Are Scholarship & Grant Money Exempt from Bankruptcy?

scholarship money

Generally, bankruptcy won’t impact financial aid for college. That means most students don’t have to worry about losing scholarships or grant money because they can exempt these financial resources.

Pursuing a college degree is becoming more expensive, which means many students are turning to financial aid from scholarships and grants to afford education. For those experiencing financial hardship due to debt, a common concern is how pursuing bankruptcy for debt relief could affect financial aid they expect to receive or have already received.

It should come as good news, then, to know that even filing for Chapter 7 bankruptcy can protect college financial aid from asset forfeiture and liquidation. This is due in part to the exemptions that Floridians can claim when they file for bankruptcy but also due to the fact that federal financial aid – such as Pell Grant money – is exempt from the bankruptcy process.

While other scholarships from private organizations may also be exempt – even if this money is already in your savings account – you should prepare to disclose all financial aid you receive so that you can claim exemptions from liquidation.

A bankruptcy attorney, such as one of ours from Buchalter & Pelphrey Attorneys At Law, can help you with this and guide you through bankruptcy when you’re pursuing a higher degree in college. We are committed to helping our clients understand the full range of options when it comes to debt resolution.

For more information about our legal services, contact us online.

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