Debt with college from cancelled federal loans

[marzipan13]

I need to file chapter 7, and in the near future I will meet with a lawyer to begin the process.
But I am confused about a debt that I have with a college I attended a few years ago.
I was awarded federal student loans, but during that year there was a lot going on with my mother suffering from cancer and I was having problems keeping up with the courses (I was full-time). I failed a couple and withdrew from a couple... because this affected my GPA and federal loan eligibility, the school returned the loan money back to the lender. My debt is with the college and not with the federal loan lender (sallie mae).
I was sent to collections, and a judgement was filed against me.
They've tried garnishing my bank account, but it is empty.
Can this debt be discharged since it is with the school and not with the federal loan lender? The school paid back that debt and is now collecting it themselves.

[HHM]

Your situation is a little confusing to dissect...there is someone on this forum that works in higher education that may be able to parse out what your situation is. The way you describe the situation is certainly not a normal way a school would deal with the money.

What type of school is this?

IMO, this debt will be considered a student loan under the BK code (remember, the federal gov't does NOT loan money directly to students, all money for student loans is done through 3rd parties, so the fact that the school was the lending agent does not change the nature of the loan).

[wrinkleigh]

This is tricky -- since the receivable resides with the school -- technically it is dischargeable. However -- your school may see it differently. Schools interpret this as an educational debt, and believe it to be covered just like a loan.

You will get absolutely nowhere challenging them yourself, you will have to get your lawyer to challenge them, and most likely you will win.

It is the uofficial "code" among universities to stick to their guns with the student, and bully you into paying. However, when a real laywer gets involved -- they will relent.

Good luck to you.

[BKOnce]

Hardship loans...

[alh]

Some background cases that may be helpful.

http://www.cullenanddykman.com/advisory/advisorypage.asp?pubid=1044511172000

[HHM]

Some background cases that may be helpful.

http://www.cullenanddykman.com/advis...=1044511172000

Good post, but the problem with the OP situation (or at least the way this person is describing the situation) is that there sounds like there was a student loan involved, but the person did not finish the semester, so the school was required to return some of the money.