School Fees and Insolvency

 Insolvency

When an individual enters into an individual voluntary arrangement (IVA), or is made bankrupt, then an assessment is carried out of the household income and expenditure to establish what, if anything, the debtor can afford to pay back on to creditors. One of the areas that is of concern to some parents is whether or not school fees can continue to be paid from the household budget. There is no easy answer to this as there two cases that have gone to Court that gave conflicting outcomes with regards to school fees and insolvency.

Case by case rulings on School Fee’s

In the case of Re Rayatt (1998) it was decided that school fees could be treated as a reliable expense. This was because it was felt that to remove the bankrupt’s eldest child from the fee paying school she attended just before taking GCSE’s would unfairly prejudice her education. However, compare this to the decision in Scott v Davis [2003]. Here the Court said that it was up to the bankrupt to produce sufficient evidence to the court for a decision to be made on whether or not school fees could be considered a reasonable expense.

The fact that this bankrupt was unhappy with local state schools, opting instead for private education, was not thought sufficient to make the school fees acceptable as a reasonable expense. Each case would have to be taken on its merits but it is clear that the general consensus is that, unless there are compelling reasons to the contrary, school fees would not be considered a necessary household expense. If you are having financial difficulty and would like to talk about how you manage your income so that you can both provide for your family and pay your creditors then please call Lines Henry. If you require advice, Call Lines Henry on 0800 012 6649.