Are Your Children Getting Ready for College?

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Do you love your children but hate your spouse? Have a lot of debt?  Make a lot of money?  You may want to “Get divorced now!” says bankruptcy attorney Marty K. Courson of San Francisco.

For consumer debtors, the mean test (I mean “means” test), requires consideration of a variety of factors including family income, secured debt, taxes, and a cavalcade o f other factors.  Depending on the amount of “disposable income” that remains after deducting means-test authorized expenses, you could find that you are simply not qualified for a Chapter 7 or that you have to invest an inordinate amount of money in a Chapter 13 or Chapter 11 bankruptcy.

But what about the children? Surely college expenses for my children are deductible from my income?  Nope. Not according to Congress when it devised the means test.

Here are some of the items that are deductible when it comes to determining disposable income:  1) Contributions to the support of an elderly, chronically ill or disabled member of your family, 2) Continued contributions to a charitable organization, 3) Your Mercedes payment, 4) The debt you pay on your vacation home, and 5) the debt you pay on your ridiculously over-encumbered house.  You could spend all day listing other bona-fide deductions.  But deductions for your college-age children?  Nada.

That is, unless you have a court order to pay such expenses.  The means test specifically permits a deduction for payments required pursuant to court order, such as spousal or child support payments.  A Massachusetts bankruptcy court addressed this very issue in In re Maiorino, (Bankr. D. Mass. 9/1/10).   In the Maiorino case, the debtor had a state court order that incorporated an agreement with his former spouse and that “requires the Debtor to be solely responsible for the reasonable college expenses and college-related expenses of his two children. These expenses include tuition, room and board, and other ancillary expenses.”  Because these expenses are clearly within the Bankruptcy Code’s definition of a domestic support obligation, the court found these court-ordered expenses to be appropriate deductions when computing the means test.

So what is the moral of this story? If you love your children, but loathe your spouse, getting divorced now may help in the long run!  Your family, broken as it may be, will quite possibly benefit considerably.

Call attorney Marty K. Courson at 415-433-3100 to schedule a free consultation for bankruptcy (Sorry though, you will have to find a divorce lawyer on your own!)

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