Schools cannot refuse to release your transcript or diploma just because your bankruptcy case discharged a debt for tuition. This ruling came down recently from the Seventh Circuit Court of Appeals, which covers Illinois, Wisconsin and Indiana. It is true that student loans cannot be discharged in bankruptcy, except in special circumstances, such has financial hardship, but money that you owe your school, college or university is not always a “student loan”.
In a recent case, the debtor, was taking art classes at a University in Wisconsin. The debtor could not afford her tuition payments and decided to file for Chapter 7 bankruptcy. The Court of Appeals ruled that the debtor is required to pay for the cost of her transcript, as any other student would have to do, but not the back-tuition payments that had been discharged. Since the school was unwilling to provide a transcript to her unless the tuition was paid, the Court decided that the school was violating her property rights under state law and could be liable for doing so.
In summary, student loans are not normally dischargeable, but your bankruptcy attorney can help you determine whether or not what you actually owe the school is a student loan or just past due tuition. If their are debts to the school that are not considered to be student loans, a Chapter 7 bankruptcy would discharge those debts and give the filer a fresh start. The college or university you attended is violating your rights if they are not releasing your transcript after the underlying debts that they are holding on to it for have been discharged.
These questions and many others can be answered by experienced bankruptcy attorneys. If you have questions regarding this article or anything else related to bankruptcy please don’t hesitate to contact us today. We offer free consultations at 5 different locations in both Illinois and Missouri.