Case Study 1: Bankruptcy
Devon lost his job as a logistics manager earning $65,000 a year when his former company downsized in 2011; however, he found a new job eight months later as a logistics supervisor for a small company in Jacksonville, Florida. Devon took a significant cut in pay and now earns $46,000 a year. Devon is divorced and claims the following debts.
- Home mortgage in Florida $173,000
- Child support $440 monthly
- Credit cards $14,000
- Student loans $24,000
During the last four months of unemployment, Devon did not pay his mortgage and the bank sought to initiate foreclosure proceedings. Devon filed a bankruptcy petition under Chapter 7 of the Bankruptcy Code. Based on federal and state bankruptcy laws, answer the following questions:
- Is Chapter 7 the appropriate bankruptcy provision for Devon’s case?
- If Chapter 7 is not appropriate, provide another option and reasons for your selection.
- Address the status of the debts Devon listed under Chapter 7 and any other provision of bankruptcy you select.