In re Cleary

Kevin Cleary (debtor) filed a chapter 13 bankruptcy petition in South Carolina. Mr. Cleary was married, but Mrs. Cleary did not join in the petition. The Clearys’ gross annual income was $86,283.60, which was below the median income for a family of eight in South Carolina. Mr. Cleary worked as a driver for a parcel-delivery company. Mrs. Cleary had not worked outside the home for most of the marriage due to her religious beliefs. However, at the time of the bankruptcy filing, Mrs. Cleary worked at a parochial elementary school attended by three of the Clearys’ children. Mrs. Cleary took that job to help pay for the children’s tuition. Private parochial education was important to the Clearys because of their religious convictions. Mr. and Mrs. Cleary had both attended private schools, and five of their six children were attending private elementary or secondary schools. The one child who was attending public school at the time of the bankruptcy filing had expressed an interest in returning to private school. Although the Clearys’ children were bright and needed a challenging school environment, they had no other special needs that required a private-school education. The Clearys spent $1,513 monthly on private-school tuition. In order to meet tuition expenses, the Clearys chose to spend less on food, clothing, recreation, and transportation. Mr. Cleary’s proposed chapter 13 plan provided, among other things, that Mr. Cleary would pay a 1 percent dividend to unsecured creditors. The plan also provided for the continued payment of the children’s private-school tuition. The chapter 13 trustee objected to confirmation of the plan. The trustee argued that the tuition payments were not reasonable and necessary expenses, which meant that not all of Mr. Cleary’s projected disposable income was being used to pay unsecured creditors as required by 11 U.S.C. § 1325(b)(1)(B).