Lee Park was an executive for a large corporation. His base salary, which was calculated on a formula tied to the company income, averaged $338,500 over a five-year period. Because of a recent divorce (within the last year), Lee owed his ex-wife $4,350 per month in spousal support. Lee owed back taxes to the IRS of $210,000, which required him to pay $2,800 per month in addition to current tax payments. Lee owed $150,000 in student loan debt. As a result of his divorce, Lee became the sole owner of his home, which was worth $900,000 and had a $600,000 mortgage on it with Bank of the US.

PLEASE ONLY CHOOSE ONE OPTION IN THE BOLD WRITING.

In this case, Lee Park (the debtor) filed a Chapter 11 / 13 / 7 bankruptcy. Under this type of bankruptcy, the debtor is required to file a list of secured and unsecured creditors as well as several other lists, known as . Creditors / Anticipated Income Statements/ Schedules. Lee’s payments to his wife generally Would / Would not be dischargeable in bankruptcy. Student loans generally Are / Are Notdischargeable in bankruptcy.

Under the federal exemptions, Lee normally Would / Would Not be allowed some portion of equity in his home. Because Lee Did / Did Not become the sole owner of the house (with responsibility for the mortgage) within the last three years, Lee Did / Did Not have a federal maximum equity exemption. According to the federal limit in the book, Lee Should / Should Not be able to claim a homestead exemption for the full amount of the equity in his home.

If the median income in Lee’s state for a single person was $47,000, there Would Be / Would Not Be a presumption of bankruptcy abuse by Lee. If Lee had to complete the means test, the Court would deduct Actual / Living / Formula-Based expenses from his monthly disposable income to decide whether Lee could pay any of his Secured / Unsecured debt. In this situation, given Lee’s income, it Is / Is Not likely that he would have his case dismissed or converted to a Chapter 13.

What If the Facts Were Different?

Assume that Lee Park was not an executive but instead was a line worker making $41,000 per year. His spousal support was $1,000 per month and his home was worth $365,000 with a $290,000 mortgage. He did not have student loans and did not owe any back taxes. The state median income was still $47,000.

In this case, Lee’s income Was / Was Not

higher than the state median. Because of this, there Would Not Be/ Would be

a presumption of bankruptcy abuse.

Lee’s equity in his house would be $290,00 / $75,000 / $365,000

. This amount of equity Is / Is Not lower than the federal limit. Lee Would Not/ Would receive the entire amount of equity in his home.