Loan For Apprenticeship Treated As Student Loan

April 6th, 2009 by Reed Allmand

There was an interesting bankruptcy case Kesler, Michael O.; In re (Indiana/Kentucky Regional Council of Carpenters Joint Apprenticeship and Training Committee v. Kesler), involving a debtor who was refused a discharge for loans who took out for carpenter training.

The details of the bankruptcy case:

While an apprentice in a training program operated by the Central Indiana District Counsel of Carpen¬ters Joint Apprenticeship and Training Fund, the Chapter 7 debtor entered into five apprenticeship loans to pay for his carpentry training. The loan agreements allowed the debtor to repay the loans through in-kind credits earned by working for an employer who was obligated to contribute to the pro¬gram. However, the debtor went to work for an employer who did not sign the collective bargaining agreement. As a result, all amounts due on the loans became immediately due and payable. After the debtor failed to repay the loan, the plaintiff obtained a judgment against him in the amount of $28,118.

When the debtor filed for Chapter 7 Bankruptcy, the bankruptcy court refused to discharge the debts because they were considered educational loans. Similar cases like this have appeared throughout the country. Usually student loans (the ones guaranteed by the government) have been considered not dischargeable. Most debtors know this when they take out the student loans. But the definition of student loan seems to be getting wider and wider. Debtors need to be extremely cautious when taking out loans for anything that may even be remotely related to education. As we have discussed here before, it is nearly impossible to discharge student loans and of course, this fact causes many creditors to desire the student loan designation for credit extended to debtors.

About Reed Allmand

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Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

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