Please help, single Mom up a creek

[ksmom80]

I need to file Chapter 7 so desperately. Long story short, I opened two medical practices for my ex "husband" (we were never legally married but had a child together, lesson learned). I paid off the LLC debt, so just need to file personal. I used all my savings to help him! I have major medical bills, bills from apartments where I co-signed and my sister/friend skipped on the lease, these debts probably total around 100K. On top of that I have student loan debt of over 250K which I know, cant be discharged. My ex "husband" decided to become a non-working alcoholic and move out of state and hasn't paid a dime of child support. So, in order to put my student loans on hold (and be able to make more money), I went back to school. Now, I have a huge student loan (medical school) since I cannot work due to residency hours which are 40+ hours per week and unpaid, so I can't work (childcare is $1200 a month!). Problem is, my bank account looks really high - 20K+ yet, this is money I have to live on through graduation in December (so really only 2K a month for expenses, I am on government assistance, food stamps don't care student loan money thank God). My attorney said that the trustee doesn't care this is student loan money, that it will count as income. Now I'm really upset, because I have so many people trying to sue me (I co-signed for my exes car and he stopped paying and it was repossessed), and I don't want my bank account garnished, I will be screwed, be unable to pay tuition or complete my program and there is no way I can pay back all my student loans and be a single Mom without my degree. Kansas has really horrible exemptions. I'm just not sure what I can do but I need a "creative" strategy to file ASAP. Anyone out there that can help? I feel so used and unable to do anything about it!

[bcohen]

You need a better attorney. Student loan proceeds are not income, and should not be considered as such. In fact, there is a separate non-bankruptcy exemption for student loan proceeds, which you can use to exempt the funds, independent of your state's bankruptcy exemptions. See the following article for more information: www(dot)bankruptcylawnetwork(dot)com/can-i-lose-my-student-loan-money-in-my-bankruptcy-case/

[ksmom80]

Question: My aunt got a "parent loan" in her name only (not mine) it is a private loan from Citizen's Bank, not a federal loan and the funds are disbursed to the student (me) - does that count under this law? I looked up 20 USC section 1095a(d) and couldn't figure it out if private versus federal mattered.

[justbroke]

As for your attorney saying that the Trustee doesn't care, I think the problem is really about whether you commingled exempt with non-exempt funds. If you commingled, then it could be hard to tell the exempt from non-exempt... exposing the potentially exempt funds. You'll probably want to shop around and look at additional attorneys and ask the impact of 20 USC 1095a and whether these proceeds are "income" while not forgetting about the commingling part.

bcohen makes a good point that you may be able to exempt the proceeds from Student loans. I don't personally believe that the proceeds are "income" but I believe that they are assets (property). Whether or not you can exempt this particular property is a question of what exemptions are available. So let's discuss what's available.

I think you're in Kansas, so have your attorney look at In Re Decena, Bankr. Arkansas, Case No. 14-10668 which cited In Re Likins, 505 B.R. 319 (D. Kan. 2014). Likins was about a tax credit named the American Opportunity Credit and other tax credits related to student loans. However, it most pointedly opines that federal student grants, loans, and work assistance, and property traceable to such assistance are exempt (under 20 USC 1095a(d)). In Decena, the Judge opined that the debtor must choose to use this Federal exemption (20 USC 1095a(d)) and have lived in Kansas for 2 years. (I have no clue where the 2 year thing comes from.) Decena was decided March 30, 2015.

[ksmom80]

thank you, I will contact some additional attorneys. Otherwise, I think I'll just have to arrange payment plans, let the funds dwindle over time and file as soon as I can. i'm interested to hear the feedback on private student loan versus federal student loans. I thought about paying several months of rent and car payments at once to get this down more quickly, but don't think I can do that? Around here mediocre attorneys charge something around 3K for a chapter 7, I'm afraid if any attorney uses this 20 USC thing they will say "oh this is a much harder case so I'm going to charge you a lot more" in that case the extra attorney fees divided over several months will be the same as just arranging a payment plan with one particular creditor who is about to sue. I'm so stressed out

[justbroke]

thank you, I will contact some additional attorneys.

Do this first before stressing out. Don't forget to mention the case I cited.

i'm interested to hear the feedback on private student loan versus federal student loans.

It's simple for this exception under 1095a(d). That section of the law does not read "federal student loan" as "loans issued by the feder4al government. That portion of the law covers "guaranteed" by the Federal government. Private student loans can be guaranteed by the Federal government. I can't answer your question as to whether your specific loan, from Citizens, is a Federally "insured or guaranteed" student loan.

I understand your stress. Visit some additional attorneys and find one who has dealt with -- rather than ran away from -- student loan proceeds exemption in a Chapter 7 bankruptcy. I wish I could be more helpful.

[ksmom80]

I don't think the loan is going to be able to be qualify, pasting from another site:
"Private loans are available to undergraduate and graduate students from Sallie Mae and other financial institutions and are designed to fill the gap after exploring federal student aid. Unlike federal student loans, private loans are not sponsored or guaranteed by government agencies and do not require completion of a federal form to qualify. Private loan eligibility requirements, interest rates and terms vary from lender to lender. Private loans are credit-based, thus applying with a cosigner may help students access a lower interest rate. Many lenders, including Sallie Mae, offer private loans to help cover up to 100 percent of the cost of attendance, less other financial aid received. For Sallie Mae loans, the school’s financial aid office certifies the cost of attendance and funds are disbursed directly to the school."

I need some chocolate

[justbroke]

I need some chocolate

I deserve some chocolate.

As I wrote, whether it is "insured" or "guaranteed" by the Federal government is the question. I do not know if YOUR specific loan from Citizen's Bank is such a loan. Only the paperwork or Citizens (or an attorney looking at everything) can answer that question.

I think that you're, right now, in a mini-panic and really lost. There are strategies to deal with almost anything in bankruptcy through bankruptcy pre-planning. You will need to speak with several more competent bankruptcy attorneys to find out which strategy or strategies will help you through this issue.

Telling you to not panic is not going to work, but you have some time. The lender, for the loan that is not otherwise in deferment, has not yet followed suit. You are doing the right thing by consulting several attorneys and finding a way through these pressing financial issues.