Source: https://lundinonchapter13.com/Content/Section/95.26
Timestamp: 2019-12-13 21:15:11
Document Index: 708609728

Matched Legal Cases: ['§ 95', '§ 95', '§ 707', '§ 707', '§ 707', '§ 707', '§ 101', '§ 707', '§ 1325', '§ 707', '§ 707', '§ 707', '§ 707', '§ 707', '§ 707', '§ 707', '§ 101', '§ 469', '§ 1325', '§ 92', '§ 1325', '§ 707', '§ 471', '§ 94', '§ 475', '§ 95', '§ 95', '§ 101', '§ 379', '§ 36', '§ 92', '§ 707', '§ 481', '§ 95', '§ 707', '§ 475', '§ 95', '§ 95', '§ 707', '§ 485', '§ 96', '§ 707', '§ 486', '§ 97', '§ 472', '§ 94', '§ 476', '§ 95', '§ 380', '§ 36', '§ 1325', '§ 707', '§ 707', '§ 707', '§ 707', '§ 707', '§ 707', '§ 707', '§ 5', '§ 707', '§ 707', '§ 707', '§ 707', '§ 707']

§ 95.26 Education Expenses
Cite as: Keith M. Lundin, Lundin On Chapter 13, § 95.26, at ¶ ____, LundinOnChapter13.com (last visited __________).
For Chapter 13 debtors with current monthly income (CMI) greater than applicable median family income,1 “amounts reasonably necessary to be expended—”2 are determined in accordance with § 707(b)(2)(A) and (B).3 Among the 10 classes of expenses included in the debtor’s monthly expenses by § 707(b)(2)(A)(ii) is the following allowance for education expenses:
In addition, the debtor’s monthly expenses may include the actual expenses for each dependent child less than 18 years of age, not to exceed $1,500 per year per child, to attend a private or public elementary or secondary school if the debtor provides documentation of such expenses and a detailed explanation of why such expenses are reasonable and necessary, and why such expenses are not already accounted for in the National Standards, Local Standards, or Other Necessary Expenses referred to in subclause (I).4
This allowance for education expenses is in addition to the other nine classes of monthly expenses allowed by § 707(b)(2)(A)(ii).5 To qualify, education expenses must be “actual”—signaling that this is not an outright allowance of the sort described in § 707(b)(2)(A)(ii)(I) with respect the National Standards and Local Standards issued by the IRS.6
Actual education expenses are only available for a “dependent” child less than 18 years old. The statute is not clear whether the child must be the debtor’s dependent. An argument can be constructed that the dependent child could be a dependent of, for example, the debtor’s spouse. In a joint case, the debtor and the debtor’s spouse’s income will be fully accounted for as CMI under § 101(10A).7 It is easy to imagine a debtor’s spouse who is required to pay education expenses for a dependent child from a prior marriage. Line 43 of Official Form B22C is as good a place as any to claim those expenses, up to $1,500 per year per child. This subclause is somewhat less explicit than others with respect to who must be dependent on whom to qualify for an expense deduction.8
Also, the section does not specify the date at which the dependent child must be less than 18 years of age. The petition date is an obvious choice, but other dates could be argued. Other sentences and subclauses of § 707(b)(2)(A)(ii) are more explicit with respect to the timing of an expense calculation.9
Perhaps more significant, the statute doesn’t tell us how long the “actual expenses” have to extend to qualify as additions to the debtor’s monthly expenses for purposes of subclause (IV). For example, if the debtor has a dependent child who is 17 years old, the debtor can reasonably claim a full (school?) year of additional monthly expenses for that child’s attendance in school if the documentation and other conditions in subclause (IV) are satisfied. That monthly expense would then be fully allowed as an “amount[ ] reasonably necessary to be expended—” to determine disposable income under § 1325(b)(3), notwithstanding that the expense may end during the Chapter 13 case.
