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Bankruptcy can help in a lot of ways. One less well-known benefit is to free up a copy of a college transcript to use for employment or future school applications when you can’t afford to pay the college back right now.

As of 2013, Americans owe more in student loan debt than credit cards. And a growing portion of that debt is in default. In some cases, your former college will be a servitor of those loans for a state lender. Or the college is owed money from some other account, like room and board or part of tuition. In those cases, the college will sometimes hold the transcript hostage to satisfaction of the debtor at least reasonable payment arrangements.

You can’t blame the college for trying to do its part to support the financial system that keeps it alive. But when the former student files bankruptcy, the rules change. When the bankruptcy is filed, an automatic stay is typically created. As described in many articles on this site, the stay prevents a creditor from taking any action to collect the debt owed without the court’s permission.

The automatic stay is a broad and powerful tool. Sometimes judges even forget how important it can be. In March 2013, Judge Dwight Williams in Alabama did not. He concluded that a college withholding a transcript to force payment of a debt was a violation of the stay and the only question was what damages would be ordered.

The judge concluded that it did not matter that the student loan owed to the college (as servitor) was would not be wiped out in the bankruptcy. It mattered that the college continued to use this tool to “encourage” payment. And that’s enough to get the college into trouble.

So keep this in mind. Getting your transcript freed up may not be a good enough reason to consider bankruptcy. As we say, don’t drive a nail with a sledgehammer. But if your debt load is a problem — which is likely if you have college loan problems — then it may be worth exploring how bankruptcy could benefit you.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg, and the Tampa Bay area.

If you would like more information on our practice, please consult our website at or call 727-335-7151.