this debt as student fees, not student loans.

[marzipan13]

Still being harassed about student debt

Can someone please define what an "educational benefit" and "educational benefit overpayment" is under the BK law?
This is what the legal department of State of MD Central Collection Unit says I received, even though I didn't attend school.
From my own research, G.I. Bill funds are considered to be an "educational benefit overpayment" if a recipient receives more money than the cost of school and doesn't pay it back to the government.
Please, if anyone can give me a clear definition of these.
I may need to file an adversary proceeding against State of MD for trying to collect on a debt (based on student debt, not student loans) that was supposed to be discharged. Even the person calling to collect a payment from me said if it was in BK, it should be discharged and that I should fight it... imagine that!

Or maybe I can have this debt discharged due to undue hardship? I only work part-time and there's no way that I can pay off nearly $8000.

Does anyone know how much the lawyers would cost if (1) I tried to fight that it was discharged with adversary proceeding or (2) I try to get it discharged due to undue hardship?

[poorold]

"Can someone please define what an "educational benefit" and "educational benefit overpayment" is under the BK law?
This is what the legal department of State of MD Central Collection Unit says I received, even though I didn't attend school."


in my opinion, the State of MD Central Collection sent you a form letter telling you why your debt is owed.

It is highly unlikely that anyone with a brain reviewed your case or letter before issuing you that letter.

It took them only 3 minutes to send that letter and move your file off their desk and onto someone elses's desk.

That's how government employees work.

[music12]

i don't understand. if the loans were cancelled then you don't owe anybody anything. what did you include in your petition then?

[jadams]

music12, I suspect the loans were posted to his/her student account. The college then billed tuition and fees against the student account.

When the loans were cancelled, it resulted in a negative balance in the student account at the college.

I have a similar situation myself, but I haven't had the ambition to approach it yet. I suspect since I went to school out of the country, it's going to make things a whole lot more difficult if not impossible.

In my case I withdrew for medical reasons after being the victim of a crime, so I was able to write an appeal request and have the majority of the fees that remained after my US government loans were cancelled reversed. Only a small balance (relative) remains.

To the OP: It's really late to be starting now, but is there any chance you could present a hardship to the school and appeal to have the fees reversed like I did?

[TeacherMomma]

Can someone please define what
Or maybe I can have this debt discharged due to undue hardship? I only work part-time and there's no way that I can pay off nearly $8000.

Does anyone know how much the lawyers would cost if (1) I tried to fight that it was discharged with adversary proceeding or (2) I try to get it discharged due to undue hardship?

The inability to pay without being totally and permenently disabled (and even some people in that situation are not granted a hardship discharge) is not a basis for being granted a hardship discharge. You practically have to be comatose and unemployable for that reason to get one. But just the mere fact that you are not working full time and cannot afford the payment is not grounds. Just based on my information.

[Amy26]

If it is infact for TUITION and FEES and NOT a student loan then it should have been discharged. Was it included on your petition?

If it is infact monies owed to the school for tuition and you included them in the petition, then simply send them a copy of your discharge papers and tell them to stuff it.

[marzipan13]

I did include in my petition for BK, the MD Collection Unit transfered it to their legal dept... which has been sitting on their desk for a year and now the collection agents are calling. I spoke with the assistant attorney general, who was handling this debt and he first put it in discharged status and said I didn't have to pay. Then later the AG took it out. I've been arguing with them for months, but even they can't give me a straight answer. They were even going to reduce the amount so I only had to pay back any stipends that I received.
I want to take care of this before they file a judgment against me and try to garnish wages or bank account!