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How To File Bankruptcy: Listing Student Loans On Bankruptcy Schedules

This is part of our series on How To File Bankruptcy. how to file bankruptcy

Though student loans aren’t dischargeable in a bankruptcy case unless you take extra steps, that doesn’t affect how you list them.

The bankruptcy lawyer knew the basic rule – a student loan can’t be discharged in a bankruptcy case without a separate judicial determination of undue hardship.

Looking at his client’s federal student loan debt, he listed them alongside the tax debts as priority claims.

Sitting in a downtown Los Angeles meeting of creditors room, the lawyer was confused when he was told to move the student loan debts elsewhere.

Just goes to show that even a lawyer who prides himself on being a seasoned bankruptcy can miss the boat once in awhile.

Student Loans Are Not Special

In bankruptcy, student loans aren’t given any special priority over other debts.

Federal of private, it doesn’t matter – they get paid after priority claims such as tax debts and child support arrears.

Just because the debt isn’t going to be discharged, it doesn’t necessarily mean the student loan will be paid before a credit card debt.

As such, the student loan gets listed with the general unsecured non-priority debts on your bankruptcy schedules.

Student Loans Are Tallied Separately

When you file for bankruptcy, your student loans are tallied separately for statistical purposes.

That means you’ve got to add them up on their own and account for them on the statistical summary.

Lawyers have software that does this automatically, by the way. It frees me up to think about bigger problems than whether I’ve added numbers correctly.

Don’t Freak Out Over Errors

The bankruptcy laws require you to list every debt – period.

Here, the bankruptcy lawyer made a slight error in not listing the student loan debt properly. But it was listed.

He listened to the trustee at the meeting of creditors, amended the schedules, and was done with the problem.

He’s not the first bankruptcy lawyer in Los Angeles to fumble a bit, and he won’t be the last. The key is to recognize the error and take immediate steps to correct it.

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By |June 25th, 2013|

About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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