Consider this estate: Assets of $135,000 that include a boat valued at $38,000 subject to a security interest of $60,000.There are tax arrears of $7,000;one secured creditor;and Smith,an unsecured creditor,owed $120,000.Smith will receive $90,000.

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Smith, as an unsecured creditor, would not receive $90,000 because the estate's assets are insufficient to cover the secured debt and tax arrears, leaving nothing for unsecured creditors.

Consider This Estate: Assets of $135,000 That Include a Boat