Question
Reggie files for Chapter 7 bankruptcy. Jim is appointed trustee and hires Debbie to represent him in the bankruptcy proceeding. Jim determines that there are
Reggie files for Chapter 7 bankruptcy. Jim is appointed trustee and hires Debbie to represent him in the bankruptcy proceeding. Jim determines that there are $15,000 of exempt assets and that Misty has a valid claim of $20,000 and a secured interest in a tractor which is worth $15,000. On February 1, Jim determines that there is $20,000 in the bankruptcy estate (excluding the exempt assets and the tractor). Jim is successful in setting aside a fraudulent transfer and also voiding a preference payment to Reggie's business partner. That produces another $15,000 which brings the total bankruptcy estate to $35,000 (excluding the exempt assets and the tractor). 4 months after filing the petition for bankruptcy, Reggie inherits $10,000 from his aunt who passes away suddenly. Jim's fees, Debbie's fees, the fees of accountants and court costs total $20,000. Reggie's wife Marcy has filed a proof of claim demonstrating that Reggie owes her $15,000 for child support. The only other valid claim is a $20,000 claim from the Dukem Inn, Inc. for Reggie's beer tab. How will the bankruptcy estate be distributed?
A. | Misty will get the tractor. Marcy will be paid $15,000. The trustee's fees, attorneys fees and court costs will be paid totaling $20,000 and the Dukem Inn, Inc. will be paid $10,000. | |
B. | Misty will get the tractor. Marcy will be paid $15,000. The trustee's fees, attorney fees and court costs will be paid totaling $20,000. The Dukem and Misty will receive nothing. | |
C. | The bankruptcy court will likely order that Debbie be paid all of the proceeds of the bankruptcy estate because lawyers are the subject matter of a lot of bad jokes and as such deserve extra compensation whenever possible. | |
D. | Misty will get the tractor. Marcy will be paid $15,000. The trustee's fees, attorney fees and court costs will be paid totaling $20,000. The Dukem will receive $8,000. Misty will receive $2,000. |
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