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BankruptcyLawyerHonolulu:Private school tuition expense...is it allowable?
Private school tuition may or may not be allowed when filing bankruptcy
By Honolulu Attorney, Brian Kawamoto
Schedules I (income) and J (expenses) are still relevant in Hawaii post BAPCPA. Essentially the Bankruptcy code and case law provides that only "reasonable and necessary expenses" should be taken on Schedule J - which is your actual or forseeable monthly living expense budget that you file with the court. After you subtract your reasonable expenses from your income, if there is substantial disposable income available to pay your creditors you may have to file a Chapter 13 instead of a Chapter 7, or if you filed for a Chapter 13 you may have to increase your plan payments. In arriving at your available disposable income, the Trustee's office will scrutinize all of your living expenses that you claim on your Schedule J.
Whether you can claim private school tuition for your children as a necessary expense on Schedule J depends. Private school or public university tuition for your adult children over 18 years of age generally will not be allowed by the court. It can be argued that primary or secondary education expenses for your minor dependent children under 18 years of age however should be allowed because the means test under BAPCPA allows for it. At the time this article was written, Congress provided an allowable educational expense deduction under the means test of $147.92 per month per child (this amount will change from time to time), see paragraph 38 of http://www.uscourts.gov/uscourts/rulesandpolicies/rules/BK_Forms_Official_2010/B_022A_0410.pdf. If you are paying for private school tuition for a minor child, I would assume that it would be alright to claim this allowed amount on Schedule J so long as you don't exceed it. If there are special circumstances for your minor child that requires private schooling, then you could claim more expenses provided that you have adequate documentation. If however you want to spend $1,400 a month to an expensive private school simply because you want your child to get a better education, filing bankruptcy may have to wait until after your child graduates. Although it is admirable to pay for your child's private school tuition, since it would be at the expense of not paying your creditors the trustee would object to your bankruptcy based upon the "totality of circumstances" test. Remember the trustee's job is to see if there are any assets that can be liquidated or to find disposable income that could be paid to your unsecured creditors. Tuition for yourself would not be allowable unless it was required for you to keep your present job.
Date of this Article: March 2011
Disclaimer - It is advised that you consult a bankruptcy attorney in your state when dealing with your individual situation as the bankruptcy laws are complex and changes from time to time, also every state has different laws, rulings and court decisions as it concerns bankruptcy matters. Statements made here reflects the author's viewpoint for general reading purposes only and therefore should not be relied upon or considered as a legal opinion or legal advice for your own particular factual situation. Each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue.