Question

Mary went for a consultation about a surgical procedure. When Robert met with her, he wore a name tag that identified him as a doctor and was addressed as “doctor” by the nurse. Robert then examined Marty, touching her stomach and showing her where the incision would be made. Robert was not a doctor, he was the office manager. Although the doctor actually performed the surgery on Mary, Robert was present. The doctor left a tube in Mary’s body at the site of the incision. A jury awarded Mary $275,000 in damages in a suit against Robert.

Robert borrowed $20,500 from a federal student loan program to finance his office management school. His salary at the doctor’s office was $12,500. Robert still lived at home with his mother, free of charge. After setting aside $50 a month in savings that included $233 for a new car and $50 for tools from Home Depot, his disposable income was $125 per month.

Robert wants to file a Chapter 7 bankruptcy petition. Why is Chapter 7 preferable in his situation to Chapter 11 or Chapter 13? Is this judgment dischargeable in bankruptcy court? Robert wants to ask the bankruptcy court to discharge the debts owed for his education. Should the court do so?

Answer 1

Chapter 7 bankruptcy his preferable in Robert’s case as it is a liquidation bankruptcy or a straight bankruptcy. Chapter 7 will allow Robert to come out without any future obligations on his discharged debts. Robert’s exempt property will not be touched, only his nonexempt property will be used to distribute the proceeds.

Yes, the judgement is dischargeable in the bankruptcy court. This is because if the debt is dischargeable in a chapter 7 bankruptcy then filing for bankruptcy will wipe out the creditor’s ability to collect. This will, however, create a lien on Robert’s property and the lien will not go away automatically.

No, the court should not discharge the debts owed for his education. This is because debts owed for education (i.e. primarily student loans) are non-dischargeable debts.

answered by: anonymous