I have posted a fact pattern that will be used for your assignments. The fact pattern is posted in a module titled "William and Diana Riker". Our clients are William and Diana Riker, who need to file bankruptcy to stop their car from being repossessed. (You will learn later in the semester that the filing of bankruptcy stops ("stays") debt collection proceedings).
The first assignment is to prepare a chapter 7 bankruptcy petition - Form 101 - using NextChapter Software. At this point you only need to prepare the petition form, although you are welcome to continue with the fact pattern which will give you a head start on later assignments.
2023 Riker Fact Pattern Page 1 of 3 Cerritos College - Law 106 Spring 2023 Michael W. Binning, Instructor WILLIAM AND DIANA RIKER William and Diana Rikker want to file chapter 7 bankruptcy as soon as possible because Toyota Credit is threatening to repossess their 2021 Toyota Prius. Personal Background. William and Diana have lived at 2385 Arbor Road, Lakewood, California 90712 since July 1, 2020. Prior to this, they lived at 45 Steamer Lane in Sparks, Nevada for 5 years. They rent their home and pay their landlord, Leon Russell, $3,500 per month on a month- to-month lease. They live in their home with their 15-year-old son, Barry. They have cosigned a $7,500 student loan from California State University System with 19-year-old daughter, Olivia, who is a student at Cal State Long Beach where she lives in an on-campus dormitory. Employment. William plays the trumpet, and has been employed by Federation Recordings for three years as a full-time session musician. He receives an annual salary of $72,000 - $6,000 per month. Diana is currently employed as an assistant manager at O’Donnell’s Ice Cream and receives a monthly salary of $2,000. She has been working at O’Donnell’s for three months. For three years before that, she was in a partnership with Miles O’Brien that bought and sold coffee beans at wholesale. The name of the partnership was “O-D Coffee Co.” O-D Coffee Co. went out of business on July 15, 2022 for lack of sales, and had no assets when it closed. Diana received no salary from O-D Coffee Co during 2020, 2021 or 2022. Accounts. The Rikers have three accounts: (1) a checking account at Bank of America with a $2,250 balance; (2) a savings accounts at Long Beach Schools Federal Credit Union with a $2,850 balance, and (3) Diana ’s IRA account at Bank of America with a balance of $275,000. Other Assets. In addition to their accounts, the Rikers own the following: (1) Household goods and furniture with a “garage sale” value of $5,000. (2) 2021 Toyota Prius with a trade in value of $16,000. (3) Personal wardrobes with a “garage sale” value of $2,000. (4) William’s used trumpet that he recently bought for $2,000. Page 2 of 3 (5) Fender Telecaster guitar signed by Steve Winwood valued at $5,000. William owned this before they were married, and it is his separate property. (6) $3,000 in cash that they keep in a safe in their home. Creditors with Lawsuits. There were two lawsuits against the Rikers in the past year that ended up with judgments against them. (1) The Almond Bros. v. William Riker, Case No. 21-17634 (judgment for $175,500 for The Almond Bros.), and (2) Ferengi Finance v. Diana Riker, Case No. 21-14000 (judgment for $13,250 for Ferengi Finance). Both lawsuits were in the Los Angeles County Superior Court, Norwalk Branch and the judgments were entered in November 2022. There is one pending lawsuit against William Riker – Brooks Bros. v. Riker, Case No. 22- 16532. The suit is in the Los Angeles County Superior Court, Norwalk Branch. Brooks Bros. is seeking $7,500 and William disputes the amount due. Other creditors. The Rikers owe $7,500 in income taxes to the IRS for 2021. They are not entitled to any tax refunds (the IRS would withhold any tax refund and apply it against the debt). They owe Toyota Credit $17,000 secured by the 2021 Toyota Prius. They pay $575 per month, are 4 payments behind, and have 30 payments remaining. All their household goods and furniture are collateral for $10,000 they borrowed from Helping Hand Acceptance Corporation (HHAC) on December 15, 2021; the Rikers still owe $10,000 to HHAC. The debt to HHAC was not incurred to purchase the furniture; instead, they gave HHAC a lien on their household goods and furniture as security for the loan. The Rikers have the following credit card debts: Fed MasterCard $3,000 American Express Green Card $5,000 Macy’s $3,000 Wal-Mart $1,500 Income and Expenses. William’s gross monthly income is $6,000; Diana’s gross monthly income is $2,000. They have provided us with the following approximate monthly expenses: Rent $3,500 Utilities (gas and electric) $ 175 Telephone/cell phone $ 150 Cable TV $ 75 Food $ 600 Page 3 of 3 Clothing $ 100 Laundry $ 30 Transportation $ 300 Insurance – Auto $ 150 Health $ 200 Renter’s $ 50 Car Payment $ 575 Internet network fees $ 42 Donation to church $ 500 Daughter’s college tuition $1,000 William has $1,000 per month withheld for taxes, and Diana has $300 per month withheld for taxes. Other issues. On December 31, 2022 Diana transferred title to an empty lot in Modesto to an old friend, Ben Sisko, for no consideration (in plain English - she gave the lot to him). Ben had given Diana the money to buy the lot and Diana always considered Ben be the real owner. The lot is valued at most at $10,000 because it has an old leaking underground gas tank; in fact, the lot is probably worthless because the cost to clean up the property is likely to be more than the amount that the property would be worth in clean condition. The Rikers have seen no attorneys in the past year other than your firm. They will be paying you a $2,500 fee for their Chapter 7 filing.