Please help me to solve this question, thanks~ John owes $5,000 to his Credit Un
ID: 2556251 • Letter: P
Question
Please help me to solve this question, thanks~
John owes $5,000 to his Credit Union, $10,000 to Ford Motor Finance, $7.500 to Bank Credit Card, and $100.000 to a hospital for a recent surgery. He has $8,000 in the bank, a car and no other assets. John decides to clear up his finances and move on with his life so he returns his car to Ford Motor Finance, pays off his loan to the Credit Union and then immediately hires an attorney and files a Chapter 7 bankruptcy. What is the likely result? Assuming Ford Motor Finance had a security interest in John's car. When John )returned the car he ended all obligation to Ford Motor Finance and in no case can Ford Motor ask for more money. The unsecured creditors. The bankruptcy trustee will make the credit union pay the $5,000 back to the Bank Credit Card will likely be paid in full as they are high on the priority list of 2) 3) bankruptcy estate and use it to pay all creditors: including the Credit Union on a pro- rata basis. 4) John cannot eliminate debt for medical expenses through bankruptcy.Explanation / Answer
Option 2 is not correct because credit card dues are unsecured and there is no priority payment rules for them.
Option 3 is also not correct because bankruptcy estate cannot ask credit union to payback. At the time of filing for bankruptcy John had already paid it off and it is of no concern now.
Option 4 is also not correct because John can infact eleminate his medical expenses through bankruptcy
Thus, Option 1 is the correct answer.