Unlike the debtor’s average monthly payments of secured debts,10 and the debtor’s expenses for payment of priority claims,11 additional monthly expenses for education of dependent children allowed by § 707(b)(2)(A)(ii)(IV) are not divided by the anticipated 60-month commitment period under the plan. Education expenses are simply a deductible amount determined in accordance with subclause (IV). This is a specific example of the more general issue that many of the “monthly expenses” allowed in § 707(b)(2)(A)(ii) are not anchored to any particular month or period of calculation.
The limitation “not to exceed $1,500 per year per child” could be read as a cap on the “debtor’s monthly expenses” earlier in the sentence. If the debtor’s allowable education expenses are lumpy but exceed $1,500 per year per child, the debtor can claim the full $125-per-month allowance.
The section addresses monthly expenses “to attend a private or public elementary or secondary school.” The expenses must be reasonable and necessary. Expenses “to attend” elementary or secondary school could include tuition, uniforms, athletic equipment, transportation expenses, room and board—the debtor need only provide documentation and a “detailed” explanation of why the expenses are reasonable and necessary.
Subclause (IV) states that the debtor must also provide a detailed explanation “why such expenses are not already accounted for in the National Standards, Local Standards or Other Necessary Expenses referred to in subclause (I).” This phrase demonstrates that Congress knew how to eliminate duplication and overlap of expenses for purposes of determining a debtor’s monthly expenses under § 707(b)(2)(A)(ii). This “not already accounted for” language does not appear in other sentences and subclauses of § 707(b)(2)(A) in which similar potential redundancies of expense deductions would have compelled a reasonable drafter of legislation to provide a similar limitation. The obvious inference is that Congress intended to prohibit “double accounting” with respect to the education expenses in clause (iv) but did not intend to prohibit possible overlaps in other places in § 707(b)(2)(A) and (B).12
There are several components of the National Standards and Local Standards and categories of Other Necessary Expenses that are included in a debtor’s monthly expenses by § 707(b)(2)(A)(ii)(I) that may overlap or be redundant of the additional education expenses described in subclause (IV). For example, the National Standards include an expense allowance for shoes and clothing for the debtor and the dependents of the debtor under § 707(b)(2)(A)(ii)(I).13 Transportation expenses are addressed in the Local Standards for Transportation.14 Among the categories of Other Necessary Expenses, “education” may overlap subclause (IV).15
It may not be simple to present a “detailed” explanation of why education expenses described in subclause (IV) are not already accounted for in an IRS standard. For example, what portion of the IRS National Standard for “food” should be allocated to a dependent child when the debtor pays separately for meals for that child to attend a private school? Is any portion of the housing and utilities expense allowance included in the IRS Local Standards allocable to a dependent child who is attending a boarding school? When the debtor’s child makes the football team and the debtor is called upon to pay $300 for a uniform, is any portion of that $300 “already accounted for” in an IRS standard?
Education expenses allowed by subclause (IV) are declared at Line 43 of Official Form B22C.16 The debtor is instructed to enter the “average monthly expenses that you actually incur, not to exceed $125 per child in providing elementary and secondary education for your dependent children less than 18 years of age.” It is not obvious why the form substitutes “in providing” for the phrase “to attend.” The instructions at Line 43 leave out altogether that “private or public” school expenses qualify for this additional monthly expense.
The statute provides no clue what “detailed” explanation is required to prove reasonableness and necessity of education expenses. Explaining the reasonableness and necessity of additional education expenses might include evidence of a child with special needs or a child with special talents, but “detailed” does not imply that “special” circumstances are required.
The statute requires “documentation” of the actual expenses but does not require documentation of why the expenses are reasonable and necessary or why the expenses are not already accounted for in an IRS standard. The instructions at Line 43 of Official Form B22C suggest without statutory support that documentation is required for all of the conditions in the subclause. Of course, documentation would not be a bad idea with respect to reasonableness, necessity and accounting for the IRS standards, but the absence of documentation is not fatal under the statute.
