Legal Question in Bankruptcy in United States

My wife and I filed for bankrupcty in Oct. 2005. We recieved notification of discharge in Feb. 2006. Prior to filing bankrupcty, we had taken a loan from my wifes family trust and used the funds to attend a university. The loan was listed in our bankrupcty papers as a student loan (I think). The trust was listed as a lender on the bankrupcty papers and the ?bankruptcy matrix? Now doing research to see if that loan was discharged or not, I've come accross the IRS definition of an educational loan (sec 221 (d) and sec 267(b)). Am I reading this correctly that the loan made to us under the IRS sections mentioned above, that since 1 the relationship was between father and daughter and between trustee and benificiary, that the loan isn't considered a "Student Loan" and therefore was discharged back in Feb. 2006?


Asked on 10/12/10, 10:48 am

1 Answer from Attorneys
Dorothy Bunce

How you listed the loan on your 2005 bankruptcy is completely unimportant. Unless the loan qualified as a student loan under Bankruptcy law, it would have been discharged in the Bankruptcy. Take a look at the provisions under Bankruptcy law in effect at the time of your October, 2005 Bankruptcy to review the definition of a student loan.

Had you taken a cash advance from a credit card to pay for school, or even used a credit card to pay for tuition, it still wouldn't be a student loan. Although I haven't looked at this law recently, I can imagine anyone beliving that a family loan would qualify as a student loan.

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Answered on 10/17/10, 4:26 pm


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