Can I take out a student loan

[mommi2many]

I will be filing chapter 7 in the next couple of weeks. I am in school and will need loans to make it through. Should I take the loan out before I file or after? Which is better? Are loans considered income? Also, what about pell grants? Are they considered income? Do I claim these on my schedules?

[bigtim6656]

I was just wondering this myself. I will be getting my fall loan after sept 14th and wonder if I should wait spend it and then file or file on the 1st like I want and just spend the loan on what I would(tires, new computer, bills since I am using my income for the month to file, and some clothes). hopefully someone will answer your questions and mine soon.

[backtoschool]

Yes you can get a federally guaranteed student loan while in the process of bankruptcy (ie a stafford loan or a perkins loan) but you have to watch your timing. The loan needs to be applied for before you file for bankruptcy, and the disbursement can happen at any time during the bankruptcy as long as the loan goes directly to the school to pay your tuition and you receive a refund for the remaining amount. You cannot get the entire loan sent to you directly. Also, if your refund is put into your account before your 341, you will have to exempt it as a cash asset. If you receive your refund (ie loan proceeds left after tuition is paid) after the 341, you do not have to exempt it. The loan does not count as income.

[Exployer1234]

I applied for my student loans in prior to filing my BK. Then after I filed BK I had to submit changes to my loan paperwork. The school may require you to have a statement from the trustee stating it is okay for you to take out additional loans. I printed up my pacer report showing the trustee had listed me as a no-asset case. I have not received what my official loan amount will be for the fall and summer, but it is supposed to be enough to cover the cost of books and tuition.

[kartoons19]

I applied for student loans prior to filing and should get a disbursement this week. I never received any information about my loans since filing. I am concerned about the refund because my 341 isn't until next week. My attorney did say that if I have it deposited into an account without any other money, she will be able to protect it. Unfortunately my state doesn't have a wildcard or cash exemption. She's been handling bks for almost 20 years, so I hope she knows what she is talking about!

[bigtim6656]

the 341 meeting is abotu 30 days after filing right? If I file on the 1st, and get my loan before the 341 meeting I would have to exempt it. What if I get my loan around the 14th then file? Would I have to count it as income. Still might not be a issue seeing how my income is exempt from the means test(SSDI)

Yes you can get a federally guaranteed student loan while in the process of bankruptcy (ie a stafford loan or a perkins loan) but you have to watch your timing. The loan needs to be applied for before you file for bankruptcy, and the disbursement can happen at any time during the bankruptcy as long as the loan goes directly to the school to pay your tuition and you receive a refund for the remaining amount. You cannot get the entire loan sent to you directly. Also, if your refund is put into your account before your 341, you will have to exempt it as a cash asset. If you receive your refund (ie loan proceeds left after tuition is paid) after the 341, you do not have to exempt it. The loan does not count as income.

[bigtim6656]

this is my worry If I filed on the 1st I would be likely to have my refund before I went for my 341. I will be getting 6200 back and it is spend on stuff I really need. Seems odd they would want to take a LOAN more so A STUDENT LOAN and pay of creditors, when we would have to repay it later.

I applied for student loans prior to filing and should get a disbursement this week. I never received any information about my loans since filing. I am concerned about the refund because my 341 isn't until next week. My attorney did say that if I have it deposited into an account without any other money, she will be able to protect it. Unfortunately my state doesn't have a wildcard or cash exemption. She's been handling bks for almost 20 years, so I hope she knows what she is talking about!

[kartoons19]

this is my worry If I filed on the 1st I would be likely to have my refund before I went for my 341. I will be getting 6200 back and it is spend on stuff I really need. Seems odd they would want to take a LOAN more so A STUDENT LOAN and pay of creditors, when we would have to repay it later.

I agree. I told my attorney on several occasions that if they take my August disbursment I will be SOL as I am a full-time grad student and only work part-time. She assured me it would be okay. I did spent my summer loan on necessities before I filed, so I had very little in my accounts. If bk is primarily a snapshot of the day I filed, then I don't think this disbursement should be an issue, but I'm not an expert. So I can't help but worry about it. I guess I will find out soon if there is a problem. Hopefully it will all go smoothly.

