Dischargeability of a private Citiassist student loan
Posted: Thu Apr 14, 2005 6:14 pm
Student loan is a lot more than a government backed sort of thing.
Section 523. Exceptions to discharge
(8) for an educational benefit overpayment or loan made,
insured or guaranteed by a governmental unit, or made under any
program funded in whole or in part by a governmental unit or
nonprofit institution, or for an obligation to repay funds
received as an educational benefit, scholarship or stipend,
unless excepting such debt from discharge under this paragraph
will impose an undue hardship on the debtor and the debtor's
dependents;
I believe that the "or for an obligation to repay funds received
as an educational benefit. . . " means any loan or funds "received
for an educational benefit."
I read a case several years ago which was some trade school I
think which was after a student who had dropped out but didn't give
the proper notice so the school was after the student for the
tuition and the school won. It had nothing to do with a traditional
student loan.
I had a case myself recently of mom and dad who got $120,000
in "PLUS loans" ie government guaranteed loans made by Sallie Mae to
the parents to put daughter through USC. The parents didn't go to
school but the debt was non-dischargeable when mom and dad filed
BK. I would love someone to show me I'm wrong on that.
Jon
wrote:
> Greetings all,
>
>
>
> I have a client who has a private student loan through Citibank.
The loan
> is called a Citiassist loan that the debtor used while in graduate
school at
> a public university. The debtor says that the loan is backed by a
private
> entity and not by any governmental entity. In fact, he was unable
to
> include it in a reconsolidation he did because of its private
nature. Is
> the debt dischargeable? Has anyone ever dealt with Citiassist
loans?
>
>
>
> Before you say that he should simply try a 523 action to determine
> dischargeability - the old nothing ventured, nothing gained
thought - there
> is an important pre-bankruptcy planning consideration. He also
has some
> Direct Loans - i.e., non-dischargeable government guaranteed
student loans -
> and he has enough money to pay off most of them or the Citiassist
loan, but
> not both. If the Citiassist loan is dischargeable, then he'll pay
off the
> bulk of the Direct Loans and discharge the Citiassist loan -
filing, of
> course, 91 days after the payment. If the Citiassist loan is not
> dischargeable, he'll pay it off before filing because its interest
rate is
> variable and quite a bit higher than that of the Direct Loans.
>
>
>
> Any ideas or case law on the subject would be greatly appreciated.
>
>
>
> Thanks,
>
>
>
> Nick
>
>
>
> Nicholas Gebelt
>
> Law Offices of Nicholas Gebelt
>
> 562.777.9159
>
> FAX: 562.946.1365
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