Question

For this "IP" you will need to access the VT statute on Bankruptcy exemptions. After reviewing the statute and after considering the following facts, you will be asked to answer a few questions:

Imagine you are facing extreme financial distress due to job loss and an illness. You have incurred the following debts:

1. Mortgage of $75,000.00 on your home valued at $150,000.00.

2. Car debt of $5,000 on a car valued at $7,000.00.

3. Credit card debt of $10,000.00.

4. Hospital debt of $40,000.00.

5. Federal taxes incurred in the last year of $5,000.00.

6. Unsecured debt to cousin Arthur of $2,500.00.

7. Magazine subscription of $250.00.

8. Debt for a "repoed' car of $6,000.00.

9. Federal guaranteed school loan of $20,000.00

You have the following assets:

A. Your house with an equity value of $75,000.00.

B. Your car with an equity value of $2,000.00.

C. Cash of $2,000.00 (held in a bank account.)

D. Furniture and appliances valued at $2,500.00.

E. Roth IRA valued at $10,000.00.

F. Heirloom watch valued at $2,000.00.

ANSWER:

What debts can and cannot be discharged in a Chapter 7 bankruptcy?

What assets can the debtor keep?

Are there any assets that the debtor cannot keep?

What must the debtor allege and prove in order to discharge the student loans?

BE SURE TO CONSIDER THE "WILDCARD " EXEMPTION

Answer 1

The Bankruptcy code lists 19 categories of debt that cannot be discharged everything that does not fall into these categories is discharged. below is the list of most common debts which can be  discharged. however any misconduct or fraud related to this categories makes them non dischargeable

credit card charges

collection agency accounts

medical bills

personal loans from friends and family

utility bills

dishonored checks

auto accidents,business debts, and money owned under lease agreements

tax penalties and unpaid taxes

attorney fees (except child support and alimony awards)

revolving charge accounts ( except extended payment chrages)

social security overpayments.

veterans assistance loans and overpayments.

(2). some assets are completely exempted from bankruptcy process by federal law. exemptions are meant to ensure that you have necessary means to live and work.

IRA are excludes up to $1 million

homestead exemption only if you have owned the house 40 months prior to filling for bankruptcy

house hold goods and appliances are exempted

other than heirloom watch and car and cash which are assets debtor cannot keep

and their is a wild card exemption

(3). In order to discharge student loans in a bankruptcy, the attorney must file an adversary proceeding prior to discharging student loans. the the adversary, the attorney must allege that requiring requiring repayment on the student loan will result in undue hardship agaginst the debtor