What happens to tuition bills in bankruptcy?

Student loans receive special treatment, and are generally not discharged (wiped-out) by a bankruptcy case. But student loans are not the only sort of educational debt. In some cases, the debt is an unpaid tuition bill or other charges owed to a school, college, or university.

In the normal case, merely not paying a bill to an educational institution does not create a "student loan". If an unpaid tuition bill is not a student loan, then a bankruptcy (chapter 7 or chapter 13) would stand to discharge that tuition indebtedness, same as an unpaid bill to a hospital or phone company.

There can be nuances present in tuition bill cases. The simplest case is where a school billed, and for whatever reason, the bill was not paid. Such a case lacks the advance of funds or promissory characteristics of a loan. Not every debt is loan. Things become more complicated when the school tries to shoehorn their tuition billing policies into a loan type framework. There, the school might use paperwork characterizing an installment payment arrangement as a loan or otherwise disguise the true nature of the debt. Close analysis of documents as well as a practical view of what really occurred will guide anticipated outcomes in a bankruptcy case.

Frequently, the practical course for a tuition bill debt is to assume that it is discharged, and then if the creditor disagrees, bring the matter to the attention of the bankruptcy court later, potentially as a discharge injunction violation after the case has closed. Other times, the particular facts of the case may make it worthwhile to seek a determination that the debt is dischargeable while the bankruptcy case is still pending.

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