Asked by Arabella Cutler on Jun 15, 2024
Verified
Ken loaned Barbara $8,000 and took back a note secured by Barbara's car. If Barbara files for bankruptcy when the value of the car is $4,500, what is Ken's status? He has a (n) :
A) secured claim for $4,500.
B) unsecured claim for $8,000.
C) unsecured claim for $4,500.
D) secured claim for $8,000.
Secured Claim
A creditor's claim that is backed by collateral, granting them a right to specific property if the debtor fails to meet the obligations.
Unsecured Claim
A claim or debt that does not have a specific asset backing it up, making it a riskier proposition for the lender.
Bankruptcy
A legal mechanism offering individuals or corporations facing financial difficulties a way to alleviate part or total of their debt obligations.
- Identify the differences between secured and unsecured claims in the framework of bankruptcy and understand their varying implications.
Verified Answer
EC
Eduardo CastilloJun 20, 2024
Final Answer :
A
Explanation :
Ken has a secured claim for $4,500 because the loan is secured by the car, which is valued at $4,500. The remaining $3,500 becomes an unsecured claim since it exceeds the value of the collateral.
Learning Objectives
- Identify the differences between secured and unsecured claims in the framework of bankruptcy and understand their varying implications.