Student loans considered income?

[katfzl]

I am filing BK 7 (unemployed over 1 year, now employed) but just read somewhere on this forum that student loans are considered income for the purposes of bankruptcy. I am surprised, as they are loans that need to be paid back, and when I had food stamps last year they weren't considered income. Are they really considered income?!

[khrisbagnaes]

no i dont agree that loan can considered as student income...there should have work to have income ....

[justbroke]

The way the bankruptcy code reads, is that "current monthly income" (CMI) is income received from all sources regardless of taxation status. It excepts, from this "CMI", only benefits derived from Social Security programs and certain war related benefits (reparations). You do not have to work in order to "earn" income. Income can be earned or unearned... so the distinction that it comes from employment is irrelevant. (Otherwise really rich people could file Chapter 7 even though they have "unearned" income from investments.)

Now, as to how "income" is actually calculated in YOUR specific District, is... well... District specific. Some Districts, for example, count unemployment insurance as income, and others find it to be a "benefit" of the social security program and is excluded.

Having really ran around your question, to get to this answer, I apologize. Student Loans are not income in most Districts. In "some" Districts, the residual amount left from a student loan, after paying tuition, books, fees, labs, etc... "may" be considered income.

I would just not count it. If the Trustee objects, then deal with it. But that's just me.

[katfzl]

The way the bankruptcy code reads, is that "current monthly income" (CMI) is income received from all sources regardless of taxation status. It excepts, from this "CMI", only benefits derived from Social Security programs and certain war related benefits (reparations). You do not have to work in order to "earn" income. Income can be earned or unearned... so the distinction that it comes from employment is irrelevant. (Otherwise really rich people could file Chapter 7 even though they have "unearned" income from investments.)

Now, as to how "income" is actually calculated in YOUR specific District, is... well... District specific. Some Districts, for example, count unemployment insurance as income, and others find it to be a "benefit" of the social security program and is excluded.

Having really ran around your question, to get to this answer, I apologize. Student Loans are not income in most Districts. In "some" Districts, the residual amount left from a student loan, after paying tuition, books, fees, labs, etc... "may" be considered income.

I would just not count it. If the Trustee objects, then deal with it. But that's just me.

Filing in Arkansas using Federal exemptions. Still unsure if I need to include them.

[despritfreya]

I take the position that since it is a loan (with a corresponding obligation to repay) it is not income for CMI purposes. If loans were "income" then the cash advances and any use on credit cards within the 6 month window along with lines of credit or any other "loan" you can think of would be "income".

Never had an issue taking this position in my district.

Des.

[dumpinmydebt]

Your student loan refund is a cash asset, not income.

Exempt the cash. That's what I'm doing.

[justbroke]

Your student loan refund is a cash asset, not income. Exempt the cash. That's what I'm doing.

While you do raise a good point to exempt any "excess" cash that you may have in the bank from that Student Loan, exemption and "income" are two different things. You can't use an "exemption" to "exclude" income. Exemptions are used to exclude assets. The only thing that allows you to not count something as income, is the definition in 11 USC 101 (Definitions) which defines "current monthly income".

I don't want people to get confused and think that they can "exempt" income in order to lower their income.

[dumpinmydebt]

Yes, thanks justbroke for clearing that up.

[justbroke]

How's your case going dumpin?

[dumpinmydebt]

We're set to file on next Monday. I'm extremely nervous. I haven't been until I realized it was next week.

My paperwork is all done, I'm just going over everything again, double and triple checking. We just got our tax return transcripts from the IRS this weekend, so we have all the necessary paperwork. So I guess we're ready, I'm just not mentally ready.

But who really is, you know?

[mommi2many]

Good luck dumpin. I hope to follow in your footsteps really soon.

[HHM]

Generally speaking, the portion of student loan proceeds used for educational expenses (tuition, books, fees, etc) is not income. That portion used for living expenses (room, board, food) etc, may be counted as income depending on the aggressiveness of your trustee and your district. There is clause somewhere buried in student loan laws about using to pay creditors (essentially an exemption), but the reference escapes me.