Asked by Rachel Sawyer on Apr 29, 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 was a house worth $250,000 on which he owed $150,000 to a bank,which 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 forms Paul's bankruptcy estate?
A) All his prepetition assets
B) Only the jewelry and the Individual Retirement Account
C) Only the nonexempt assets
D) Only the personal goods lacking a security interest
E) Only the real estate
Bankruptcy Estate
All legal and equitable interests of the debtor in property at the time of the bankruptcy filing, as defined by bankruptcy law.
Prepetition Assets
Assets that a debtor possesses before filing for bankruptcy protection, which are generally subject to evaluation and potentially used to satisfy creditor claims in the bankruptcy process.
Federal Bankruptcy Exemptions
Legal provisions that allow individuals declaring bankruptcy to retain a portion of their property from creditors.
- Acquire knowledge about the immunities outlined in federal bankruptcy law.
- Learn the sequence in which claims are addressed and how assets from the estate are distributed during Chapter 7 bankruptcy proceedings.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
A
Explanation :
Once the petition is filed,all the debtor's prepetition assets form the bankruptcy estate.
Learning Objectives
- Acquire knowledge about the immunities outlined in federal bankruptcy law.
- Learn the sequence in which claims are addressed and how assets from the estate are distributed during Chapter 7 bankruptcy proceedings.