Answer the 4 questions passed on the information given. Then discuss your a position on the
Debate This topic.
Debate This: Personal Bankruptcy
From Business Law II
Chapter 26 p. 631
Three months ago, Janet Harts husband of twenty years died of cancer. Although he had
medical insurance, he left Janet with outstanding medical bills of more than $50,000. Janet has
worked at the local library for the past ten years, earning $1,500 per month. Since her husbands
death, Janet also has received $1,500 in Social Security benefits and $1,100 in life insurance
proceeds every month, giving her a monthly income of $4,100. After she pays the mortgage
payment of $1,500 and the amounts due on other debts each month, Janet barely has enough left
over to buy groceries for her family (she has two teenage daughters at home). She decides to file
for Chapter 7 bankruptcy, hoping for a fresh start. Using the information provided in the chapter,
answer the following questions.
1. Under the Bankruptcy Code after the reform act, what must Janet do before filing a
petition for relief under Chapter 7?
2. How much time does Janet have after filing the bankruptcy petition to submit the
required sched-ules? What happens if Janet does not meet the deadline?
3. Assume that Janet files a petition under Chapter 7. Further assume that the median family
income in the state in which Janet lives is $49,300. What steps would a court take to
determine whether Janets petition is presumed to be substantial abuse under the means
test?

4. Suppose the court determines that no presumption of substantial abuse applies in Janets
case. Nevertheless, the court finds that Janet does have the ability to pay at least a portion
of the medical bills out of her disposable income. What would the court likely order in
that situation?

Debate This:
Rather than being allowed to file Chapter 7 bankruptcy petitions, individuals and couples should
always be forced to make an effort to pay off their debts through Chapter 13