From: Piper, Pat (ppiper@ufl.edu)
Date: Fri Sep 21 2001 - 09:35:16 EDT
After withholding transcripts and other services during bankruptcy for many
years, our attorney recently advised us to change our policy and release
"when requested". The following is the pertinent part of the response to my
inquiry:
Pat: This is a difficult issue. As we have discussed in the past, Florida
bankruptcy courts have not ruled on whether a University can continue to
withhold transcripts in bankruptcy for a non-dischargeable loan. There is
some out of state case law that says that it can but the majority of recent
cases hold that withholding transcripts violates the automatic stay. So it
is more likely than not that a Florida court would rule with the majority.
Of course, these cases were decided before the change making all loans
non-dischargeable rather than just those 7 years or older. However, just
like before a debtor can still receive a hardship discharge so there is
always the possibility that a student loan will in fact be discharged. So we
can't really argue that we should be able to violate the stay because our
loans will never be discharged.
On the other hand, assuming we do not file a proof of claim and thereby
waive our 11th amendment immunity, a bankruptcy court cannot assess money
damages against us for violating the stay. But whether this is a good enough
reason to knowingly violate the law is questionable.
So what does all this mean? I don't really know. I guess my recommendation
is to stop withholding transcripts during the pendency of the bankruptcy.
And this is based not as much on our technical legal rights but on what is
the best thing for us in the long run and what is right. The whole purpose
of the automatic stay is to give the debtor some breathing room to get his
or her finances reorganized or liquidated. If we continue to withhold a
transcript during this period we are disrupting this process. I don't this
helps us or the debtor. A transcipt is usually used to obtain employment and
in the long run it is to our benefit for the debtor to get a good job since
we, unlike most creditors, will actually have the right to get paid in full
after the discharge. Plus, we already have much greater rights in bankruptcy
than most creditors and I am concerned that if we and other universities
continue to also withhold transcipts, it may backfire and cause Congress to
consider passing legislation limiting some of those advantages.
So I think overall it is best to release the transcript to a debtor in
bankrupcty when requested.
Pat Piper
Administrative Services Coordinator
University of Florida
University Financial Services
S-113 Criser Hall, PO Box 114050, Gainesville, FL 32611
(352) 392-0766 Fax: (352) 392-3448
ppiper@ufl.edu <mailto:ppiper@ufl.edu>
> -----Original Message-----
> From: Boord, Peggy [mailto:pboord@ju.edu]
> Sent: Friday, September 21, 2001 8:14 AM
> To: bursar-l@virginia.edu
> Subject: RE: Bankruptcy
>
>
> We have come across this question and have arrived at a different
> conclusion. Our attorneys advised us that we could, in fact, hold the
> students transcripts but could not require payment of the
> debt. It can be
> compared to a piece of property. In bankruptcy you do not
> have to continue
> to pay for a car, but you do not get to keep the car.
> Obviously I am not an
> attorney so I would not take this as the final word, but that
> is the advice
> we were given.
>
>
> Peggy L. Boord
> Controller
> Jacksonville University
> 904-745-7080
>
>
> -----Original Message-----
> From: McCue, Cathy [mailto:CMcCue@iona.edu]
> Sent: Thursday, September 20, 2001 3:08 PM
> To: bursar-l@virginia.edu
> Subject: RE: Bankruptcy
>
>
> Cathy,
>
> In response to both of your questions, the only reason that
> we place "holds"
> on student's transcripts or registrations is if they have a
> balance owed to
> the school. With a bankruptcy, the court has forgiven the
> debt, so nothing
> is owed. I don't believe that we can legally collect the
> money or still
> make the student responsible once this has happened.
> Therefore, we really
> have no reason (or right?) to keep a hold on.
>
> I DO require a copy of the Discharge of Bankruptcy to
> write-off the account.
>
> Cathy J. McCue
> Bursar
> Iona College
> New Rochelle, NY
>
>
> -----Original Message-----
> From: cathy foland
> To: bursar-l@virginia.edu
> Sent: 9/19/01 5:40 PM
> Subject: Bankruptcy
>
> I am interested in finding out what other schools do with students who
> owe past due debt and who declare bankruptcy.
>
> 1. Do you release transcripts to students whose accounts are in
> bankruptcy? What if a "hold" was already in place to block the release
> of a transcript to the student before the notice of bankruptcy was
> received?
>
> 2. Do you permit students whose accounts are in bankruptcy
> to register
> for classes? What if a "hold" was already in place to block
> the student
> from registering before the notice of bankruptcy was received?
>
> Thanks to all who respond!
>
> --
> Cathy Foland
> Associate Bursar
> Office of the Bursar
> Southern Illinois University Edwardsville
> Phone: (618) 650-3131
> Fax: (618) 650-2971
> Email: cfoland@siue.edu
>
>
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