Applying for a Plus Loan Prior to filing chapter 7

[Ann]

I know you are going to think I'm crazy here but my child needs my assistance for college. I think based on my taking the practice means test that I may qualify for chapter 7. I plan to file sometime in early December. Here is my question. I was pre-approved for a parent plus loan from my child's school. Now I have to officially apply for the loan. Is this a bad thing to do right now knowing I'm going to file in about 3-4 months??? What do you suspect my chances of approval are with a 585 credit rating? Thanks! Any advice would be more than appreciated!

[DeadManCrawling]

Not sure what your chances of approval are, but student loans cannot be discharged in bankruptcy, so it wouldn't seem to matter.

I am assuming that this also applies to educational loans taken out on your child's behalf. You will have to pay this loan even if you later file BK.

I am curious to hear from others more knowledgeable about one possible point though:

If a parent files BK (as opposed to the student), does responsibility then transfer to the student?

If that is the case, then I guess you would end up sticking your kid with this bill.

[Ann]

I just got word I have been approved. The payments are going to be quite low so I can always figure that in to my "necessary expenses" when I go to do the actual means test although I'm very new to all of this and I could be way off on this one. If so I would really like to hear some feedback from anyone out there who is much more knowledgeable!

[pcn]

Are PLUS loans guaranteed by the gov't? I cant remember, but I do remember that I was able to defer my payments until I graduated, so that may help your finances immediately after filing.

[LuciluS]

Congratulations on getting approved for your ParentPlus Loan! Some of the loans you are able to receive 1/4 interest lower if you allow them to use ACH from your checking account. My husband has one for his son's first year of college.

No this is not a dischargeable debt. Before you file bankruptcy, I would suggest you call the Loan Company (hubby's is with Direct Plus)and ask to speak with the Bankruptcy Dept. There maybe a specific address your payments will need to be made to during your BK process.

We will be filing 9/30/09. Dh's loan comes out on the 10th of every month. I'm going to have Dh call & ask them where to mail the payments, as I believe the ACH's have to cease during BK, and if he loses the .25% off the loan.

Since it is not a dischargeable debt, I don't believe you did anything wrong.

[123ABC]

You are able to delay payments till after your child graduates. Also if you had NOT been approved it is no big deal because then the student is allowed to take out additional federal student loan monies. (i work as an admission representative for a college)

[Ann]

You are able to delay payments till after your child graduates. Also if you had NOT been approved it is no big deal because then the student is allowed to take out additional federal student loan monies. (i work as an admission representative for a college)

I did not know you could delay the payments. I was led to believe that my payments would begin about 60 days after it is dispersed. Do I have a choice? I just applied through online through my sons financial aid office. I don't even know who my lender is. That is bad isn't it?

[boyohboy]

I also have a parent Plus Loan (Direct Loans). If that's your lender, they will check your credit every semester before they disburse to the school. Our payments began after the end of the first school year. Payments are low the first year but will go up each year.

[Ann]

I also have a parent Plus Loan (Direct Loans). If that's your lender, they will check your credit every semester before they disburse to the school. Our payments began after the end of the first school year. Payments are low the first year but will go up each year.

So if I was approved for $5,100.00 the first semester and I file in December they will not disburse the other $5,100.00 for the second semester? Will the filing (I'm sure it will) stop the future disbursements?

[boyohboy]

I think that's what might happen. In our case, Direct loans sent a letter before each semester letting us know if we were approved or not.

[Ann]

I think that's what might happen. In our case, Direct loans sent a letter before each semester letting us know if we were approved or not.

So If they deny me than can they (the school) ask for more in unsubsidized loans for my son midway? Did you have to do a entrance exam for a plus loan?

[boyohboy]

I'm not too sure. You might want to talk to your school's financial aid. For the plus loan, we had to complete a application (FAFSA) online every school year. And from that, we found out how much we could borrow.

[eddiep]

I applied for a plus loan this year for my daughter, I had not made any payments on cc in 6 months, I was denied. She was able to get more money in unsubsidised loans but not the entire amount she needed (there is a cap). our only options at that point were private student loans in her name, but require cosigner or Tuition Pay, it is not a "loan" but we were able to spread the payments out for 10 months, in your case it would be 5 months. We included the tuition pay payments in our expenses.