Bankruptcy Assignment Help | Bankruptcy Case Study Help Celia graduated from a prestigious law school two years ago. Celia’s parents did not have the resources to help her pay for college. For the past seven years, Celia accumulated almost $150,000 in debt for student loans for her undergraduate and law degrees.After graduation, Celia opened her own jury consulting business as a sole proprietor. Her new business was not doing well. Celia earned approximately $35,000 after her business expenses were paid. Remembering her class in bankruptcy from law school, Celia believed that if she filed a voluntary Chapter 7 petition that all of her debts would be discharged and she could start over.
- Is Celia entitled to file for Chapter 7 bankruptcy? Why or why not?
- Assume Celia is eligible to file Chapter 7. Will the credit card debt and student loans be discharged? Why or why not?
On May 1, Celia filed for Chapter 7 bankruptcy. At that time and for at least four months prior to that time, she was unable to pay all of her current obligations. On March 15, Celia paid the following expenses: her monthly personal credit card payment, her home mortgage, the rent for her consulting office, and the electric bill for both her business and her home.
- The trustee in bankruptcy claimed that some of these payments were voidable preferences. Is the trustee correct? If so, which payment(s) is a voidable preference and why?
Answer 1 In the situation, where Celia has opened her own jury consulting business as a sole proprietor and she has already in the condition to have $150,000 debt there she has much of responsibility. Due to some reasons, her business didn’t go well and at last she has earned $35,000 approx. In this situation, it can be evaluated that she does not has enough credit to pay creditors. Also, her business were not doing well and in the condition where she is badly in debt and unable to service the debt to creditors (Miller & Harrell, 2002). In this situation the Chapter 7 of Bankruptcy can be filed by Celia with the aim to wipe out all debts and get a fresh start. Chapter 7 of the title 11 of the United States Code that is known as Bankruptcy Code is governed to precede the liquidation under the bankruptcy laws of the United States. In other words, Chapter 7 is the single most common bankruptcy chapter filled in the United States that involves the sale of a debtor’s non-exempt assets by trustee or owner (Ekvall & Smiley, 2007, p. 29-31).
Answer 2 As per the criteria of eligibility of Celia to file Chapter 7 the willingness to discharge credit card debt and student loans cannot be go along. It is because Chapter 7 is only can be filed with the condition to inability to pay debt to the creditors which only goes with the discharging of credit card debt not with student loans. But in this condition, where Celia is eligible to file Chapter 7, it is determined that there is no further hope of paying her student loan as her parents is not in the condition to pay the loan and her business is also faced loss. In this condition, student loans can we wiped out after the filing of Chapter 7 (Attorney, 2011). But, it is not same in all situations, that student loans are discharges by the trustee in bankruptcy. Answer 3 Celia has filed Chapter 7 on May 1 and has paid several expenses on March 15; Celia is unable to pay all current obligations. But the trustee feels that the expenses paid by Celia were not all considered as fair preference. Home mortgage is a voidable preference because it is the liability that Celia has to pay at her personal level. In this debt the creditor can be his relative as well so, it cannot go with the rules of Chapter 7 (Hamilton & Booth, 2007, p. 9-13). Along with this, the electric bill for home is another unfair preference that Celia has made before filing the Chapter 7. Attorney, S.E. (2011). How to File for Chapter 7 Bankruptcy. Nolo. Ekvall, L.L. & Smiley, E, (2007). Bankruptcy for Businesses: Benefits, Pitfalls and Alternatives. Entrepreneur Press. Hamilton, R.W. & Booth, R.A. (2007). Attorney’s Guide to Business and Finance Fundamentals. Aspen Publishers Online. Miller, F.H. & Harrell, A.C. (2002). The ABCs of the UCC: Related Insolvency Law. American Bar Association. Get 100% original and quality assignment help services from our Bankruptcy case study assignment help experts.