Anyone who has taken out student loans for college and experienced financially trying times knows that student loans cannot be discharged in bankruptcy unless they cause an “undue hardship” to the debtor, which means rarely. But what about unpaid tuition, can unpaid tuition be discharged in bankruptcy? Well under normal circumstances, yes tuition can be discharged in bankruptcy. Let’s take a look.
If a debtor goes to school and simply fails to pay tuition, then mostly likely the debt can be discharged in bankruptcy. For example, if the school allowed a student to attend classes and not pay at all and then later attempted to collect the money, this type of tuition debt may be discharged in bankruptcy. But, if a student signs a promissory note with a school or the school gives the student money, this debt may not be dischargeable in bankruptcy. In this case the bankruptcy courts consider the debt a “student loan.”
If you’re considering bankruptcy and have unpaid tuition debt, speak to a bankruptcy attorney to determine if this debt is dischargeable in bankruptcy.
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