Just because a person or company, or even a college, has filed bankruptcy, does not mean you are off the hook if you owe them money.
Lon Morris College filed, and expects to get as much as one million dollars by suing students for unpaid tuition.
These are not student loans, but tuition that has not been collected.
Well, as with any business, if you are giving away your product or services, you will eventually go broke.
I was surprised to learn, in the article by Ben Tinsley of the Jacksonville Daily Progress, that:
Yale University and Temple University go as far as to share the same debt collections attorney.
Yale and Temple are not close to bankruptcy. The debtor, the one who files bankruptcy, is the one who gets the automatic stay and protection of the bankruptcy court from its creditors.
The debtor in possession in Chapter 11 bankruptcy cases, like the college, and the trustee, in Chapter 7 bankruptcy cases, has the right to sue to collect money owed to the bankrupt entity.
The bankruptcy school, or company, or person, does not HAVE to sue. They can hire collection agencies too.
So if your landlord, or mortgage company, like Ally Financial, files bankruptcy, this does NOT mean you are off the hook.
Sometimes, being sued by a bankruptcy trustee is enough to put you over the edge.
I have successfully defended some of theses suits by having my client fill out the bankruptcy schedules, as if we were filing, to show the trustee that my client is broke, and winning the suit would be pointless, as nothing could be collected.
That way, you do not have to actually file bankruptcy.
My guess is, most of those students the colleges are suing don’t have any money, because they could not get a job, even with their college education.