Educational debts
It is commonly known that student loans are non-dischargeable debts in a bankruptcy filing, but what might raise more questions are unsecured educational debts. Outstanding balances owed for day care and private schooling through the secondary level may be discharged through a bankruptcy filing, as they are not federally-guaranteed student loans. Schools receiving notice of their debt on a bankruptcy filing often have questions about the process and whether they may recover the amounts owed. They may find the attorney filing the case to be more helpful than the court, which by law cannot provide legal advice to any parties regarding cases before it. While the attorney should ensure that it is made clear that he or she only represents the debtor and that the creditor should seek the assistance of their own counsel as regards their rights, the attorney can inform the creditor that such a debt is unsecured and subject to discharge by the bankruptcy filing. The creditor may not, as provided in the notice, pursue further contact with the debtor but may appear at the creditors’ meeting, only to question the debtor about potential assets with which to pay the debt, and attempt recovery through their own court actions (motions to avoid stay, etc.) Practically speaking, the only realistic way for a school to guarantee their debt payment is to bar attendance by children of families having outstanding balances.
