Essay 7,9,10

Question #1

First point

The three main purposes of federal bankruptcy code are:

· To preserve debtor’s property so much.

· To fairly divide debtor’s assets between the debtor and creditors.

· To divide fairly the creditor’s share of the assets amongst themselves.

These goals will impact Max and his creditors as follows:

· A development plan will be developed on how Max will repay his creditors.

· Max’s assets will be divided fairly to his creditors.

· The creditors’ share from Max assets will be divided fairly according to how each creditor lent Max.

· Max after filing bankruptcy, his bankruptcy assets will be sold to pay his creditors and in the future the creditors will not bother on his earnings.

Second Point

According to my opinion, bankruptcy code is a good way to protect both the creditor and debtor in order to make people from animosity or creating unwanted deaths due to a debtor failing to settle his debt.

Advantages

· Debtor will still continue earning in the future after filing bankruptcy.

· Creditors will still get some debtor’s assets even when the debtor files bankruptcy.

· Poverty levels will not be evident because the debtor will still have a chance to run another business even after filing bankruptcy where the creditors will have no right on the debtor’s earnings in the future.

Disadvantages

· Creditors experience losses because they do not regain all their assets or money they had lent when the debtor files bankruptcy.

· Debtor may face a challenge in future when he or she files bankruptcy because he or she cannot seek to borrow loans in financial institutions like bank to run another business.

Question #2

First Point

Leah’s plan of payment can only be confirmed or rejected by bankruptcy court.

Second Point

The bankruptcy court to confirm Leah’s payment plan will consider the following factors:

· The feasibility of the plan and whether she will be able to make the promised payments.

· The plan should not extend 3 years without significant reason and should not last longer than 5 years if a good reason is given after 3 years.

· Does the plan provide Leah to pay her creditors in full and if not all her disposable income for the next 5 years must go to her creditors.

· Consider whether Leah is acting in good faith through making a reasonable effort to obligations payment.

Third Point

Advantages

· Leah will be able to make a repayment plan and the court will protect her property from being taken by creditors.

· Leah will have a good range of time i.e. maximum of 5 years to pay her creditors according to her earnings.

· Leah’s reasonable efforts will help her to pay the creditors without much pressure.

Disadvantages

· Leah might pretend to act in good faith but finally fail to commit to the obligation payment.

· 5 years might end without Leah settling all the debt with her creditors.

Question #3

First Point

The ways that an insurer can violate a covenant are:

· A valid claim payment refusal.

· Inducing an individual to buy a policy in fraudulently way.

· Refusal in accepting a reasonable settlement offer which has been made to an insured.

Second Point

· A valid claim payment refusal. Fact situation: Peter Stephen experienced electricity fault in his business building leading to fire outbreak which burnt all of his assets. He reported this to his insurance company, Madison. Madison appraiser determined the assets were damaged beyond repair and recommended the company to pay him $40000 the value for those assets. Instead, the company decided to repair the assets spending $25000 which never came into good condition. Peter kept claiming the assets were not in good condition and some were not presented because they were burnt completely but the company until Peter’s contact expired which made him not succeeding to be paid by the company in full.

· Inducing an individual to buy a policy in fraudulently way. Fact situation: Donald John was induced to buy property policy lasting for 2 years valued at $20000. After 1 year the policy expired and Donald’s money was supposed to last for 2 years and when he claimed for refund, he was not paid back.

· Refusal in accepting a reasonable settlement offer which has been made to an insured. Fact situation: Elizabeth has an automobile insurance policy valued at $50000. She experienced an accident using her van and injured Jackson. Jackson sues her $70000 but the insurance company defending her against Jackson’s claim could only offer $50000 which was for the risk. Jackson decides to settle for $50000 but the insurance company refuses to comply with that.

Third Point

My friend had a deal with an insurer where he was insured on automobile insurance policy which was to last for three years. The situation was not challenging because as per the covenant’s agreement, the insurance company did not breach it. This was evident when my friend got an accident and the whole car was beyond repair. When he reported the issue to his insurance company, the company sent its appraiser and claimed that the car was beyond repair. Another appraiser was sent to investigate and give an analysis and the appraiser still recorded that the car was beyond repair. The insurance company settled him with a new car of the same model and value because the amount of the risk as indicated in the policy was enough to settle it.