Edith files a Chapter 7 petition in bankruptcy.She owns the following property: (1)an automobile valued at $1,000; (2)a homestead valued at $75,000,on which First Bank holds a mortgage of $50,000; (3)personal jewelry valued at $1,100;and (4)monthly disability payments of $1,000.Assuming Edith elects to use the exemptions listed in the Bankruptcy Code,what property may Edith keep?

Question

Quizplus · Accepted Answer

Under the Bankruptcy Code, Edith is allowed to claim exemptions to protect certain assets from being sold by the bankruptcy trustee to pay off her creditors. In this scenario, Edith may keep the disability payments, the automobile (since it is worth less than the applicable exemption amount), and at least some of the equity in her homestead (which is protected by the homestead exemption). Additionally, she may keep the personal jewelry (also protected by an exemption). Therefore, choice C is correct.

Edith Files a Chapter 7 Petition in Bankruptcy