Scenario 1Bankruptcy

Kitty, a bookkeeper for Jabil Circuit, filed a petition in bankruptcy under Chapter 7, seeking to discharge $65,000 in credit-card debts and $45,000 in student loans. Kitty's husband died and left her with two children, Daniel, who attended college, and Darius, who was 14 years old. According to Kitty, Darius was a star football player who practiced ten to fifteen hours a week and made all-star for two years. Kitty's petition showed monthly income of $4840 and expenses of $5,050. The expenses included annual football expenses of $6,500. The expenses did not include college costs for Daniel, or airfare for his upcoming summer trip to Budapest, and other items. The trustee allowed monthly expenses of $4,200, with nothing allocated for football expenses and requested that the court dismiss the petition.

• If Kitty qualified for Chapter 7, which debts would be discharged? Which debts would not be discharged? Why?
• Using the median income from your Ohio, does Kitty qualify for Chapter 7? Remember to count the number of people in the household as 3.
• If Kitty earns too much money, what are the next steps?
• Should the court grant the trustee's request? Does Kitty have other options if the Chapter 7 petition is dismissed?
• Explain your answers and support them with relevant scholarly sources.