Reference - Claims to Funds

Multiple Choice

Reference - Claims to Funds. Paul had a great job as a bank executive. Unfortunately, his bank came under scrutiny by federal regulators and while Paul had done nothing illegal, he ended up being fired. Unfortunately for Paul, he had a number of debts. Among his assets were a house worth $250,000 on which he owed $150,000 to a bank which held a security interest; three vehicles; an expensive watch worth $5,000; and $120,000 in an Individual Retirement Account "IRA". He owed $900 per month in child support to his ex-wife Suzy and was behind on payments in the amount of $1,800. He also owed $2,000 in wages consisting of four months of back pay to Bob who took care of Paul's landscaping needs and swimming pool care. Unable to find a job and believing that he had no other option, Paul filed for Chapter 7 bankruptcy. All debtors angrily demanded payment from liquidation of Paul's assets. Paul, on the other hand, claims that he needs all the above mentioned assets and that he should not have to give up anything. Only federal bankruptcy exemptions apply to Paul's case. Which of the following is true under bankruptcy in regard to Paul's claim to the watch?

A) The watch will be sold with the entire proceeds being used to satisfy claims of creditors.
B) The watch will remain Paul's property because it is automatically exempt.
C) The watch will remain Paul's property so long as he can establish that it is needed in his profession.
D) Paul's interest in the watch is exempt only up to $1,000.
E) Paul's interest in the watch is exempt only up to $500.