1 See 11 U.S.C. § 101(10A), discussed in § 469.1 [ Comparison of CMI to Applicable Median Family Income: § 1325(b)(3) ] § 92.4 Household Size and Comparison of CMI to Median Family Income: § 1325(b)(3).
4 11 U.S.C. § 707(b)(2)(A)(ii)(IV).
5 The classes are listed in § 471.1 [ Big Picture: Too Many Issues ] § 94.1 Big Picture: Too Many Issues.
6 See §§ 475.1 [ National Standards ] § 95.2 National Standards and 476.1 [ Local Standards: Housing and Transportation ] § 95.3 Local Standards: Housing and Transportation.
7 11 U.S.C. § 101(10A), discussed in §§ 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19 Form 122C-1: Statement of Current Monthly Income and 468.1 [ Current Monthly Income: The Baseline ] § 92.3 Current Monthly Income: The Baseline.
8 See, e.g., 11 U.S.C. § 707(b)(2)(A)(ii)(II) (“the dependents of the debtor”), discussed in § 481.1 [ Elderly, Ill or Disabled ] § 95.24 Elderly, Ill or Disabled.
9 See, e.g., 11 U.S.C. § 707(b)(2)(A)(ii)(I) (“as in effect on the date of the order for relief”), discussed in §§ 475.1 [ National Standards ] § 95.2 National Standards and 476.1 [ Local Standards: Housing and Transportation ] § 95.3 Local Standards: Housing and Transportation.
10 See 11 U.S.C. § 707(b)(2)(A)(iii), discussed in § 485.1 [ Average Monthly Payments on Account of Secured Debts ] § 96.1 Average Monthly Payments on Account of Secured Debts.
11 See 11 U.S.C. § 707(b)(2)(A)(iv), discussed in § 486.1 [ Total Priority Debts and Divide by 60 ] § 97.1 Total Priority Debts and Divide by 60.
12 This issue is discussed further in § 472.1 [ Netting Issues, Including Exclusion of Payments for Debts ] § 94.2 Netting Issues, Including Exclusion of Payments for Debts.
14 See § 476.1 [ Local Standards: Housing and Transportation ] § 95.3 Local Standards: Housing and Transportation.
16 See § 380.1 [ Form B22C: Disposable Income Calculation ] § 36.21 Form 122C-2: Disposable Income Calculation.
DeHart v. Bridgeforth (In re Bridgeforth), 571 B.R. 669, 671 (Bankr. M.D. Pa. Aug. 18, 2017) (Thomas) (Expenses for education of an adult child are not ordinary or necessary and are not allowable in calculation of projected disposable income. Special educational expenses for a mentally or physically challenged child are allowable under the IRM but are “shared expenses” that must be prorated with nonfiling spouse based on respective incomes. “[G]uidance is found in the IRM which states that education expenses are allowed ‘[i]f it is required for a physically or mentally challenged child and no public education providing similar services is available.’ . . . [E]ducating a minor child is an expense that should be shared by the parents and attribution of that expense between the Debtor and his nonfiling spouse [is required.]”).
In re Brown, No. 16-12609-BFK, 2017 WL 2189557 (Bankr. E.D. Va. May 17, 2017) (Kenney) (To properly account for receipt of monthly child support under § 1325(b)(3), debtor with current monthly income greater than applicable median family income must include all child support in CMI, then deduct amount of that support “reasonably necessary” to be expended for support of children—but only to the extent not already accounted for in other parts of means test. Debtor who receives $1,300 a month of child support who expends $1,600 per month per child for private school tuition is permitted to account for reasonably necessary support expenses for the children in excess of the amount spent per month for private school. Put another way, the debtor is required to include all child support in CMI and can then deduct the amount reasonably necessary to be expended for the support of children in excess of the separate deduction for private school expenses.).
