Answered

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 one child. They live in Virginia and have a combined annual income of [tex]$\$[/tex]91,215[tex]$. The couple has a mortgage, a car loan, student loans, and credit card debt. When one of them loses their job, their monthly income is reduced by $[/tex]\[tex]$3,200$[/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
Let's analyze the situation in a step-by-step manner:

1. Initial Income Information:
- The couple's combined annual income is \[tex]$91,215. - One of them loses their job, which means a monthly income reduction of \$[/tex]3,200.

2. Annual Income Reduction Calculation:
- Since the income reduction is monthly, we need to calculate the annual reduction.
- [tex]\[ \text{Annual Income Reduction} = \$3,200 \times 12 = \$38,400 \][/tex]

3. Reduced Annual Income Calculation:
- Subtract the annual income reduction from the initial annual income to find the reduced annual income.
- [tex]\[ \text{Reduced Annual Income} = \$91,215 - \$38,400 = \$52,815 \][/tex]

4. Median Income Comparison:
- The couple has one child, so they are a 3-person family.
- According to the provided table, the median income for a 3-person family in Virginia is \[tex]$74,151. 5. Bankruptcy Qualification: - To qualify for Chapter 7 bankruptcy, the couple's income needs to be below the median income for their family size. In this case, they must compare their reduced income to \$[/tex]74,151.
- [tex]\[ \$52,815 \leq \$74,151 \][/tex]
- Since \[tex]$52,815 is less than \$[/tex]74,151, they qualify for Chapter 7 bankruptcy.

6. Conclusion:
- Based on the reduced income being less than the median income for a 3-person family in Virginia, the couple can file for Chapter 7 bankruptcy. Chapter 7 bankruptcy typically allows for the discharge of all (or most) debt.

Therefore, the correct statement is:

a. They could file for Chapter 7 bankruptcy and discharge all of their debt.