Question

Jon and Susan Bogren filed for voluntary bankruptcy under Chapter 7 and qualified by passing the means test. They own one car outright that has a value of $3,000, and they owe $10,000 to the bank for their second car. Their bankruptcy action will cause them to incur attorney’s fees, trustee fees, and court costs. Jon owes alimony and child support to his former wife and children. Jon and Susan also owe income taxes and penalties from 2015, and Susan owes $35,000 in student loans. Is any property exempt? Are all of the debts dischargeable in bankruptcy? If not, indicate which ones are not dischargeable. List the priority in which the creditors will be paid.

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Answer 1

1.Under Chapter 7 of Bankruptcy rule properties such as clothing furniture and car is exempt from discharge.
Hence here the car owned by Jon and Susan is exempt.

2.All debts are dischargeable except :
a)Income tax and penalties owned by susan
b)Alimony and child support owed by Jon and
c)Student loan of $35000 owed by Susan is not dischargeable unless he convince the court for the same.
These three debts can not be discharged and will stay as debt with Jon and Susan.

3.Priority of payment to creditors
i)First of all the COURT will be paid its court fees.
ii)Next the bank loan of $10000 will be paid off.
iii) Next the unsecured creditors will be paid which is child support and alimony owed by Jon to his wife and children and student loans though this will remain with Jon and Susan if any balances are still reamining.
iv)Next the other charges such as attorney fees,trustee fees will be paid.
v)Last income tax and penalties will be paid.