In re Brown, 500 B.R. 255, 268-69 (Bankr. S.D. Ga. Sept. 6, 2013) (Barrett) (Evidence that debtor has a "special needs" child satisfied special circumstances requirements in § 707(b)(2)(B) to allow private school tuition in excess of the $1,775 allowed by § 707(b)(2)(A)(ii)(IV). "The Bankruptcy Code allows expenses for private school tuition up to $1,775.00/year with documentation of the expenses and an explanation of why they are 'reasonable and necessary.' 11 U.S.C. § 707(b)(2)(A)(ii)(IV). Debtor seeks to pay approximately $3,150.00/year for her daughter's private school . . . . I . . . find the facts of this case are compelling, constituting 'special circumstances' for the excess Debtor is paying for this education. . . . Debtor's daughter has been diagnosed with ADHD and other auditory and speech disorders. Her daughter has been attending private school since first grade where a special plan is in place designed to specifically address her needs. . . . Debtor's testimony and the documented third-party reports and assessments of her daughter's special needs for the smaller class size and the specialized attention . . . established that the excess expense is 'reasonable and necessary' and therefore Debtor is entitled to the full deduction for private school tuition.").
In re Grabarczyk, No. 10-37007, 2012 WL 5409373 (Bankr. N.D. Ohio Nov. 6, 2012) (Whipple) (Deduction for education expenses is limited to amounts actually incurred under § 707(b)(2)(A)(ii)(IV).).
In re Paliev, No. 11-17647-BFK, 2012 WL 3564031, at *10 (Bankr. E.D. Va. Aug. 17, 2012) (Kenney) ($55 per week for tutor recommended by daughter's school was documented consistent with § 707(b)(2)(A)(ii)(IV) but disallowed because debtor did not prove that this additional expense was not already accounted for in National or Local Standards. "The Debtor testified that these expenses consist of $55 a week for a tutor recommended by her daughter's school . . . . Section 707(b)(2)(A)(ii)(IV) . . . allows a maximum of $1,775 per year per child . . . . The Debtor has provided the required documentation to the Trustee. . . . The Debtor has put forth no argument or evidence as to why these expenses are not already accounted for in the National and Local Standards. Accordingly, the Court finds that the Debtor has not met her burden.").
In re Cluff, No. 09-41244-JDP, 2012 WL 909551 (Bankr. D. Idaho Mar. 15, 2012) (Pappas) (Support of adult children attending college was discretionary expense, not allowable deduction from income. However, allowable expenses otherwise exceeded income, requiring denial of trustee's motion to modify confirmed plan.).
In re Leasure, No. 11-24447-D-13L, 2012 WL 8442200, at *1 (Bankr. E.D. Cal. Mar. 8, 2012) (unpublished) (Bardwil) (Section 707(b)(2)(A)(ii)(IV) does not allow deduction for college expenses for a child under or over 18 years old. "Allowable educational expenses include the actual expenses for a dependent child less than 18 years old, up to $1,500 per year per child, to attend a private or public elementary or secondary school . . . . [T]he omission from [§ 707(b)(2)(A)(ii)(IV)] of college expenses for children 18 and older means that Congress did not intend such expenses to be deducted.").
In re Hicks, No. 10-41855-JJR-13, 2011 WL 2414419 (Bankr. N.D. Ala. June 15, 2011) (Robinson) ($147.92-per-month education expenses for each of three dependent children are disallowed because debtors failed to provide documentation and explanation required by § 707(b)(2)(A)(ii)(IV).).
In re Cleaver, 426 B.R. 390, 396 (Bankr. D.N.M. Mar. 22, 2010) (Starzynski) ($137.50 for education expenses at Line 43 is refused based on a confusing citation to Internal Revenue Manual § 5.15.1.10. "The Debtors list $137.50 as an expense for education expenses. At trial, Debtors stated their son is in public school and this figure represents costs associated with him being in the choir. 'But educational expenses are deemed "necessary" only if the education producing the expenses "is required for a physically or mentally challenged child and no public education providing similar services is available," or if it is "for the taxpayer and . . . [is] required as [a] condition of employment."' . . . Despite the value of this activity for the child's education and character development, unfortunately the Court does not have the discretion to allow this expense." There is no discussion of § 707(b)(2)(A)(ii)(IV).).
