Posted on July - 03 - 2011
Private School Tuition in Chapter 13 Bankruptcy
Everyone filing for Chapter 13 bankruptcy knows they will make a plan that must be approved by the bankruptcy court in order for them to proceed. But what may be included in that plan? The Bankruptcy Code uses vague terminology such as “fair” and “reasonable” to define what costs a debtor can claim are necessary on a monthly basis. Many want to know: does private school tuition for your child count as “fair” and “reasonable” in bankruptcy?
Because the court has discretion in this area, every bankruptcy district will be slightly different, and every case may have a different outcome based on the individual facts of the case. There have been cases in which debtors had always sent their children to the same private school, and the court held that the tuition was reasonable given the circumstances. On the other hand, if the court determines that an individual debtor is paying an unreasonably high tuition, that it is not necessary for a child to go to private school, or that the tuition is being paid in order to shelter it from creditors, the court may decline to accept your plan.
Although bankruptcy courts are reluctant to get involved in matters that are strictly family decisions, they are in the difficult position of being forced to assess every aspect of an individual’s budget. If the court determines you can make a $500/month tuition payment for private school, that may mean a creditor never gets paid. A court will consider the equity or fairness in any given situation.
For this reason, it may be difficult to predict the outcome in any given case. It is import to consult a knowledgeable bankruptcy attorney in your area as soon as you know you may be considering bankruptcy as an option.
Stephen M. Trezza, Arizona Bankruptcy Attorney
Similar Posts:
- What You should Know before Qualifying Chapter 13 Bankruptcy
- Reaffirmation Agreements: the Legal Impact
- Anatomy of a Chapter 13: Part 1
- Can you Qualify for Chapter 7 Bankruptcy?
- Deciding Which Bankruptcy Chapter Is Most Appropriate
