Summary:
In , Judge Pamela McAfee denied confirmation of the Clarks’ Chapter 13 plan after concluding that continuing to spend $1,715 per month on private Christian school tuition while proposing to discharge roughly 90% of more than $300,000 in unsecured debt was inconsistent with the good faith requirement of 11 U.S.C. § 1325(a)(3).
The court emphasized that Chapter 13 good faith requires examination of the “totality of the circumstances,” including the debtors’ financial situation, percentage repayment to creditors, accuracy and honesty in schedules and testimony, and whether the debtors made meaningful efforts to reduce expenses.
Judge McAfee carefully reviewed both the Clarks’ prior Chapter 7 abuse litigation and the subsequent Chapter 13 plan. The opinion repeatedly focused on the debtors’ continued effort to maintain what the court viewed as expensive lifestyle choices—including costly vehicles, gym memberships, pet expenses, and especially private school tuition—while seeking to discharge substantial unsecured debt with minimal repayment.
The opinion gave particular attention to the evolving explanations for why the debtors chose private school. During the earlier Chapter 7 proceedings, Mr. Clark emphasized dissatisfaction with pandemic-era virtual public schooling and generalized criticism of public schools. Later, during the Chapter 13 confirmation hearing, he reframed the decision primarily as rooted in faith and Christian education.
The court was especially critical of Mr. Clark’s testimony that he would not consider public schools because “They put litter boxes in the public schools in Apex.” Footnote 6 directly identified this as a “widely circulated (and debunked) rumor” involving children who “identified as cats.” The court clearly viewed this testimony as damaging to credibility.
Importantly, the court did not hold that private school tuition can never be maintained in Chapter 13. Instead, Judge McAfee discussed multiple cases where courts permitted such expenses because debtors demonstrated either:
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educational necessity or special circumstances; or
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meaningful financial sacrifice elsewhere in their budgets.
The opinion referenced cases involving children with ADHD, emotional crises, chronic illnesses, denied transfer requests, or other compelling educational needs. The court also noted cases where debtors significantly adjusted their lifestyles or where one spouse worked specifically to fund tuition expenses.
Ultimately, Judge McAfee concluded that the Clarks failed to demonstrate either sufficient educational necessity or meaningful “belt-tightening” efforts. Confirmation was therefore denied, although the court expressly stated it was not requiring the debtors to remove their children from private school in order to obtain Chapter 13 relief.
Commentary:
In re Clark II is not really a “private school tuition” case as much as it is a credibility and lifestyle-adjustment case.
Footnote 6 likely will receive the most snide attention (including from this blog) because it reflects unusually direct judicial scorn for Mr. Clark’s reliance on the debunked “litter box” conspiracy theory regarding public schools. But the deeper issue was not politics—it was credibility. While attorneys cannot control what their clients say, preparing them to avoid rambling into rants and conspiracy nonsense is vital. The court repeatedly contrasted the debtors’ earlier explanations for private school enrollment with later testimony that appeared more carefully tailored toward bankruptcy confirmation standards.
For consumer debtor attorneys, the opinion contains several important practical lessons.
First, debtors who intend to maintain private school expenses in Chapter 13 increasingly will need significant pre-bankruptcy preparation. Attorneys likely will need to help clients investigate and document:
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public-school alternatives,
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charter or magnet options,
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scholarship or tuition assistance programs,
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church support,
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transportation concerns,
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individualized educational needs,
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bullying or emotional concerns,
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special learning accommodations,
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extracurricular or continuity issues,
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and any other facts supporting genuine educational necessity.
Equally important, attorneys will need to prepare debtors to testify honestly, consistently, and without appearing defensive or ideological. A debtor who calmly explains: “We researched alternatives extensively, made difficult sacrifices elsewhere, and believe this educational environment remains critically important for our child” presents far differently than a debtor who appears dismissive of the process or relies on inflammatory rhetoric.
The opinion also exposes a recurring tension in consumer bankruptcy law: what exactly constitutes sufficient “belt-tightening”?
Courts routinely expect debtors to reduce expenses before and during bankruptcy. But substantial pre-petition sacrifices often become invisible by the time schedules are filed. Families may already have eliminated vacations, stopped retirement contributions, sold assets, exhausted savings, canceled discretionary spending, liquidated cryptocurrency, deferred healthcare, or downsized numerous aspects of life merely to survive until bankruptcy. Once those sacrifices are already embedded into the schedules, courts frequently see only the remaining expenses.
That said, the remaining numbers here were still difficult.
If the Clarks had:
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eliminated $250/month in gym memberships,
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reduced pet expenses by $75/month,
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curtailed private school expenses to the Means Test amount of approximately $189.58 per child per month,
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and somehow replaced or refinanced vehicles to reduce payments by another $800 monthly without creating large deficiency claims,
they potentially could have generated well over $2,300 additional monthly disposable income. Combined with the proposed $700 payment, that could have created approximately $3,000 per month for unsecured creditors—potentially yielding repayment approaching or exceeding $180,000 over a 60-month plan.
Yet the vehicle issue also highlights a recurring disconnect in consumer bankruptcy jurisprudence. In the wake of Goddard v. Burnett, this sort of vehicular “belt-tightening” increasingly can feel like a mirage envisioned by judges and trustees that rarely materializes in practice. Surrendering even admittedly expensive vehicles does not necessarily mean that financially distressed debtors can obtain reliable replacement transportation that is genuinely and substantially cheaper once all real-world costs are considered—including damaged post-bankruptcy credit, higher interest rates, required down payments, increased maintenance costs on older vehicles, repair uncertainty, insurance costs, and the practical necessity of dependable transportation for employment and family obligations. A debtor who replaces a newer financed vehicle with an older high-mileage car may reduce the monthly payment on paper while simultaneously increasing long-term financial instability through recurring repair expenses and transportation unreliability.
Whether the statutory private-school amount under § 707(b)(2)(A)(ii)(IV) is truly an “allowance” or still requires a separate showing of “reasonable and necessary” remains an interesting unresolved issue. The Clarks’ counsel argued that no further explanation should be required for expenses within that statutory amount. Judge McAfee firmly rejected that argument, emphasizing that the statute itself expressly requires “documentation” and a “detailed explanation” even for those amounts.
One additional irony stands out in the opinion. Although faith ultimately became central to the debtors’ justification for both private Christian schooling and participation in a “faith-based medical cost-sharing program,” the schedules reflected no charitable or religious contributions whatsoever.
That omission matters because Congress specifically protected charitable contributions in Chapter 13 through 11 U.S.C. § 1325(b)(2)(A)(ii), authorizing qualified charitable giving up to 15% of gross income. In some situations, debtors with strong church involvement may have opportunities for reciprocal tuition assistance, scholarships, or ministry support that reduce the direct financial burden of private education. Whether such options existed here is unknown, but the absence of any tithing or charitable giving likely weakened the persuasiveness of the debtors’ later faith-centered narrative.
Ultimately, Clark II reflects a broader judicial expectation that Chapter 13 debtors cannot simultaneously preserve nearly every major component of an upper-middle-class lifestyle while shifting the overwhelming burden of financial collapse onto unsecured creditors. The opinion is a reminder that successful Chapter 13 practice often depends not only on statutory calculations, but on credibility, demonstrated sacrifice, and a debtor’s ability to persuade the court that difficult compromises have genuinely been attempted.
To read a copy of the transcript, please see:
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