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?!
top Ad Widget
Collapse
Announcement
Collapse
No announcement yet.
Student loans considered income?
Collapse
X
-
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.Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
Status: (Auto) Discharged and Closed! 5/10
Visit My BKForum Blog: justbroke's Blog
Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.
Comment
-
Originally posted by justbroke View PostThe 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.
Comment
-
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.
Comment
-
Your student loan refund is a cash asset, not income.
Exempt the cash. That's what I'm doing.I may be smarter than an attorney, but I'm not one. No legal advice here, people.
Filed Ch. 7 pro se on 10/22/10 341 on 11/19/10 Report of No Distribution Filed on 11/19/10 Discharged 1/19/11 Closed 2/2/11
Comment
-
Originally posted by dumpinmydebt View PostYour student loan refund is a cash asset, not income. Exempt the cash. That's what I'm doing.
I don't want people to get confused and think that they can "exempt" income in order to lower their income.Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
Status: (Auto) Discharged and Closed! 5/10
Visit My BKForum Blog: justbroke's Blog
Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.
Comment
-
How's your case going dumpin?Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
Status: (Auto) Discharged and Closed! 5/10
Visit My BKForum Blog: justbroke's Blog
Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.
Comment
-
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?I may be smarter than an attorney, but I'm not one. No legal advice here, people.
Filed Ch. 7 pro se on 10/22/10 341 on 11/19/10 Report of No Distribution Filed on 11/19/10 Discharged 1/19/11 Closed 2/2/11
Comment
-
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.
Comment
bottom Ad Widget
Collapse
Comment