Bankruptcy Trustee Suing College to Recover Tuition Paid By Debto

| Nov 3, 2017 | Chapter 7 |

Bankruptcy trustee suing college to recover tuition.  What happens when you pay your child’s college tuition and then file a chapter 7 bankruptcy within the next couple of years? Some bankruptcy trustees are suing the colleges to get the money back to pay the creditors in the bankruptcy. The theory is the parent did not have a legal obligation to pay the tuition and received no benefit so the payment was a fraudulent conveyance and therefore must be returned. Some courts have agreed with this argument and required the college to return the money. In that case the student now owes the unpaid tuition. Some courts more recently have determined that the college does not need to return the money because the parent is receiving a benefit such as making child independent so parent does not have to support. However, there is certainly a risk at this point when a bankruptcy is filed after tuition payments were made.

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