Courts Divided on Trustee's Ability to Recover College Tuition Payments

The Bankruptcy Court for the Southern District of Georgia recently held in Roach v. Skidmore College (In re Dunston), Bankr. S.D. Ga. (Jan 31, 2017), that a bankruptcy trustee could recover as a fraudulent conveyance college tuition payments the debtor made on behalf of an adult child. Conversely, in DeGiacomo, as Chapter 7 Trustee v. Sacred Heart Univ. (In re Palladino), Bankr. D. Mass. (Aug. 10, 2016), the Bankruptcy Court in Massachusetts held such payments could not be recovered. In the Massachusetts case, the court was persuaded that the payments indirectly benefited the parent by increasing the chances that the child would be gainfully employed. The Georgia court rejected this rationale and concluded the supposed benefit was too attenuated.

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