Bankruptcy, student loans and sole proprietorships
Answer the questions in Scenario 1 and then select ONE of
the other two Scenarios. It is not necessary to copy the case study into the
paper. Label the beginning of each case study with the number you selected
(e.g. Scenario 1). Cite your sources in APA format on a separate page
Scenario 1: Bankruptcy
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?
Scenario 2: Property
Frankie Smith age 12, lived with his mother, Vanessa Smith,
in a rental house next to a farm owned by Daphne and Brandon Brown. On the back
of the farm property was a small creek that had good fishing, but there were
deadly piranha in the waters. Frankie would often sneak onto the farm property
to fish. One day, while fishing on the farm, he was bitten by a piranha and
severely injured. While running to help her son on the farm property, Vanessa
tripped on a wire and broke her leg. The Smiths sued the Browns for their
injuries.
– Explain whether the Browns owe a duty of care to Frankie
and Vanessa.
Scenario 3: Insurance
When Beth Simpson applied for a $250,000 life insurance
policy with Meridian Insurance Co., she stated on the application that she had
not seen a physician within the last three years. She, in fact, had seen a
physician regularly. In fact, one month prior to the application Beth had seen
her physician, who diagnosed her with fibromyalgia. Her response to the drug
use question was that she was not a user of drugs, but, in fact, she regularly
smoked marijuana because it eased the symptom of fibromyalgia. Beth died within
the two-year contestability period and Meridian refused to pay. The beneficiary
to the policy, Philip Simpson, contends all premiums were paid in full and any
misstatements were unintentional. Meridian contends that if the deceased had
given the facts, the policy would not have been issued.
– Based upon a discussion of your understanding of insurance
law principles, should Philip Simpson recover on this policy? Why or why not?
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