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Reference - Claims to Funds

question 61

Multiple Choice

Reference - Claims to Funds. Paul had a great job as a bank executive. Unfortunately, his bank came under scrutiny by federal regulators and while Paul had done nothing illegal, he ended up being fired. Unfortunately for Paul, he had a number of debts. Among his assets were a house worth $250,000 on which he owed $150,000 to a bank which held a security interest; three vehicles; an expensive watch worth $5,000; and $120,000 in an Individual Retirement Account "IRA". He owed $900 per month in child support to his ex-wife Suzy and was behind on payments in the amount of $1,800. He also owed $2,000 in wages consisting of four months of back pay to Bob who took care of Paul's landscaping needs and swimming pool care. Unable to find a job and believing that he had no other option, Paul filed for Chapter 7 bankruptcy. All debtors angrily demanded payment from liquidation of Paul's assets. Paul, on the other hand, claims that he needs all the above mentioned assets and that he should not have to give up anything. Only federal bankruptcy exemptions apply to Paul's case. Which of the following is true under bankruptcy in regard to Paul's claim to the watch?

Definitions:

Mathematical Mistake

An error made during the process of calculation or measurement, affecting the accuracy of results.

Gross Negligence

A severe lack of care or concern for the safety or lives of others, significantly deviating from the behavior expected of a reasonable person under similar circumstances.

Fraudulent Misrepresentation

The act of intentionally deceiving another party with false information to induce them into a contract.

Bilateral Mistake

An error mutually made by two parties in a contract, potentially rendering the agreement invalid.