Monday, March 26, 2012

Bankruptcy Code Limit On Deducting Tuition Is Not Free Exercise Infringement

In In re Meyer, (Bankr. ED WI, March 22,2012), a Wisconsin federal bankruptcy court upheld the constitutionality of a provision in Title 7 of the Bankruptcy Code that limits the amount of private school tuition that may be included in the computation of allowable living expenses and the determination of whether granting bankruptcy relief would be abusive.  7 USC 707(b) limits the tuition amount to $1775 per year per child. Here the debtors, who sent their children to a Catholic parochial school with higher tuition, argued that the limit forced them to choose between the free exercise of religion and their right to a discharge in bankruptcy. But the court rejected debtors' free exercise argument. It said in part:
the law is not discriminatory in its object or purpose; the Bankruptcy Code's means test has a purely economic purpose and neither advances nor inhibits religion. And finally, the actual operation of the statute does not target the practices of a particular religion for discriminatory treatment.... 
While the debtors have the right to the free exercise of religion and the right to direct the education and upbringing of their children, that right is not independent of their personal economic limitations and choices. There is no duty of either the government or the debtors' creditors to fund their religious choices.