Martina is a bankrupt student in Ottawa.Her debts exceed $200 000.Of that total amount, $50 000 is owed in student loans.Her assets, in contrast, are worth only $100 000.Included in that total are (i) clothing worth $5000, (ii) household furnishings worth $7000, (iii) an insurance policy worth $20 000, and (iv) a Mercedes worth $75 000.Which of the following statements is most likely to be TRUE?

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Quizplus · Accepted Answer

In a bankruptcy situation, certain assets may be exempt from seizure depending on the jurisdiction. In Ottawa, where Martina resides, a life insurance policy with a cash surrender value of up to $5000 is exempt. Therefore, Martina is entitled to keep the insurance policy worth $20 000. The car and household furnishings would likely be seized to repay the debt, and the clothing value is not relevant. However, it should be noted that bankruptcy laws and exemptions vary by jurisdiction, so it is always best to check with a legal professional in the relevant area. Option A is not true because bankruptcy does not necessarily mean the debtor will be debt-free after the process. Option B is false because the car's value exceeds her total assets' worth. Option D is incorrect because the household furnishings' total value exceeds $5,000. Option E is also incorrect because the clothing's value doesn't matter in this case.

Martina Is a Bankrupt Student in Ottawa