[bigtim6656]

Ya I wish I filed when I wanted to a year ago. I had not got any loans or anything yet. I think I will wait get my money buy what I need that is exempt and I can over with my wild card and then file. I do think I will meet with the lawyer I will be using and bring him up to speed and see what he thinks. Let me know how the 341 goes so I know what to expect if you do not mind.

I agree. I told my attorney on several occasions that if they take my August disbursment I will be SOL as I am a full-time grad student and only work part-time. She assured me it would be okay. I did spent my summer loan on necessities before I filed, so I had very little in my accounts. If bk is primarily a snapshot of the day I filed, then I don't think this disbursement should be an issue, but I'm not an expert. So I can't help but worry about it. I guess I will find out soon if there is a problem. Hopefully it will all go smoothly.

[kartoons19]

I wish I filed a year ago too. Oh well. I can't wait until my 341 is done and I get a report of no distribution! I'll keep you posted.

[backtoschool]

the 341 meeting is abotu 30 days after filing right? If I file on the 1st, and get my loan before the 341 meeting I would have to exempt it. What if I get my loan around the 14th then file? Would I have to count it as income. Still might not be a issue seeing how my income is exempt from the means test(SSDI)

Student loans never count as income. If the refund part of the loan (the part given to you by your school after your tuition is paid) is put into your bank account before your 341 you need to exempt that amount as a cash asset, or the trustee can make it part of the bankruptcy estate. Some trustees do not check bank account balances on the date of the 341 (they only check bank account balances on the date of filing) and some do check bank account balances on the date of the 341. As with anything ymmv. But if you get the cash disbursement before you file, or before your 341, you should exempt it to be safe.

Depending on what year you are in in school and whether you have had stafford loans already or not, you may need to sign a new master promisory note. This will not keep you from getting your money and is only a formality that has to be signed since technically your old promissory note is included in your petition. (although the loans are not dischargable).

[bigtim6656]

So it sounds like I should get my refund into my account. Buy what I need that is exempt, then use the rest for food, and such. I do not see a issue, it really comes down to my jeep and if they go by retail or trade in. Indiana has a 4k wildcard. Since my tires and money to fix it will be on my jeep value and not improve the value much since tires ARE A MUST. laptop 1500, guns 500, clothes 800 after buying some new ones, 1500 for bk which is kind of an chicken and the egg thing. Sure bk is not education related, but if I use my income for my bk I would use the same from the loan for my bills. SO really does not matter.

So the trustee will check the balance on the day I file and maybe the day of the 341. When I got my summer loan I owed my dad rent money for a couple months since my va education check was messed up and let him use my card to buy some scuba gear so I did not eat 50 bucks on fees getting the money. Which would be easy to show since they stuff he bought is about 10 times to small for me.

A little less worried now, thanks

Student loans never count as income. If the refund part of the loan (the part given to you by your school after your tuition is paid) is put into your bank account before your 341 you need to exempt that amount as a cash asset, or the trustee can make it part of the bankruptcy estate. Some trustees do not check bank account balances on the date of the 341 (they only check bank account balances on the date of filing) and some do check bank account balances on the date of the 341. As with anything ymmv. But if you get the cash disbursement before you file, or before your 341, you should exempt it to be safe.

Depending on what year you are in in school and whether you have had stafford loans already or not, you may need to sign a new master promisory note. This will not keep you from getting your money and is only a formality that has to be signed since technically your old promissory note is included in your petition. (although the loans are not dischargable).

[kartoons19]

So far I haven't been asked to bring any statements to my 341, so I am hoping the trustee will not check my balance. I also haven't been asked to sign a new master promisory note, but that may come down the road.

Bigtim6656, sounds like you are covered either way with the 4K cash exemption. Colorado doesn't have an exemption and that is why I am a bit worried.

[bigtim6656]

I do not think the 4k is a cash exemption but being a wild card exemption it may be able to be used like that.

So far I haven't been asked to bring any statements to my 341, so I am hoping the trustee will not check my balance. I also haven't been asked to sign a new master promisory note, but that may come down the road.

Bigtim6656, sounds like you are covered either way with the 4K cash exemption. Colorado doesn't have an exemption and that is why I am a bit worried.

[backtoschool]

I do not think the 4k is a cash exemption but being a wild card exemption it may be able to be used like that.

Wild card exemptions can be used for anything, including cash.