Laws 2325

Kim Huggins

Module 2

                                                                                                                                      12-14-21

Topic Questions:

• The Murphys’ consumer debt includes the following:

• Home mortgage of $92,500 ($993 monthly payment) – owed to First Bank of Capital City
• Vehicle payment of $8,900 ($310 monthly payment) – owed to Friendly Finance Company
• Mastercard credit card debt - $5,000
• Visa credit card debt - $3,000
• Shears department store installment sales contract - $4,592
• Home improvement loan of $35,000 ($406 monthly payment) – owed to Teachers Credit Union in Capital City
• Child support - $400 monthly payment – owed to Sharon Murphy (ex-wife of Nick Murphy)
• Pearl Murphy’s medical bills - $28,000
• Pearl Murphy’s prescriptions - $325 monthly payment

Consumer debt total: $177,717

• At this point when meeting with the Murphy’s to discuss their financial situation, the attorney will conduct the first of the following four steps…
• Information Gathering
• Analyzing
• Counseling
• Drafting

During the information gathering step, the Murphys would meet with either the attorney and/or the paralegal (depending on how the attorney’s firm works) to discuss the following:

1. The Murphys will be asked to provide a list of their creditors.
2. The attorney/paralegal will initiate a review of any conflict of interest.
3. The Murphys, as debtors, will be informed they are required, “within 180 days preceding a bankruptcy filing, to receive a briefing  from  an  approved nonprofit  budget  and  credit-counseling  agency  that outlines the opportunities for credit counseling and a budget analysis.
4. Upon completion of conflict of interest, the Murphys will be asked to complete a questionnaire, which will itemize the following:

• Assets and liabilities
• Information for the statement of financial affairs
• Monthly income statements
• Monthly expenses
  1. The Murphys will also be asked to provide copies of the debtors’ following documents:
• Real estate deeds and mortgages
• Loan agreements
• Security agreements
• Vehicle titles
• Tax returns
• Paystubs or other evidence of payment received from an employer within 60 days prior to bankruptcy filing
• Federal income tax forms from most recent year
• Proof of identity
• Social Security Card

After the Murphys have completed this questionnaire and returned copies of the requested documents, the attorney will analyze the Murphys’ financial situation. The attorney will the meet with the couple to see if they should file for bankruptcy or seek a non-bankruptcy solution. In this case, with the Murphys’ amount of debt, their employment situation, and Ms. Murphy’s Chapter 13 Bankruptcy - Adjustment of Debts of an Individual With Regular Income - would probably be the solution.

Reflection Questions:

1. The primary areas of information this Module 2 assisted me with understanding was the differences between the three different types of claims a creditor can hold. I had heard about these claims by name, but was unfamiliar with what the names stood for, or how each one was different. Now after reading the material, I have a better understanding of how they three claims are different and why these claims need to be separated.
   I also have a better understanding of how the bankruptcy process works. I was familiar with it; however, I was unfamiliar with all the key components and people involved in the process. I had heard the names but was not sure how each person or entity played a role in the bankruptcy process.

The primary entity I was always curious about was a Debt Relief Agency. It was interesting to read how this entity works and what restrictions they are held accountable to. I found this portion of the reading material very interesting to review. Additionally, I never new a person had to own property to file for bankruptcy. That said, if person lived in an apartment and did not have a car, could she/she file for bankruptcy?

2. I would have to say the process of Chapter 7 Bankruptcy would be a social issue when it comes to a business. This last year I was employed with a company that filed for Chapter 7 Bankruptcy and went out of business, primarily due to losing money from the Covid pandemic. As a former employee, I saw how filing for bankruptcy allowed the business to be relieved from its debt. However, I also saw how this decision affected its employees and the loss of their jobs, especially when they needed those jobs most. I know this business needed to find a way to cut their losses, but by doing so a lot of individuals where left unemployed with losses of their own.
3. With each new chapter we are reviewing about bankruptcy, the process is making more sense how it works. I think these last two chapter have really helped me to have a better understanding of bankruptcy. The first two chapters were a little confusing in discussing the distinct types of bankruptcy. However, the discussion of how each person and entity engages in the bankruptcy process has given me a clearer overview. I especially was interested in reading about the alternatives to bankruptcy and how each one of these processes work.