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Bankruptcy Essay

1234 words - 5 pages

Bankruptcy Assignment
Warren and Westbrook, The Law of Debtors and Creditors

Sara Israelyan
Spring Semester 2011
University of Minnesota Law School

March, 2011

Warren and Westbrook, The Law of Debtors and Creditors
Problems
8.1 Absent bankruptcy, what can Harv and Lois protect as the creditors begin to move in? What if they filed a Chapter 7? What could they protect if they lived in Cheyenne, Wyoming?
When considering bankruptcy, pre-bankruptcy planning is one of the most important steps for Harv and Lois. In a Chapter 7 bankruptcy, the TIB will take all non-exempt valuable property that he can sell to distribute the money to the creditors. The main idea behind the Chapter ...view middle of the document...

  In the states that require debtors to utilize the state exemptions, there are still some federal exemptions which are available to debtors.
The following items will be exempted under Texas and Wyoming law:
| | Texas | | Wyoming | |
Item | Value | Exempt? | Provision | Exempt? | Provision |
Household furniture & Appliances | $ 8,000 | Yes | 42.002(a)(1) | Yes | 1-20-106(a)(iii) |
Clothing | $ 2,000 | Yes | 42.002(a)(5) | Yes | 1-20-105 |
Law books | $ 2,400 | Yes | 42.002(a)(4) | Yes | 1-20-106(a)(i) |
Moped | $ 800 | Yes | 42.002(a)(9) | Yes | 1-20-106(a)(iv) |
1970 Convertible | $ 500 | No | 42.002(a)(9) | Yes | 1-20-106(a)(iv) |
Cash Value on L’s insurance | $ 2,000 | Yes | 1108.0531 | Yes | 1-20-110(a)(i) |
Wedding ring | $ 1,000 | Yes | 42.002(a)(6) | It depends | 1-20-105 |
Computer | $ 1,200 | Yes | 42.002(a)(4) | It depends | 1-20-106(a)(iii) |
100 shares | $ 5,000 | No | 42.0021 | Yes | 1-20-106(a)(b) |
Joint checking account | $ 400 | No | | No | |
Computer set up | $ 7,500 | Yes | 42.002(a)(1) | No | 1-20-106(a)(iii) |
Friendship sloop | $ 6,000 | Yes | 42.002(a)(4) | No | 1-20-106(a)(iv) |
Wheelchair | $ 18,000 | Yes | 42.002(a)(9) | No | 1-20-106(a)(iv) |
Fluffy | $ 200 | Yes | 42.002(a)(11) | Yes | |
Soccer ball | $ 2 | Yes | 42.002(a)(8) | Yes | |
Total | $ | | | | |

8.2. If Suzan decides to declare bankruptcy, what can she keep? If Suzan and Mr. B had been living in Odessa, Texas, would the outcome be the same?
Generally, under both Wyoming and Texas law, life insurance benefits are exempt from bankruptcy proceedings. Under Wyoming law, Section 26-15-129 applies to this matter.
Assuming that Suzan (widow) is the legal beneficiary of the insurance policy after her husband’s death (i.e. a policy is payable to the person other than the insured if and to the extent that a facility-of-payment clause or similar clause in the policy permits the insurer to discharge its obligation after the death of the individual insured by paying the death benefits to a person as permitted by the clause), an unlimited amount of the insurance policy (i.e. $ 1 million) will be exempted.
Under Texas law, section 1108.0531(a)(1) applies. This section applies to any benefits to be provided to a beneficiary (Suzan), an insurance policy issued by a life. There is no limit on the amount (i.e. $ 1 million).

Suzan’s double wide trailer will also be exempted under both Wyoming (section 1-20-104 which states that a house trailer or other movable home, the value of which does not exceed $...

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