Consider this estate: Assets of $135,000,which includes a boat valued at $38,000 subject to a security interest of $60,000.The government is owed tax arrears of $7,000,and Smith an unsecured creditor is 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 minus liabilities (including the secured debt on the boat) do not cover his claim. The boat's security interest exceeds its value, leaving less for unsecured creditors.

Consider This Estate: Assets of $135,000,which Includes a Boat Valued