CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

Does Bankruptcy Affect College Grants and Loans?

Bankruptcy Grants And Student Loans Pasco, St Petersburg, And Tampa Florida.College is one of the most expensive investments you’ll ever make. This is especially true if you attend beyond the traditional four years and seek a higher degree.

By the time many people complete their education, they’re dealing with tens – if not hundreds – of thousands of dollars in debt. And while it’s worth it and can provide an opportunity for higher earnings and career advancement, in the long run, it’s just too much for some people. College debt is one of the most common reasons people file for bankruptcy.

In some cases, bankruptcy becomes a necessity before someone finishes his or her education. Even if their student loans are not due to be paid yet, they might have accumulated other types of debt. Though it’s more common for older people to file for bankruptcy, there are still those who need to file in their mid-to-late 20s while they are still attending school.

But what happens when debt drives you into bankruptcy, but you’re relying on a variety of sources to pay for college?

Does filing for bankruptcy affect financial aid?

Types of Bankruptcy

First and foremost, it’s important to understand the different types of individual bankruptcy and what they entail. Chapter 13 bankruptcy is a repayment plan that allows you to retain ownership of your assets and make payments over three to five years on your debt.

Chapter 7 bankruptcy, on the other hand, requires the liquidation of your assets. You give up ownership of your assets in exchange for the discharge of your debt. The funds from your liquidated assets are used to pay your creditors and whatever amount is still owed after that is discharged.

What does this mean for financial aid?

Bankruptcy and Financial Aid

Essentially, bankruptcy has minimal bearing on college financial aid. Money received from the federal government, including Pell grant money, is exempt from bankruptcy. You won’t need to worry about losing your federal funding for college if you are forced to file for bankruptcy.

Pell grants are awarded to undergraduate students seeking their bachelor’s or professional degree. The money does not need to be repaid, as it would be for federal loans. A Pell grant is just that – a grant. The amount varies based on several factors specific to the individual student and the money is given to the school and then passed on to the student after tuition, fees, and other expenses are taken care of.

Other grants that might be available for undergraduate or graduate students will also likely be exempted from asset seizure in bankruptcy. Grants and loans funded by the federal government are all exempt and the bankruptcy trustee cannot touch them when you file. Scholarship money is also exempt from bankruptcy.

Even if you deposit the money into your personal savings or checking account, it is still off-limits to the bankruptcy trustee and any of your creditors. Money from government-funded student loans and grants are protected from seizure and garnishment or levy.

To learn more about the various types of college funding available, check out this information from Nerd Wallet. Knowing what you have and what types of funds you’re using to pay for college is important so you can share that information with your bankruptcy attorney.

Managing Bankruptcy as a College Student

Figuring out how filing for bankruptcy will affect your college tuition situation and determining whether bankruptcy is right for you while attending college can be a difficult decision. Working with an experienced attorney who can explain the benefits and drawbacks of filing can help you make the right decision based on your circumstances.

For more information or to schedule a consultation with an experienced bankruptcy attorney, contact the bankruptcy Law Office of Robert M. Geller at 813-254-5696 to discuss your situation.

Archive

Video Testimonials

Tampa Bankruptcy Law Blog

Are Medical Issues Forcing You Into Bankruptcy?

Many Americans wind up in debt because of medical bills. One of the most common reasons for filing bankruptcy in...
Read More

Law Offices of Robert M. Geller, P.A. Congratulates Danielle Austin For Receiving the Patriot Award from the United States Department of Defense

Award Recognizes Support of Guard and Reserve Members Who Work for the Organization Tampa, Florida, June 29, 2021 – The...
Read More

Is Your 401k or Other Retirement Savings at Risk in Bankruptcy’s Liquidation of Assets?

If you’ve spent years saving for retirement, putting that money at risk when you file for bankruptcy is likely one...
Read More

Tips to Help You Protect Your Assets When You File for Bankruptcy

One of the most intimidating aspects of filing for bankruptcy is protecting your assets. Worrying about whether bankruptcy puts their...
Read More

How Does Bankruptcy Affect Vehicle Ownership? What Assets Can You Keep through the Bankruptcy Process and Does It Affect Your Car?

Many people struggling financially avoid filing for bankruptcy because of concerns about losing important assets like their vehicles. The good...
Read More

Is There a Legal Way to Hide Assets When You File for Bankruptcy?

Filing for bankruptcy can be an overwhelming experience. The relief you receive when you file helps you feel better about...
Read More

Do Bankruptcy Trustees Take Your Savings? What is Considered an Asset in Bankruptcy and How Does It Affect the Money You’ve Saved?

Bankruptcy trustees gain access to a variety of your assets when you file. But what is considered an asset in...
Read More

Can Filing for Bankruptcy Help You Protect Your House?

fiHow filing for bankruptcy affects your home is one of the greatest concerns people have when they consult with bankruptcy...
Read More

Should I Refinance a Student Loan I Can’t Discharge in Bankruptcy?

Student loan debt is overwhelming many people. Could refinancing be the answer to help you avoid bankruptcy if your student...
Read More

Can Student Loan Consolidation Help You Avoid Bankruptcy?

One of the most common questions people have when they consider bankruptcy is “can student debt be discharged in bankruptcy?”...
Read More

Bankruptcy

For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More

Infographics

We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

NACBA Logo avvo1 avvo2 avvo3 LEA BBB Logo RG Seal

Call For A Free Initial Consultation

813.254.5696

Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 532-3939

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Map And Directions