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Use the following table to help answer the question below.

\begin{tabular}{|c|c|c|c|c|}
\hline State & Single-Earner & 2-Person & 3-Person & 4-Person \\
\hline Florida & [tex]$\$[/tex] 41,226[tex]$ & $[/tex]\[tex]$ 52,259$[/tex] & [tex]$\$[/tex] 58,574[tex]$ & $[/tex]\[tex]$ 69,009$[/tex] \\
\hline Georgia & [tex]$\$[/tex] 40,691[tex]$ & $[/tex]\[tex]$ 55,258$[/tex] & [tex]$\$[/tex] 61,104[tex]$ & $[/tex]\[tex]$ 68,502$[/tex] \\
\hline Missouri & [tex]$\$[/tex] 39,645[tex]$ & $[/tex]\[tex]$ 51,568$[/tex] & [tex]$\$[/tex] 60,371[tex]$ & $[/tex]\[tex]$ 71,059$[/tex] \\
\hline Texas & [tex]$\$[/tex] 38,940[tex]$ & $[/tex]\[tex]$ 55,859$[/tex] & [tex]$\$[/tex] 59,222[tex]$ & $[/tex]\[tex]$ 66,381$[/tex] \\
\hline Virginia & [tex]$\$[/tex] 48,362[tex]$ & $[/tex]\[tex]$ 65,122$[/tex] & [tex]$\$[/tex] 74,151[tex]$ & $[/tex]\[tex]$ 85,939$[/tex] \\
\hline
\end{tabular}

A couple has two children. They live in Missouri and have a combined annual income of [tex]$\$[/tex]96,730[tex]$. The couple has a mortgage, a car loan, student loans, and credit card debt. When one of them loses employment, their monthly income is reduced by $[/tex]\[tex]$2,100$[/tex]. If they felt the need to file for bankruptcy, which of the following statements is true?

a. They could file for Chapter 7 bankruptcy and discharge all of their debt.
b. They could file for Chapter 7 bankruptcy and discharge most of their debt.
c. They could file for Chapter 13 bankruptcy and discharge all of their debt.
d. They could file for Chapter 13 bankruptcy and discharge some of their debt.



Answer :

GinnyAnswer
To determine which type of bankruptcy the couple in Missouri can file for, we need to follow these steps:

1. Calculate the total annual income after the job loss:
- Original combined annual income: \[tex]$96,730 - Monthly income reduction due to job loss: \$[/tex]2,100
- Annual reduction: \[tex]$2,100 * 12 = \$[/tex]25,200
- New annual income after reduction: \[tex]$96,730 - \$[/tex]25,200 = \[tex]$71,530 2. Compare the new annual income to the Missouri income limit for Chapter 7 bankruptcy for a 4-person household: - Missouri income limit for a 4-person household: \$[/tex]71,059
- New annual income: \[tex]$71,530 Since \$[/tex]71,530 (the new annual income) is greater than \[tex]$71,059 (the Missouri income limit for a 4-person household), the couple does not qualify for Chapter 7 bankruptcy. Given this, the couple would need to explore Chapter 13 bankruptcy options. 3. Determine the suitable bankruptcy type: - Chapter 7 bankruptcy allows individuals to discharge most of their debt if their income is below the state limit. - Chapter 13 bankruptcy allows individuals to restructure their debt and discharge some of it over a repayment plan. Since the couple's new annual income (\$[/tex]71,530) exceeds the Missouri limit for Chapter 7 bankruptcy (\$71,059), they do not qualify for Chapter 7 bankruptcy and must consider Chapter 13 bankruptcy.

Thus, the appropriate statement is:
d. They could file for Chapter 13 bankruptcy and discharge some of their debt.

The answer is (d).

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