The following attachment need to be turned into a client letter only .Running Head: Chapter 7 Bankruptcy
Letter to Clem Client advising him on whether he is eligible for Chapter 7 bankruptcy
Evelyn Wiggins
December 11, 2016
Running Head: Chapter 7 Bankruptcy
In accordance to the facts given of Mr. Clem Client, it is true to assert that he qualifies for
Chapter 7 Bankruptcy.
To begin with, a “means test” is used to determining whether one‘s income is not enough for him
to file for Chapter 7 bankruptcy. In our case scenario, Mr. Clem Client has low income; he earn
$47,000 per years, he has credit debts totaling $12,000, he own no real estate and he has court
judgments totaling $8,750. He also has a car loan of $5,700 (Bris, 2013).
Therefore, Mr. Clem is fully eligible to filing for Chapter 7 bankruptcy since he has many
expenses to settle.
It is important to note that when he will apply for the Chapter 7 bankruptcy, his monthly
expenses will be deducted from his “current monthly income” in order to arriving to his
disposable income (monthly). However, if his disposable income will be significantly higher,
Clem will not be allowed to use the Chapter bankruptcy (Bris, 2013).
Further, Mr. Clem will only file Chapter 7 bankruptcy with the consumer debt and not business
debt. In order for him to be authorized to take the mean test, he must determine or deduce
whether his income is equal or less than median income in his respective state. If it is deduced
that he earns higher income, it is important for him to figure out if he has sufficient left over
having made expenses subtraction.
Running Head: Chapter 7 Bankruptcy
Do You Qualify for Chapter 7 Bankruptcy? Retrieved from:
Bris, A., Welch, I., & Zhu, N. (2013). The costs of bankruptcy: Chapter 7 liquidation versus
Chapter 11 reorganization. The Journal of Finance, 61(3), 1253-1303.

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