Will Bankruptcy Affect Your Kids’ Education?

student loanOne of the frequent questions I get from my clients concerns their ability to help their kids through college.  They wonder whether filing bankruptcy will limit access to scholarships, grants, or student loans, for themselves or for their children.  The short answer is that bankruptcy will not change their ability, or their children’s ability, to qualify for any form of student financial aid.

Federal grants, and federally guaranteed student loans are based on need, rather than on credit-worthiness.  Of course, a private lender or scholarship or grant fund, can base their decisions on any criteria they choose (as long as it not a prohibited criteria), but the vast majority of grants and loans available for college expenses are federal programs; bankruptcy won’t affect eligibility for those programs.

So, once you know that bankruptcy won’t affect your ability to continue your education, or your ability to help your kids get an education, there is one more important question to ask: should you?  In particular, should you take out student loans in order to finance your education or your children’s?

Opinions differ on why college education has become so expensive.  But the fact remains that college expenses continue to rise, and most of us don’t have the ability to simply write a check for those costs.  Of course, there are the lucky few who can do just that.  And there are another lucky (and hardworking) few who obtain enough scholarship and grant money that education costs are not a concern.  But for the rest of us, we may be required to have a hard conversation with our children about college costs.  It is not an easy conversation to contemplate; none of us want to say no to our children, or limit their opportunities.  But student loan debt, whether taken on by the student or the parents of that student, is a serious committment.  There is a very limited chance to discharge student loans in bankruptcy, especially in the Fourth Circuit, which includes South Carolina.  And such debt can cripple one’s financial future.

Colleges and universities have financial aid departments whose job is to find the money for you or your kids to attend college.  Their focus is on finding the money–after all, they want you to enroll–not on whether you will ever be able to repay those loans.  And I am afraid that eighteen-year-olds are notoriously bad at making logical, well-thought-out decisions.  So the reality check is on mom and dad.  That reality check will differ depending on your child–whether he has a career path in mind, or is marking time; whether her chosen career path offers a stable financial future, or she’s facing a more challenging path.  But you’ll be doing your kids a favor to ask the hard questions, and encourage your kids to minimize the debt they take on, and limit that debt to a level that makes sense.

I wish, for my own sake, that the question of college was as simple as where a child wants to go, and whether they are admitted to that college.  But it isn’t, and the sooner you and your kids have those hard discussions, the easier their paths will be.

About

Däna Wilkinson (pronounced "Donna") is a bankruptcy lawyer practicing in Spartanburg, South Carolina and serving South Carolina's upstate region, including Greenville, Spartanburg, Gaffney, Union, Anderson, Easley and Pickens. She has been in practice for more years than she cares to count, but it’s more than 20 years. Däna has been a bankruptcy lawyer from the very beginning of her career as a lawyer.

Däna went to law school at the University of South Carolina, where she was Student Works Editor on the South Carolina Law Review and a member of the Order of Coif. She started doing bankruptcy work while still a student, working for a bankruptcy boutique firm whose members included a Chapter 7 panel trustee, and recognized experts in Chapter 11 reorganizations. She enjoyed the work from the beginning, and upon graduation took a job as a law clerk to the Honorable Rodney Bernard, bankruptcy judge for the Western District of Louisiana. Judge Bernard had spent a number of years on the bankruptcy bench, and was an excellent teacher and mentor. Upon Judge Bernard’s retirement, Däna stayed on for a time as clerk to the Honorable Donald W. Boe, until homesickness for South Carolina struck, and she returned to private practice in Charleston. Four years later, she received an offer to return to Columbia, where she practiced until 1997.

In 1997, planning to start a family, Däna decided to return home to the Upstate, and opened her own practice in Spartanburg in 1998. Over the years, Däna represented all sorts of parties in bankruptcy: business debtors in reorganization, individual debtors, creditors and creditors’ committees, and trustees. In establishing her own practice Däna decided to focus on consumer debtors, ordinary people who find themselves overwhelmed by debt. Her focus is on the individual needs of clients, and on crafting a solution to their unique financial needs. She is committed to helping clients make a fresh start, and preserving their dignity in the process.

Däna is the proud mother of a beautiful, talented and very active daughter, who is, as her mother says, “practically perfect.” She is also active in both church and community activities, all of which means that there is a fair chance that any given blog post was written while in the car pool line or while waiting for a hearing or a meeting to start.

Däna is also certified as a bankruptcy specialist by the South Carolina Supreme Court, which means that she has taken and passed a proficiency examination on bankruptcy law, devoted her practice to bankruptcy for a number of years, and continues to take classes on bankruptcy law and related issues.

Contact information for Däna Wilkinson:

Law Office of Däna Wilkinson
365-C East Blackstock Road
Spartanburg, SC 29301
(864) 574-7944
[email protected]
www.danawilkinsonlaw.com

Däna also blogs at www.bankruptcylawnetwork.com.


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