I divided this topic into two parts because the answer implicates more than one portion of New York bankruptcy. In part 1, we learned that a child’s physical mobile device can actually be a parent-debtor’s property that must be transferred to the bankruptcy estate unless the debtor can fit it into an exemption. In general, federal exemptions are more favorable to debtors in these circumstances than New York State’s exemptions. There are two issues beyond the physical device: the data plan and possibly the parent-debtor’s home Internet plan.
Mobile devices require Web and cellular network access to have much value, especially to students. These usually involve cellular and mobile data plans that parents must pay for. These plans are contracts that bankruptcy treats as “executory agreements.” In an executory agreement, the parties have not completely performed their parts, so their obligations are ongoing. The service provider gives the user access to its cellular and data networks, and the user pays a periodic fee, usually monthly. It’s almost certain that parents who purchase these plans for themselves include their children’s devices in them, so bankruptcy’s effects on the parent’s plans will affect the child’s access as well.
Provided the debtor has the income to continue paying the mobile-devices’ network and data plans, in chapter 7 he or she can assume the lease to remove it from the bankruptcy estate. The debtor must sign the assumption agreement within 60 days of the meeting of the creditors. If the debtor missed any payments, then he or she must cure those payments or persuade the bankruptcy court that past payments will be cured in the future. Once assumed, an agreement cannot be rescinded.
Along with assumption, debtor-parents might want to explore whether they can downgrade their mobile plans. This can save money without compromising children’s use of their devices. Alternatively, parents can do away with the data plan entirely, and simply rely on home or school wireless Internet access for their non-cellular needs. Going this route will limit where children can use their devices for Internet access, but it can keep costs down as necessary. It’s not like they need to work anywhere, just at school, home, and possibly friends’ homes.
Of course home Internet options are likely to be executory agreements, so the same rules will apply to those.
Older children’s access to the Internet via mobile devices is increasingly normalizing, especially for school work. As a result, parents must pay additional costs for devices and plans that they would not have borne twenty years ago. Furthermore, these costs can burden parent-debtors in bankruptcy. If that’s the case for you, then you should consult with an experienced New York bankruptcy lawyer.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.