case studies 7

Scenario 1: Bankruptcy
Celia graduated from a prestigious law school two years ago. Celia’s parents did not have the resources to help her pay for college. For the past seven years, Celia accumulated almost $150,000 in debt for student loans for her undergraduate and law degrees.

After graduation, Celia opened her own jury consulting business as a sole proprietor. Her new business was not doing well. Celia earned approximately $35,000 after her business expenses were paid. Remembering her class in bankruptcy from law school, Celia believed that if she filed a voluntary Chapter 7 petition that all of her debts would be discharged and she could start over.

  • Is Celia entitled to file for Chapter 7 bankruptcy? Why or why not?
  • Assume Celia is eligible to file Chapter 7. Will the credit card debt and student loans be discharged? Why or why not?

On May 1, Celia filed for Chapter 7 bankruptcy. At that time and for at least four months prior to that time, she was unable to pay all of her current obligations. On March 15, Celia paid the following expenses: her monthly personal credit card payment, her home mortgage, the rent for her consulting office, and the electric bill for both her business and her home.

  • The trustee in bankruptcy claimed that some of these payments were voidable preferences. Is the trustee correct? If so, which payment(s) is a voidable preference and why?

Scenario 2: Property
Frankie Smith age 12, lived with his mother, Vanessa Smith, in a rental house next to a farm owned by Daphne and Brandon Brown. On the back of the farm property was a small creek that had good fishing, but there were deadly piranha in the waters. Frankie would often sneak onto the farm property to fish. One day, while fishing on the farm, he was bitten by a piranha and severely injured. While running to help her son on the farm property, Vanessa tripped on a wire and broke her leg. The Smiths sue the Browns for their injuries.

  • Explain whether theBrowns owe a duty of care to Frankie and Vanessa.

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