Legal Question in Bankruptcy in Hawaii

Impact of bankruptcy on student loans

A debtor in a bankruptcy may receive student loans and lenders probably would have no problem making the loans because they are not, as a rule, dischargeable in bankruptcy. The problem is that, according to Williamson, _The Attorney's Handbook on Consumer Bankruptcy and Chapter 13_, 20th Ed. (1996), Argyle Pub., Lakewood, CO, student loan proceeds are not exempt in Hiawaii and would become part of the bankruptcy estate. That means your student loans would pay part of your secure obligations and not your college and you would end up having to repay the student loans. Whether your college would continue your enrollment when it faces having your tuition discharged in bankruptcy is another question.

Why not get with your mortgage lender and see if you can have time to sell the house and put it on the market immediately?

bankruptcy and student loans

11 U.S.C. 525 (c)(1) provides that government programs which guaranteestudent loans may not deny a loan or loan guarantee to a person becauses/he has been a debtor in a bankruptcy proceeding. Your problem may be one of timing if the proceeds of a student loan areincluded in your estate for bankruptcy purposes. If you have used the proceeds to pay current tuition you may be OK. You need to see alawyer.