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DIFFICULTY: ChallengingNATIONAL STANDARDS: United States - BUSBROG: - AnalyticACCREDITING STANDARDS: DISC: - AICPA: BB-LegalTOPICS: 23-1h Events of DefaultKEYWORDS: Blooms: Application61. Matthew has filed for Chapter 7 bankruptcy relief. He had borrowed money from his best friend, Rick, for the purchase of a car. Matthew really wants to repay Rick, but does not want to jeopardize his bankruptcy relief and the discharge of a number of other debts. What option, if any, is open to Matthew?Matthew can reaffirm the debt to Rick, and the bankruptcy judge has no authority to interfere in that decision.Matthew can reaffirm the debt to Rick but only up to 50% of the maximum amount owed, and the bankruptcy judge has the authority to disapprove of the agreement if thecourt finds that it is not in Matthew's best interest.
62. Bob goes bankrupt. He has several creditors and a small amount in savings. He owes XYZ Bank $200,000 for which he used his home as collateral. XYZ Bank properly perfected its interest in the home. Bob additionally owes $3,000 in alimony to an ex-wife, Sue; $50,000 in unsecured credit card bills; and $5,000 in unsecured debt to his friend Tina. After all exemptions are satisfied, $205,000 from the sale of the home and $5,000 in a small bank account remain for distribution to creditors. Which of the following is true regarding priority?Tina has first priority, the credit card companies are then paid, and XYZ Bank is entitled to any remainder.Tina has first priority, XYZ Bank is then paid, and the credit card companies divide theremainder.