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Does Religious Private School Tuition Fall Under a “Reasonable Expense” During Bankruptcy?
If your family is struggling with overwhelming debt and you need the protections offered by bankruptcy, don’t hesitate to get in touch with an experienced bankruptcy attorney. Don’t assume that filing bankruptcy will mean living in poverty, giving up everything except the bare minimum necessities, or pulling your kids out of school because you currently pay private school tuition. When filing bankruptcy, the bankruptcy trustee assigned to your case examines your income and your expenses to determine allowable and reasonable costs.
What are Common “Reasonable” Expenses in Bankruptcy?
- Home Mortgage Payment or Rent
- Home Repair or Maintenance Costs
- Homeowner or Rental Insurance
- Property Taxes
- “Reasonable” Household Items
- Common Household Services, such as Utilities, Water, Sewer, Gas, Trash, etc.
- Internet, Phone, and Cable
- Medical and Dental Insurance
- Food
- “Reasonable” Recreation and Entertainment
- Automotive and Transportation Costs
- Auto Insurance
- Life Insurance
- Clothing and Dry Cleaning
- Alimony and Child Support
- Child Care, School Expenses and Sports Fees for Children
- Business Expenses, Self-Employment or Payroll Taxes
- Retirement Contributions
- Employment Expenses or Union Dues
- Student Loan Payments and Education Costs
- Charitable Contributions
- Taxes Not Discharged by Bankruptcy
- Trustee Fees for Chapter 13 bankruptcy
How To Establish a Reasonable Expense for Bankruptcy:
The most effective method of establishing a reasonable expense during bankruptcy is to keep a record of services/items purchased regularly. Examples of regular purchases that you may want to include in a track record may be haircuts, recreational expenses, parking, dry cleaning, other grooming services, etc. A record of purchases can establish a history of spending to present to the bankruptcy court.
Is Private School Tuition Considered a Reasonable Expense?
When filing bankruptcy, the court may question private school tuition expenses; particularly if they are exorbitant. The amount the bankruptcy court will typically deem “reasonable” for private school tuition expenses is subject to adjustment every few years, so consult an experienced bankruptcy attorney if you need to consider private school tuition during a bankruptcy. However, some cases involving private school tuition that exceeds what the court would typically deem reasonable may be considered as reasonable under special circumstances or if a compelling reason exists for the expense.
What Constitutes a Compelling Circumstance For Private School Tuition Costs?
Some examples of a situation that the bankruptcy court may recognize as a compelling circumstance to justify private school tuition above the typically acceptable amount during bankruptcy include:
- Public Schools in the Area that Offer an Inadequate Academic Experience
- Special Medical Conditions or Disabilities Better Accommodated by the Private Campus/Staff
- Specific Educational Needs Making Private School Essential
It’s important to note that approaching the court for an exception to what they deem a “reasonable” expense for private school tuition based on preference for the private school over other options or religious purposes is not generally enough to constitute a compelling circumstance.
Establishing the Sacrifice of Other Expenses to Support Private School Tuition in Bankruptcy:
In some bankruptcy cases, parents may present a record of expenses and past expenses, showing that they are sacrificing other reasonable or necessary expenses to cover the costs of private school tuition. For instance, maybe parents cut back on the costs of their health care, canceled their dental or vision coverage, etc. When parents sacrifice other reasonable and necessary expenses to fund private school tuition costs above what the court would typically consider reasonable, the court may recognize the tuition as justified.
There is no shame in turning to bankruptcy to seek a discharge of debt when unintended circumstances leave you struggling to provide for your family. Are you out of choices? Do you need help releasing your family from the chains of debt? Don’t hesitate to call Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.
The post Does Religious Private School Tuition Fall Under a “Reasonable Expense” During Bankruptcy? appeared first on Kenneth C. Rannick, P.C..
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