To determine which type of bankruptcy the couple in Missouri can file for, we need to follow these steps:
1. Calculate the total annual income after the job loss:
- Original combined annual income: \[tex]$96,730
- Monthly income reduction due to job loss: \$[/tex]2,100
- Annual reduction: \[tex]$2,100 * 12 = \$[/tex]25,200
- New annual income after reduction: \[tex]$96,730 - \$[/tex]25,200 = \[tex]$71,530
2. Compare the new annual income to the Missouri income limit for Chapter 7 bankruptcy for a 4-person household:
- Missouri income limit for a 4-person household: \$[/tex]71,059
- New annual income: \[tex]$71,530
Since \$[/tex]71,530 (the new annual income) is greater than \[tex]$71,059 (the Missouri income limit for a 4-person household), the couple does not qualify for Chapter 7 bankruptcy.
Given this, the couple would need to explore Chapter 13 bankruptcy options.
3. Determine the suitable bankruptcy type:
- Chapter 7 bankruptcy allows individuals to discharge most of their debt if their income is below the state limit.
- Chapter 13 bankruptcy allows individuals to restructure their debt and discharge some of it over a repayment plan.
Since the couple's new annual income (\$[/tex]71,530) exceeds the Missouri limit for Chapter 7 bankruptcy (\$71,059), they do not qualify for Chapter 7 bankruptcy and must consider Chapter 13 bankruptcy.
Thus, the appropriate statement is:
d. They could file for Chapter 13 bankruptcy and discharge some of their debt.
The answer is (d).
