CBS Asset Valuation & Exemptions 2

Question 1

Under the 'replacement value' standard established in Associates Commercial Corp. v. Rash, how is secured creditor collateral valued in a Chapter 13 plan?

Accepted Answer

At the price the debtor would pay to replace the property

Answer

Rash held that replacement value—what the debtor would pay to obtain the property—applies when the debtor retains collateral under a cram-down plan.

Question 2

A debtor claims a homestead exemption on a property titled solely in the non-filing spouse's name. Under most state laws, what is the likely outcome?

Accepted Answer

The exemption is denied because the debtor has no ownership interest

Answer

Homestead exemptions generally require the debtor to hold a legal or equitable ownership interest; title in a non-filing spouse's name alone typically defeats the claim.

Question 3

Which bankruptcy Code section specifically caps the homestead exemption that can be claimed if the debtor acquired the home within 1,215 days before filing?

Accepted Answer

11 U.S.C. § 522(p)

Answer

Section 522(p) limits the homestead exemption to approximately $189,050 (adjusted periodically) for equity acquired within 1,215 days of filing.

Question 4

A debtor owns a term life insurance policy with no cash surrender value. How is this asset treated for bankruptcy estate purposes?

Accepted Answer

It is not property of the estate because it has no present monetary value

Answer

A term life policy with no cash value generates no estate asset because the estate cannot realize value from it.

Question 5

Under 11 U.S.C. § 522(f), a debtor may avoid a judicial lien on exempt property if the lien impairs the exemption. Which formula determines impairment?

Accepted Answer

Lien + all other liens + exemption amount exceeds the property's value

Answer

Impairment exists when the sum of the judicial lien, other liens, and the applicable exemption amount exceeds the property's value.

(CBS) Certified Bankruptcy Specialist Practice Test

(CBS) Certified Bankruptcy Specialist Practice Test

CBS Asset Valuation & Exemptions 2