Question

James Smith had a successful auto repair business. There has been a downturn in business and he is unable to pay his creditors. James is also divorced from his wife and is paying alimony to her and child support for their two children. His possessions/assets are his home; vehicle at $5,000 Don't let in tools of his trade at $7,500; personal jewelry at $6,800: personal household furnishings valued at $10,000; an un-matured life insurance at $25,000. James also serves as the Chief Counsellor for Local Government. The amount owed to his creditors is $19,500. James wants to know how he can best resolve his issues without being left penniless. Also advise James as to what process his creditors will have to go through in order to have him declared bankrupt. (25 points)

Answer 1

James can resolve this issues and not be left penniless by doing the following:

• he can sell some of the assets which are not a must have .because James is owing his creditors $19,500 he can dispose personal jewelry to pay some of his creditors because his personal jewel amount to $6,800.
• James can also terminate his life insurance and pay the creditors because the insurance is worth $25,000 and in life insurance Act if one terminates his life insurance cover is given the lump sum amount which he paid or that he has already paid.
• Because James is working in a government organisation he can as well apply for a loan to pay the creditors and left paying the bank because loans are paid in installment.

There are steps which the creditors must follow in order to make James declared bankrupt and the steps include:

• Taking action before making James declared bankrupt-before the creditors can apply to the court to make one declared bankrupt they have to show that they have made legal actions to make one pay their money.
• bankruptcy petition is another step or process that the creditors has to do before making James declared bankrupts can find legal advice to help him put his case together.this can him him get legal aid.
• bankruptcy hearing-after filling the case the bankruptcy hearing will be before a judge .James will be given a notice of hearing and should attend taking an appropriate evidence if he is opposing the bankruptcy order.
• bankruptcy order made-the court will declare James bankrupt if it finds out that :what the creditors said is true,the debt has not been paid,no agreement has been made to pay the debt,if the defendant has no defense against making of bankrupt order.