Taylor Has the Following Assets and Liabilities Suppose That Taylor Receives a $10,000 Bonus from Her Employer

question 39

Multiple Choice

Taylor has the following assets and liabilities: $$\begin{array} { l l r } \text { Two cars } & \$ 15,000 \\\text { House } & \$ 400,000 \\\text { Mortgage } & \$ 300,000 \\\text { Cash } & \$ 1,000 \\\text { Car loans } & \$ 5,000 \\\text { Checking account balance } & \$ 3,000 \\\text { Credit card balance } & \$ 3,000\end{array}$$ Suppose that Taylor receives a $10,000 bonus from her employer. If she puts that money toward her mortgage, her wealth would ______; if she puts that money in her checking account, her wealth would ______.

• A) increase to $121,000; decrease to $101,000
• B) increase to $115,000; decrease to $95,000
• C) increase to $121,000; increase to $121,000
• D) increase to $115,000; increase to $115,000

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Definitions:

Order for Relief

A court order in bankruptcy proceedings that gives the petitioner protection from creditors and approves the commencement of bankruptcy processes.

Chapter 13

A type of bankruptcy that allows individuals earning a regular income to create a plan to repay all or part of their debts.

Payment Period

The duration of time during which a debtor is obligated to make a payment to a creditor.

Bankruptcy Code

The body of federal law that governs the process of bankruptcy in the United States, allowing individuals or entities in financial distress to discharge or reorganize their debts.