Student loan refunds??Will the trustee take it?

[coffee]

My husband is filing ch 7 in September. I am not filing and I am starting college in the fall. I plan on taking extra on my student loans for living expenses because i wont be able to work as many hours. Can the trustee take my student loan money or is it exempt? I'm in NH.

[music12]

tough question! hope someone can answer for you.

[Sham11801]

Student loan refunds i believe are considered disposable income. They are not exempt, neither is using tuition as an exemption (except in cases where its required by work).. as long as the student loan pays off the tuition directly and does not go through your bank account you'll be ok. BUT , once u deposit the overage that money is fair game for them...thats what i was told by my attorney.

[bkmaggster]

Student loan refunds i believe are considered disposable income. They are not exempt, neither is using tuition as an exemption (except in cases where its required by work).. as long as the student loan pays off the tuition directly and does not go through your bank account you'll be ok. BUT , once u deposit the overage that money is fair game for them...thats what i was told by my attorney.

So they can take the overage *and* the debt isn't dischargeable? Ouch ouch ouch! This is why living off of student loans is such a terrible idea!

[music12]

sham, is that true even if the person taking the loan is not filing, only the spouse is?

[madeia98]

student Loan

I never really got an answer as to this, but I had 6K that was part of a student loan in my bank acct, I gave a copy of the check to my atty with an explanation. I am not sure if I had exemptions to cover it but was told it would be ok.
My theory is that it was a loan and part of non dischargeable loans. If they were going to take it you should be allowed to just give it back?

[sdbird101]

Id hold off cashing/depositing student loan money until after if possible or try to keep it in a different account. That said, it is not income, you do not pay taxes on it, it is a loan, but talk to a lawyer. My bet is if done right you can keep it.

[AngelinaCat]

I am not a student loan expert by any means.

However, if the non-dischargability of student loans works anything like the non-dischargability of IRS debt, then that refund will be turned around and applied to any existing student loan debt.

AND in any case of BK you wish to file, you must disclose these loans and payments, if any, to these entities.

REMEMBER: You must provide your bank statements for the past six months or so, along with any other types of financial documentation requested. This includes IRS W-4 forms, 10-99 forms, etc., etc.

[Rick9972]

As you are not filing BK. To keep there from being any questions asked, I would not take disbursement of the extra money until after he files or after it is discharged. If you could do that.

[Runnin on empty]

I went back to school after we made the decision to file. I had already started attending classes, got a student loan and had loan refunds before we even had our 341 meeting (but not before we actually filed). Granted, I can't speak for what every Trustee is like and what they can/can't do, but I would think that because just the hubby is filing, the Trustee should be leaving you alone as far as that's concerned.

If you don't have the student loan refund money coming as a direct deposit, that'd be even more of a safeguard. The school will take out what you need for tuition and cut/mail you a check for the difference. Take it to the local bank that the college has it drawn on and cash it.

I'd say to make sure you don't try and keep the student loan info from the Trustee a secret. Let him/her know that you're attending school and using Stafford loans to pay for it, and they should leave you alone.

[coffee]

Thanks for the replies. He is filing at the end of September. We are talking to a lawyer tonight. I'm going to ask him about this. I would be starting school before he files. I would not get the refund check until mid October to beginning of November. I cant unfortunately hold off until next semester. I hope this works out....

[snowangel]

wondering what your verdict was?

I have spoken to several lawyers regarding this issue and can't seem to get a good solid answer.