Unusual student loan question

[BrokeStudent8]

I'm filing for Chapter 7 pro se, and I'm curious about my student loan. I am a full time student (graduating in May) and I don't have a job. I have no assets, other than a car which I might reaffirm. I just received my first student loan disbursement ever of $2700 (for this Fall semester.) I am scheduled to receive another $2700 in January for my Spring semester. I have read that loan money is not considered income, but does anyone know what law states that? Also, should I deposit the money into my checking account, or wait to deposit it until after I file? I don't know if this is relevant, but I'm a Texas resident. THANK YOU for your help, I really appreciate it.

[HHM]

First, lets back up...why are you filing bankruptcy? What debts do you have and how much?

[BrokeStudent8]

I'm declaring Chapter 7 because I think it's my best option. I worked full time for my first three years of college (and beforehand) but in my third year I was drugged and raped by a coworker. I went crazy, took a year off of school and quit working. I also quit paying ALL of my bills. I sold everything I owned and went to live with friends. Now that I'm sane again, I'm finishing college and looking at my debt. I have about 30K in unsecured credit card debt and multiple collections. A lot of the credit cards that were charged off turned into collections, but some of the creditors haven't tried collections. Regardless I am not in a situation where I can afford to pay it back, and would rather declare Chapter 7 and get a fresh start.

I fully understand the ramifications of declaring chapter 7 (I had perfect credit for 5 years beforehand, and I know what I'll be facing post-bankruptcy) and I still think it's my best option. I consulted with multiple attorneys, but their fees were a little out of my price range. So I ordered a book off of NOLO and have decided to go about it pro se....

The reason why I'm asking about my student loan is because I'm worried the trustee will try to liquidate it. I'm not trying to discharge it, I just want to make sure I can use it for my living expenses.

[HHM]

Sorry to hear about your circumstances, the reason I asked is that its fairly extreme for a college student (still in school) to be needing to declare bankruptcy.

You will need to determine what your state's asset exemptions are, regardless of whether the money is income, its still an asset once you obtain possession of the funds. Thus, you will need a way to exempt it. Most states have exemptions for education benefits and I believe there is a federal exemption for education benefits as well.

If you declare bankruptcy before you get the spring check, it shouldn't be an issue as income and assets received after filing are not part of the bankruptcy (but there is one qualification, if the right to the asset was created before filing, then it is subject to the bankruptcy)

[lilabelle]

I have the same problem! Did you find an answer?!?

I'm a graduate (gradual) student going into my fifth year of the PhD after four years to get a 3-year MFA (changed from crappy school to good school) so I'm going into my 13th year of frikken college, make less than 15k from my stipend, and have more than 30k credit card debt. Maybe undergrads don't usually need to go bankrupt, but I've known a fair share of graduate students who have needed to. In order to pay my credit card bills (and my stupid mortgage and my food and my expensive books) I've had to take out about 15k/year in student loans. I don't even break even. I've had to charge my summer living expenses, and next year I'm not eligible for loans, so the whole kaboodle has gone kaput.

My disbursement of just under 5k is sitting in my bank account. I was hoping to use it to fund my on-site research for my dissertation over the summer, but my lawyer is concerned that I might have turn it over to my lenders (or something, I don't know all of the terminology, etc).

1) I want to keep it to use for education-related expenses.
2) However, if I can't keep it, I'd rather send it back to my original lender rather than go into debt on student loans which can't be paid back for money I wasn't able to use for my education.

So, did you ever find an answer? I'm in Ohio. If you could even point me in the right direction to find out about Ohio exemptions, I'd be grateful.

Many thanks,
lilabelle