Asked by Mehki Welch on Jul 09, 2024
Verified
Fritz is a professional painter and owns a truck worth $10,000 and tools worth $3,000.He owns a very modest house worth $17,000.He has numerous unsecured debts totaling $500,000 and considers filing for bankruptcy.Discuss the bankruptcy alternatives for Fritz.
Unsecured Debts
Financial obligations that do not have collateral backing, meaning the lender has no claim on the borrower's assets if the debt is not paid.
Professional Painter
An individual skilled and employed in applying paint or other coatings to surfaces as a form of protection or decoration.
Bankruptcy Alternatives
Various options or strategies, such as debt consolidation or negotiation, available to individuals or businesses to avoid filing for bankruptcy.
- Examine the ramifications and results of declaring various bankruptcy chapters from the viewpoints of both the debtor and the creditor.
- Understand the strategic aspects involved in selecting a bankruptcy chapter.
Verified Answer
RM
Riley MarshallJul 12, 2024
Final Answer :
If Fritz files for Chapter 7 liquidation and uses the federal exempt property list,he can only exclude $1,850 in professional tools and $2,950 equity in a motor vehicle.In addition,there is a $18,450 homestead exemption that will protect his house from creditors.Unless Fritz lives in a state where he may use more generous state exempt property laws,he stands to lose most of his professional property.Another option would be a Chapter 11 reorganization where Fritz becomes a debtor-in-possession of his property and makes payments under a plan approved by creditors.Fritz exceeds the $307,675 unsecured debt ceiling to qualify for Individual Debt Adjustment-Chapter 13,Bankruptcy Code.
Learning Objectives
- Examine the ramifications and results of declaring various bankruptcy chapters from the viewpoints of both the debtor and the creditor.
- Understand the strategic aspects involved in selecting a bankruptcy chapter.