Bankruptcy Trustees are Filing Lawsuits to ‘Claw Back’ College Tuition Payments

by San Antonio Attorney

Bankruptcy trustees are filing lawsuits against universities and even college students to recover tuition payments as part of an assertive and flourishing legal strategy.

Parents who declare bankruptcy after spending money on the soaring price of college tuition could be scrutinized by bankruptcy trustees who claim that the money they obtained should have been allocated to pay their increasing debts.

The University of Maryland, College Park has refused to return $61,595.33 in tuition payments that a couple had paid for their son beginning in 2010.  The lawyer of the school has stated in a court filing that if the trend continues, it will spoil the relationship between parents and children.

The legal cases show an unexpected effect that bankruptcy can cause for families.  Going through this would be hard both for the parents and their child be horrible, according to sociologist Deborah Thorne.

Several bankruptcy attorneys said students are a reasonable target for lawsuit, though trustees do not often do that since it is very unlikely for them to afford a debt repayment.  A study shows that in 2008 there were a number of cases in which the children themselves were sued.

As an example, a Boston College graduate was sued in 2006 after his parents declared bankruptcy and later on agreed to pay $10,000. The school itself returned $3,230.

Even lawsuits that are unsuccessful can still be costly to families.  When a woman faced a lawsuit in 2013 for $12,305.70 tuition in a university, a bankruptcy judge did not allow the student to hire a free lawyer.  Fortunately, the attorney that she and her parents hired gave him a discount from his usual fee.

Since bankruptcy trustees may claw back tuition money from schools, some families said that they concerned whether their child would be asked to pay back the money, won’t be given a transcript or get expelled.

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