Chapter 15, Problem 1RE

Summary Introduction

Case summary:JH’s husband who was twenty years old died of cancer. She has a pending medical bill of $50,000 from her husband, a mortgage payment of $1500, and other debts. She has been working in a library for ten years earning $1500 per month and receives $1500 in social security. She also receives $1100 in life insurance after her husband's death. She has to clear the dues and there is hardly any money left for groceries. JH decides to file for chapter 7 bankruptcy.

To find: The steps to be taken by JH before filing the bankruptcy application under section 7.

Explanation of Solution

The person, JH is under heavy debt as her husband died leaving behind a medical bill of $50,000. She can file for voluntary bankruptcy to get rid of her debts. Voluntary bankruptcy is a legal process by which an individual can get relief from their debts. The voluntary bankruptcy provides for liquidation and distribution wherein most or all debts are discharged. But according to the 2005 bankruptcy reform act, a person before filing a petition in bankruptcy must be counseled with an individual or a group belonging to a non-profit agency which is called credit counseling. The credit counseling is given within the 180 days period prior to filing. The person, JH must obtain a certificate proving to have received counseling from an approved nonprofit agency, before filing for Chapter 7 bankruptcy.