Child care can be expensive, especially daycare for young children. For many people filing bankruptcy in San Diego, a critical question in assessing their options is whether they will be able to continue to pay for necessary expenses to properly look after and care for their children. Also, assuming that paying for child care is a permissible expense in your particular case, a second and equally important question is how much is one permitted to pay for the care of a child when filing for bankruptcy in San Diego.
Can I Pay for Day Care or Child Care in Bankruptcy?
If you have children and pay for daycare or childcare, you may be paying anywhere from $500 to $1,000, or more, each month. If you have such a substantial day care or child care expense and are considering bankruptcy, you may be asking, “Can I pay for day care or child care in bankruptcy in San Diego?” The short answer is, “yes.” But in reality the answer is a bit more complex, as there are important factors to consider and discuss with your attorney.
Chapter 7 Cases
In most cases, you can pay for child care in a Chapter 7 proceeding. The court and trustee appointed to oversee your case will usually respect your decision to pay for childcare, even up to $1,000 per month, or more. The court and trustee will consider your overall circumstances, such as the number of kids you have, the cost of the day care or child care, and whether both parents have full time jobs, thus making the cost of the such care an unavoidable expense. Reasonableness is always a consideration.
Proof of Day Care Expense
In Chapter 7 cases, for Means Test purposes, if you are claiming child care or day care expenses in order to qualify for bankruptcy, then the childcare or daycare expenses must be expenses that you actually pay each month and that you actually paid each month during the 6-month period prior to your Chapter 7 filing (the Means Test period). If the expense is rather large, then frequently the trustee appointed to oversee your case will require proof.
Chapter 13 Cases
In Chapter 13 cases, similar to Chapter 7 proceedings, the court and trustee will usually permit payment of child care or day care. In Chapter 13 cases, it is not essential that the childcare or daycare expenses have existed during the six months prior to filing (although that is preferable), because the Means Test calculations can be redone based on your expenses going forward.
What is perhaps most important in Chapter 13 cases, is how much longer the daycare or childcare expense will last. You see, in a Chapter 13, the child care or day care expense will often end before your three-year or five-year Chapter 13 plan term. For example, kids grow older, attend kindergarten, and day care expense goes down. Once the daycare or childcare expense ends, or is reduced, then based on your budget given to the court at the time of case filing, you will have more money available, more disposable income (since you no longer have the daycare or childcare expense). It takes a skillful San Diego bankruptcy attorney to: (1) foresee this issue in the first instance; and (2) propose your Chapter 13 plan to the court in a way that takes into account the dropping of expenses without increasing your disposable monthly income.