Chapter 13 – Can I Keep Paying for My Child’s College Education?
In a Chapter 13 bankruptcy in Northwest Georgia, you can keep paying for your child’s college education if you are in a 100 percent plan. A 100 percent Chapter 13 bankruptcy plan means that you are paying all of your creditors back. However, there are exceptions to every general rule.
I recently met with some bankruptcy clients in my Rome, Georgia office who were extremely upset by the thought of not being able to help their child graduate from college. As a father of four, I can certainly understand why a parent would want to help their child get a college degree. You watch your kids grow up dreaming of entering some profession. You watch them work hard in school. They study hard, behave well, and graduate with honors. You see the excitement in their eyes when they get accepted to the college of their choice. “Sorry kid, I can’t help you.” This just doesn’t work when you love your child with all of your heart.
Some cases are not ideal for fulfilling the family educational dreams. In Chapter 13 bankruptcy cases where we are wiping out debt (also known as a composition plan), parents cannot make payments toward their child’s college education. When you have a Chapter 13 bankruptcy plan that eliminates credit card or medical debt, you can’t pay for any expenses that could be categorized as a luxury. For example, you can’t pay for a boat, airplane, or a four wheeler while you are in a composition plan. Why would anyone be able to eliminate credit card or other unsecured debt but still be able to pay for boats or other luxuries at the same time? It can’t be done. Unfortunately, many bankruptcy judges believe that you paying for your child’s college education is a luxury.
In most situations, this is almost never an issue because children of people who are suffering economically generally qualify for some type of financial aid form their school. In addition, Georgia offers the HOPE scholarship which pays are large amount of the education costs regardless of financial necessity.
The typical case where I see a parent have to make the choice between filing bankruptcy or keep paying for the child’s college education is divorce situations. One of the parents files bankruptcy and the other does not. One parent suffers economically but the other makes enough money to eliminate the child’s ability to qualify for any type of financial aid.
I wish every story had a happy ending in this world but sometimes life just stinks. The good news is that kids who can make the grade always find a way to get the degree. It may take a few years longer, but determined hard working people always come out on top.