Are Bar Study Loans Student Loans?

[phat2009]

Does anyone know if the private loans that law students take out to pay for housing and other living expenses for the three months while they study for the bar exam postgraduation are considered "student loans" for purpose of the BK laws that say that private "student loans" are not dischargeable? Technically, one is not a student at that stage, there is no institutional association to the funds, so that is why I was wondering.

Thanks!

[justbroke]

It would be a good argument in a Complaint to Determine Dischargeability. You may want to look up "Cost of Attendance" as defined in the Higher Education Act . I think that 11 USC 523(a) deals with those costs related to a "qualified education loan" and that definition may include housing.

Would be interesting to fight in Bankruptcy court.

[tobee43]

It would be a good argument in a Complaint to Determine Dischargeability. You may want to look up "Cost of Attendance" as defined in the Higher Education Act . I think that 11 USC 523(a) deals with those costs related to a "qualified education loan" and that definition may include housing.

Would be interesting to fight in Bankruptcy court.

i for one, would like to attend that argument....and i do believe the definition was designed to include housing although also somewhat arbitrary in nature...one could say.
( suppose it's done like that on purpose?).

[phat2009]

I already had a Chp 7 discharge in 2007, but it just occurred to me that these particular loans may be different from student loans, as they are often described as private loans based on credit. So, if they are, shouldn't they have been discharged as a regular private debt? It's not like I'd trust the lenders to process it correctly if they can get away with deeming it a student loan to an unsuspecting borrower, when/if they should not. I'd ask the BK attorney who did my filing, but unfortunately, he was an idiot who told me all of my private student loans were being discharged. It was not til after all was said and done that I was informed he was wrong.

[justbroke]

After casually reviewing this, a "bar study loan" may be an educational benefit and as such be non-dischargeable. Especially if you obtained the bar study loan while in your third (or final) year! So, I think you'd have a hard time trying to discharge the debt unless you are able to get it discharged for normally recognized causes, like inability to work.

See In Re Skipworth, Case No. 09-83982-JAC-7, AP No. 09-80149-JAC-7. Bankr. N.D. Alabama, Northern Division.

See also Sallie Mae's Bar Study Loan Guide where it mentions that the loan is non-dischargeable. If you received this money from a source like Sallie Mae, it's almost definitely non-dischargeable, except under the recognized causes such as inability to work.

[phat2009]

Thanks!! I'd say that based on In Re Skipworth that it would be deemed a student loan because there was an educational benefit. Thanks very much for showing me that!

[tobee43]

I already had a Chp 7 discharge in 2007, but it just occurred to me that these particular loans may be different from student loans, as they are often described as private loans based on credit. So, if they are, shouldn't they have been discharged as a regular private debt? It's not like I'd trust the lenders to process it correctly if they can get away with deeming it a student loan to an unsuspecting borrower, when/if they should not. I'd ask the BK attorney who did my filing, but unfortunately, he was an idiot who told me all of my private student loans were being discharged. It was not til after all was said and done that I was informed he was wrong.

did you list the loans as secured or unsecured when you filed....

if they were listed as unsecured loans and discharged you may have the slightest of argument...however, as jb as pointed out there may already be precedence on a similar case set on this situation.

[justbroke]

Just listing a non-dischargeable debt will never discharge the debt. The only way to discharge an otherwise non-dischargeable debt, is to file a Complaint to Determine Dischargeability and be granted judgment in your favor. Otherwise, every debtor could discharge everything just by listing it on the schedules. I for one, wish that were the case!

[tobee43]

Just listing a non-dischargeable debt will never discharge the debt. The only way to discharge an otherwise non-dischargeable debt, is to file a Complaint to Determine Dischargeability and be granted judgment in your favor. Otherwise, every debtor could discharge everything just by listing it on the schedules. I for one, wish that were the case!

oh...i agee....i'm just curious is to how exactly it was listed on the petition...

i would have thought it would be interesting to know where the debt or loan was listed. of course, and as usual you're correct jb...just because it was listed as unsecured does in no way mean it was...i was just wondering how it was handled on the petition itself.

[phat2009]

Oh I have no idea how it was handled, I was so ill at the time and the files are packed away now, but I am willing to bet it was listed as a student loan, which is what Skipworth did. I accept my fate here, I just wanted to make sure I knew if anything different applied or not. Thanks all!! You folks are a great resource!!

[tobee43]

Oh I have no idea how it was handled, I was so ill at the time and the files are packed away now, but I am willing to bet it was listed as a student loan, which is what Skipworth did. I accept my fate here, I just wanted to make sure I knew if anything different applied or not. Thanks all!! You folks are a great resource!!

n/p..... just my interest is peaked now....LOL!!

[justbroke]

A student loan is noting more than a general unsecured debt. It would always be listed on Schedule F. Some Debtors have tried, in vain, to list them as "priority" unsecured debt on Schedule E, so that they could treat them like taxes, but it doesn't work that way. You should always see student loans on Schedule F - Creditors Holding Unsecured Nonpriority Claims.

[justbroke]

FYI, if you can't get to In Re Skipworth from the link above, try this one... http://www.leagle.com/unsecure/page....bco20100401780 or this one... http://beirener.com/Student-loans/st...rreview-loans/

[tobee43]

re: skipworth


"BAPCPA amended § 523(a)(8) of the Bankruptcy Code to make student loans nondischargeable, in the absence of undue hardship, regardless of the nature of the lender, thus covering loans from both non-governmental and private lenders. Section 523(a)(8) now reads as follows:
(a) A discharge under section 727 . . . does not discharge an individual debtor from any debt—
* * * *"


need go no further......

[KeithDoxen]

Good question! Unfortunately, courts have held that bar study loans are in fact student loans and are non-dischargeable in bankruptcy. Here is the relevant portion of the court's ruling in Skipworth:

"The Court finds that the debtor has failed to establish that this debt is not a student loan for purposes of § 523(a)(8). While the debt is not a government insured student loan under § 523(a)(8)(A)(i), nor an educational loan that is a qualified educational loan as defined in 26 U.S.C. § 221(d)(1) for purposes of § 523(a)(8)(B), subsection (a)(8)(ii) excepts from discharge, in the absence of undue hardship, debts "to repay funds received as an educational benefit, scholarship, or stipend[.]" The affidavits submitted by the debtor in support of his motion for default judgment fail to establish that the loan obligation to Citibank Student Loan Corporation is not an obligation to repay funds received as an "educational benefit." The debtor admits that the loan was incurred for the purpose of paying for his Alabama State bar review course. The Citibank Disclosure Statement attached to the debtor's motion reflects that the bar study loan was given to the debtor while he was enrolled as a third year law student at the University of Alabama. Moreover, the debtor listed the loan to Citibank on Schedule F of his petition as a "student loan." The Court thus finds that the debtor's obligation to Citibank is clearly "an obligation to repay funds received as an educational benefit" for purposes of § 523(a)(8)(A)(ii) in that Citibank loaned funds to the debtor to assist the debtor with his educational expenses i.e. the debtor's bar review course."