In re O'Connor, No. 08-60641-13, 2008 WL 4516374, at *14 (Bankr. D. Mont. Sept. 30, 2008) (Kirscher) (Section 707(b)(2)(A)(ii)(IV) requires documentation of special circumstances for education expenses; debtors failed to prove $95 per month education expenses for a 12-year old nephew living with the debtors. "Both § 707(b)(2)(A)(ii)(IV) and § 707(b)(2)(B)(ii) require the debtor to provide documentation of additional expenses for education or as special circumstances, and a detailed explanation that justify such expenses. Debtors provided no supporting documentation in support of the $95 for their nephew's school activities, failed to explain why such expenses are reasonable and necessary and not already accounted for in the National and Local Standards or Other Necessary Expenses, and therefore failed their burden under the plain language of both subsections[.]".).
In re Saffrin, 380 B.R. 191, 192 (Bankr. N.D. Ill. Dec. 21, 2007) (Goldgar) ($1,000 a month for daughter's college expenses is not allowable educational expense under § 707(b)(2)(A)(ii)(IV); that Congress separately permits actual education expenses for dependent children younger than 18 years of age to attend elementary or secondary school strongly supports exclusion of expenses for college. "Educational expenses are specifically addressed in section 707(b)(2)(A)(ii)(IV). . . . No deduction is mentioned for expenses a child over eighteen incurs or for expenses beyond elementary or secondary school. College expenses therefore may not be deducted.").
In re Boyd, 378 B.R. 81, 83-84 (Bankr. M.D. Pa. Nov. 6, 2007) (Thomas) (That Congress allows debtor with CMI greater than applicable median family income to deduct up to $1,500 per year for secondary school education expenses is some evidence that Congress would not allow $2,400-per-year contribution to an adult child attending college. "Applying the principle of ejustem generis, I am inclined to conclude that Congress would not deem [$2,400] expense necessary, considering that the statutorily approved expenditure is a smaller amount than the request before me, deals with a dependent minor child rather than an adult, and references those critical elementary and secondary school years, as opposed to undergraduate education.").
In re Featherston, Nos. 07-60296-13, 07-60441-13, 2007 WL 2898705, at *14 (Bankr. D. Mont. Sept. 28, 2007) ($350 per month for college expenses of adult child is not deductible expense under § 707(b)(2)(A)(ii)(IV) because specific allowance of education expenses for dependent children younger than 18 precludes education expenses for older children. "'Section 707(b)(2)(A)(ii)(V), is to be given its plain and ordinary meaning. It applies to elementary or secondary school expenses. It applies to dependent children less than eighteen (18) years old. The omission of expense for a college education suggests application of the legal maxim expressio unius est exclusio alterius . . . . Education[ ] expenses for students over the age of eighteen (18) and college expenses generally are no longer within the scope of 'reasonable and necessary' expenses contemplated by the Bankruptcy Code. Because Congress expressed that debtor's expenses may include those of children under the age of eighteen (18) to attend elementary or secondary school, expenditures for children over the age of eighteen (18) to those outside the elementary or secondary school context are excluded.'", aff'd, 2008 WL 5217936 (D. Mont. Dec. 11, 2008).).
In re Goins, 372 B.R. 824, 827 (Bankr. D.S.C. Aug. 1, 2007) (For a debtor with CMI greater than applicable median family income, there is no expense deduction for supporting a 19-year-old college student. "Educational expenses for students over the age of eighteen (18) and college expenses generally are no longer within the scope of 'reasonable and necessary' expenses . . . . Because Congress expressed that debtor's expenses may include those of children under the age of eighteen (18) to attend elementary or secondary school, expenditures for children over the age of eighteen (18) and those outside the elementary or secondary school context are excluded.").