Student Loans

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STUDENT LOANS

Not a big fan of student loans. Why? They just never go away.

Here is a student loan case from late last year, Busson-Sokolik v. Milwaukee School of Engineering (7th Cir. 2011). The bankruptcy debtor agreed to a student loan from Milwaukee School of Engineering (MSOE) in 1999 for $3,000.00  MSOE sued debtor in 2005 and won a judgment for $5,909.00 (the amount of debt had only increased twice in a 6 year period).

Debtor filed bankruptcy 2005 and filed a complaint to have this debt discharged in bankruptcy, because the $3,000 was not used for education (what it was used for is unclear).

The Bankruptcy Court rejected debtor’s contention and instead held that it is the “purpose” of the loan which determines if the loan is educational.

The Court found the following facts determined the purpose of the loan was for educational purposes:

1. MSOE was a school
2. the loan was part of a package that went toward debtor’s education
3. the promissory note was signed by debtor while a student at MSOE
4. the debtor had to be a student to be eligible for the loan he received
5. the loan was deposited into debtor’s account

For various other factors the debtor and his bankruptcy attorney were also ordered to pay attorney fees and sanctions, and the total amount that the debtor was not responsible for totaled $20,446.52.

Therefore, the debtor’s $3,000 student loan in 1999 grew to over $20,446.52.

Student loans sound good until it comes time to repay.

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• Los Angeles/Orange County  Bankruptcy Attorney

• Law Offices MJ Mann Bankruptcy Attorney
• 2706 Artesia Blvd, Suite BK
  
• Redondo Beach, CA 90278
• 310.376.9865