Payments made for daughters college expense

[GHG7F0]

I have to make some payments for my daughters college expenses. As a parent I feel obligated to do this. If I decide to file Chapter 7 in the future will this give me any problems?

What if I put it on a credit card with the thought of it not be discharged. Then after a Chapter 7 I can pay it back with a retirement loan?

Just thinking out loud on a way to pay my half of my daughters college expenses without wanting to fraud the system.

Thanks...

[btbeme]

Using credit when you know you will not pay it back is fraud. Now, the BK courts automatically consider any credit purchase within 90 days of filing as automatically fraudulent...but that does not mean that you're free and clear on Day 91. Outside of 90 days, the creditor can attempt to make the case that you had no intention of payback. Making that case is both expensive and time-consuming for the creditor, which is why few of them do so.

Your mileage may vary. But don't fall for the "free credit" trap thinking you will just wait 91 days to file. It can - and does - have a heavy penalty.

After Ch 7 you have no reason to pay anything back, especially with a retirement loan. Rather than commit fraud, you should consider helping your child via a retirement loan after completing a Ch 7.

[GHG7F0]

Obviously you didn't read or understand my post or perhaps I didn't clarify properly. I am a honest person and would not commit a fraud even if I could get away with it.

My question was could I use the card to finance my daughters college with the full intention of paying 100% of it, since it would be non dischargeable.

[btbeme]

I understood it perfectly well, thank you. Fraud isn't what YOU say it is, it is what the BK system and the Trustee say it is. Nobody said you are dishonest. Honesty and fraud are unrelated in this particular instance.

Since any charge placed on a credit card is a dischargeable unsecured debt, any charge placed there within 90 days of filing with the intent of having it discharged when payment is known to be impossible is considered fraud. Not by me - by them. 90 days after the charge is made, it STILL can be considered fraud if the bank backing the card wishes to pursue it or the Trustee chooses to disallow the charge for whatever reason (see debee's note below).

Doing what you are asking about is an open invitation for a Trustee to radically mess with your world. Regardless if you plan to pay it back post-BK, you have no legal requirement to do so; therefore, your intent is, in fact, considered to be of no value to the court or Trustee. In fact, the intent to "pay it back" post-BK can constitute the basis for fraud and get your entire case tossed.

Welcome to the crazy-straw logic of Chapter 7 Bankruptcy. If you came here for help, please accept our help, free of charge. In this case, your best bet to avoid a fraud charge and thereby risking your entire case is to wait until discharge, then use retirement funds to pay the school bill. There is, in a legal sense, no such thing as a credit card charge you intend to pay back after a Ch 7. That is reserved for a Ch 13 BK.

[debee]

"Qualified" education expenses aren't dischargeable in bankruptcy. Normally they show up as student loans, but sometimes in an AP filed by a creditor because a credit card was used to pay for them. This would be true even if the charges were made 6 months prior to the filing. Or six years. Very risky. There is a very specific definition in terms of what constitutes a "qualified" educational expense so not every expense related to education qualifies to be "qualified".

Perhaps there is another way you can help your daughter.

[ScaredINMich]

It sounds like the poster is asking if they can charge on a credit card and not file a claim against that one credit card, but keep it and pay it.

Correct me if I'm wrong.

[Pandora]

I have to make some payments for my daughters college expenses. As a parent I feel obligated to do this.

"have to make payments" and "feeling obligated" are 2 different things - so are you on the loan as signer/co-signer or are you merely stating that you feel its your parental duty to pay for her college education? If its number 2 - then perhaps daughter can obtain a job and pay for her own college expenses - many do it successfully (ours does) and without issue. There are also scholarships that college kids seem to forget all about once they get into school... they are out there until the day you graduate and should be applied for consistently to help reduce student loans.

As to putting it on a credit card - I agree with the others...dont do it - for the same reasons they've mentioned.

[HHM]

1. you cannot pick and choose which debts to put into BK.

2. As others have pointed out, this WILL be a problem.

3. "Feeling obligated" and being "obligated" are different things. Bottom line, you either cut expenses elsewhere to make up the short fall and pay the college expenses, or you don't pay the college expenses. But charging the college expenses and then filing BK is fraud, no matter how you slice it.

I think you need to have a serious review of your finances and may need to have a heart to heart with your daughter about how to pay for college. Either YOU downsize your expenses, or your daughter pays her own college, that is reality.

[GHG7F0]

Thank You HHM...

[BKAttyMI]

I worked my way through college and law school, I still have student loans, but I also gained a lot of work experience and time management skills, both of which were immensely helpful in finding a job after school. In today's job market, I think all college students should be working while in college just to gain experience.

I agree with the above.

[IamOld]

I would agree with you, and believe it or not, most college students either work and/or get some kind of financial aid. BUT, no "normal" person can afford just to "work their way" through school...at least not at any legal job! :-)

I worked my way through college and law school, I still have student loans, but I also gained a lot of work experience and time management skills, both of which were immensely helpful in finding a job after school. In today's job market, I think all college students should be working while in college just to gain experience.

I agree with the above.

[Pandora]

I would agree with you, and believe it or not, most college students either work and/or get some kind of financial aid. BUT, no "normal" person can afford just to "work their way" through school...at least not at any legal job! :-)

What do you consider "normal"? Our daughter lives on her own (room-mates of course) in another state, pays all her own bills, pays for her college education (yes, she has student loans), all the while holding a job working roughly 32-36 hrs a week. Is it hard? Yep....but is it "do-able" - yep. She uses her student loans for school purposes only - not living expenses. For those..she pays out of her paycheck.

[IamOld]

What do you consider "normal"? Our daughter lives on her own (room-mates of course) in another state, pays all her own bills, pays for her college education, all the while holding a job working roughly 32-36 hrs a week. Is it hard? Yep....but is it "do-able" - yep.

Right Pandora, but she essentially works FULL TIME - I would agree, if you work a F/T job it is financially doable, if you've got no other bills (more or less), go to a college on IN-state tuition...but for the average 18 year old, that's pretty much not possible...where I live the "local" "HUGE STATE UNIV" is about...$12K/year F/T undergrad - still a bargain, but unless you do work F/T it's not affordable w/out other help - that doesn't include books, "user fees," etc etc etc etc - and assuming that the student lives at home...

Although I've also made the assumption that the student wishes to finish in 4 years - the average time for an undergrad today is around 5-7 years...meaning that most people don't finish in the "traditional" four.

[keepsmiling]

Wow Pandora- how old is your daughter? Is she in school FT?
My son's financial counselor told him that the work/study program strongly limits the amount of time the students can work.

[IamOld]

Wow Pandora- how old is your daughter? Is she in school FT?
My son's financial counselor told him that the work/study program strongly limits the amount of time the students can work.

True fed funded WORK STUDY is limited in time. BUT - it's a great way to earn money and work on campus!