Legal Environment

the reading is in the attached file.


YOU BE THE JUDGE WRITING PROBLEM To finance her education at DeVry Institute of Technology, Lydia borrowed $20,000 from a private lender. After graduation, she could not find a job in her field, so she went to work as a clerk at an annual salary of $12,500. Lydia and her daughter lived with her parents free of charge. After setting aside $50 a month in savings and paying bills that included $233 for a new car and $50 for jewelry, her disposable income was $125 per month. Lydia asked the bankruptcy court to discharge her debt. Would paying this debt impose an undue hardship on her? Argument for Lydia: Although she saves money by living with her parents, she would still have to spend every single penny of her disposable income for nearly 15 years to pay back her $20,000 debt. That would be an undue hardship. Argument for the Creditor: Paying back this debt would not constitute undue hardship because Lydia could easily reduce her expenses. She should not be buying new cars and jewelry. Nor does she have the right to save money when she has outstanding debt.

After filing for bankruptcy, Yvonne Brown sought permission of the court to reaffirm a $6,000 debt to her credit union. The debt was unsecured, and she was under no obligation to pay it. The credit union had published the following notice in its newsletter: If you are thinking about filing bankruptcy, THINK about the long-term implications. This action, filing bankruptcy, closes the door on TOMORROW. Having no credit means no ability to purchase cars, houses, credit cards. Look into the future—no loans for the education of your children. Should the court approve Brown’s reaffirmation?

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