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Can A Bankruptcy Debtor Pay For Their Child's College Expenses?

Posted By admin || 29-Sep-2011

Can A Bankruptcy Debtor Pay For Their Child's College Expenses?

Bankruptcy and Your Children's College Tuition

After a debtor's Chapter 7 bankruptcy case is discharged, they can conceivably pay for anything they like. However, the problems of paying for a adult child's college education usually presents itself in Chapter 13 bankruptcy or when the debtor takes the means test to determine their eligibility for Chapter 7 bankruptcy.

As the bankruptcy law stands now, a debtor cannot deduct their adult child's college expenses on their means test. There is no area for higher education deductions for adult children. And while the bankruptcy code does allow a debtor to deduct expenses they incur when taking care of an adult who is elderly, disabled or chronically ill, they cannot pay for the educational expenses of a child who is over 18 years old and place them on this deduction line.

However, if the child is disabled or chronically ill, they might be able to justify a higher education deduction if the expense was deemed necessary by the bankruptcy court. This is something the debtor would need to discuss with their bankruptcy attorney.

The bankruptcy court reasons that any expenses above and beyond those absolutely necessary for day-to-day living should not be deducted on the means test.  Any additional income that was earmarked for an adult child's education should go to the unsecured creditors according to how the bankruptcy code is interpreted by many trustees and judges.

It's important to note that a bankruptcy debtor is allowed to pay for the primary and secondary schooling of their minor children. Although, the amount of money allowed as a bankruptcy means test deduction for primary and secondary schooling is relatively small.

Categories: Bankruptcy
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