5 Things to Know About Paying for Private School Tuition While in Chapter 13 Bankruptcy

A chapter 13 Las Vegas bankruptcy sets up the debtor with a three- to five-year repayment plan based on what the debtor can afford to pay. The amount that goes into the repayment plan is based on the debtor’s income minus regularly monthly household expenses. Most expenses deal with the necessities of life: shelter, food, fuel, utilities, basic cell phone plans, etc. Bankruptcy courts are unlikely to approve plans that include luxury items. Are children’s education’s at a private school a luxury item? Here are five things you need to know.

  1. Because the local government provides children’s education free of charge, then there’s a good chance that the bankruptcy court will not approve a private school as an expense. Both the court and the trustee will consider it money that can go to the creditors.
  2. One exception to the general rule is if the debtor has elected a 100 percent repayment plan. If all the creditors are being repaid, and there’s money left over for children’s private schooling, then there’s no problem.
  3. Another, more questionable exception is if the private school is a parochial institution. The bankruptcy code cannot interfere with people’s First Amendment rights to exercise their religions, and Congress has passed laws amending the bankruptcy code to allow up to 15 percent of debtors’ incomes to be tithes to religious institutions. Whether that can legally or financially cover the tuition is unclear. Under such circumstances, the best option is to try to negotiate a discount or financial aid from the private school. Sometimes they can help, especially for students who are gifted.
  4. The bankruptcy court might be more easily persuaded to allow private school education if the child has developmental problems or has a language barrier.
  5. It might be possible to have relatives pay for a child’s private school education. That’s always an option.

If you are considering filing chapter 13 Las Vegas bankruptcy, and you have children in a private school, then you’ll probably want to do everything you can to keep them with their friends and teachers. Unfortunately, there isn’t much the bankruptcy code can do to help, but hiring an experienced Las Vegas bankruptcy lawyer can help you explore your options.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.