Asked by Oguche Agnebb on Apr 24, 2024
Verified
Claims to Funds.Paul had a great job as a bank executive.Unfortunately,his bank came under scrutiny by federal regulators,and although Paul had done nothing illegal,he ended up being fired.Unfortunately for Paul,he had a number of debts.Among his assets were a house worth $250,000 on which he owed $150,000 to a bank that held a security interest; three vehicles; an expensive watch worth $5,000; and $120,000 in an Individual Retirement Account (IRA) .He owed $900 per month in child support to his ex-wife Suzy and was behind on payments in the amount of $1,800.He also owed $2,000 in wages consisting of four months of back pay to Bob who took care of Paul's landscaping needs and swimming pool care.Unable to find a job and believing that he had no other option,Paul filed for Chapter 7 bankruptcy.All creditors angrily demanded payment from liquidation of Paul's assets.Paul,on the other hand,claims that he needs all the above-mentioned assets and that he should not have to give up anything.Only federal bankruptcy exemptions apply to Paul's case.Which of the following is true regarding Paul's claim to his vehicles?
A) All vehicles will be sold,with the entire proceeds being used to satisfy claims of creditors.
B) All vehicles will remain Paul's property because vehicles are automatically exempt.
C) One vehicle with the least value will remain Paul's property as an exemption,and the others will be sold to satisfy the claims of creditors.
D) An interest in a motor vehicle up to $3,675 is exempt.
E) An interest in a motor vehicle up to $5,000 is exempt.
Motor Vehicle Exemption
A provision in bankruptcy law that allows an individual to keep a vehicle up to a certain value as exempt from seizure by creditors.
Federal Bankruptcy Exemptions
Provisions allowing an individual to exempt certain types of property from the bankruptcy estate, thus protecting them from being seized to pay off creditors under federal bankruptcy law.
Liquidation
The process of closing a business and distributing its assets to claimants, typically occurring when a company is insolvent.
- Gain insight into the waivers permitted under federal bankruptcy regulations.
- Gain knowledge about the hierarchy of claims and the dispersal of property in the context of Chapter 7 bankruptcy.
Verified Answer
RP
Regina Puma-atMay 02, 2024
Final Answer :
D
Explanation :
Interest in a motor vehicle (not necessarily an automobile)up to $3,675 is exempt.
Learning Objectives
- Gain insight into the waivers permitted under federal bankruptcy regulations.
- Gain knowledge about the hierarchy of claims and the dispersal of property in the context of Chapter 7 bankruptcy.