Expert: Terry Leeders - 2/17/2008

Question
The school that my husband has been going to has recently gone bankrupt under chapter 7 title 11. Tuition has been paid in full by a private loan from a student loan company even though my husband never graduated. We are listed as unsecured creditors. The student loan company is listed as a secured creditor. What are our rights? There is going to be no way for us to pay off this loan since my husband can not get a job without complete training and we no longer have the credit to get another loan. Are we going to be forced into bankruptcy too or is there any way for the loan to be paid back to us?

Answer
You have the right to file a claim for the amount you paid in, that you haven't used yet (for classes).  You will receive a percentage of any payout, based on your class status(you said unsecured)if there are assets that are liquidated to pay to the class.  You may want to speak to an attorney to help you fill out the proof of claim, and/or file any objections as necessary to help protect your interest.