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Debtors can keep a maximum of $17,425 in equity in a personalresidence—the homestead exemption . They can also keep a maximumof $925 for any individual item of furniture, household goods,clothes, appliances, books, crops, animals, or musical instruments. Thetotal of all exemptions taken in this category cannot exceed $9,300.Debtors are also allowed to exempt $1,150 in jewelry beyond the $9,300mentioned previously. In addition, they may keep any other propertynot exceeding the value of $925, plus up to $8,725 of any unused amountof the $17,425 homestead exemption.Debtors may also keep certain necessary items. They include a maximumof $1,750 in professional tools, instruments, and books; up to$2,775 in a motor vehicle; and any medical supplies that have beenprescribed for the health of the debtor. Alimony and child supportpayments can also be excluded. Social security and benefits receivedunder a disability program and certain life insurance policies are alsoexempt.The bankruptcy act has modified the common law so that a personwho is hopelessly in debt may be relieved of further obligation on contractsif the court grants that person relief. However, debts associatedwith fraud or wrongdoing are revived even after the debts have beendischarged in bankruptcy.Exceptions to Discharge Some debts cannot be discharged. Theseinclude debts caused by the debtor’s fraud, back taxes, and student loansthat do not impose a hardship on the debtor.ScienceResearch and Development(R&D) is thedepartment withinmost businesses that isresponsible for developingnew products andreformulating old ones.Many companies mustborrow money for theirR&D. Using the Internet,locate the annual reportof a pharmaceutical,biotechnology, or otherscientific business.Research ActivityFind out how much thecompany spent on R&Dlast year. Do you thinkthat the companyborrowed money topay for its R&D? Explainyour answer.Reviewing What You Learned1. What are the nine warning signs that youmight be in financial trouble?2. What service is provided by the ConsumerCredit Counseling Service?3. Discuss the differences between declaringChapter 7 and Chapter 13 bankruptcy.Critical Thinking ActivityDebt Problems Do you recognize any of thewarning signs of debt problems? Do they applyto you or someone you know? How might youcorrect these debt problems or advise someoneelse to do so? Why is it important to addressdebt problems as soon as possible?Legal Skills in ActionCredit Counseling Unfortunately, many peoplerealize they are in financial trouble when it istoo late to correct the problem. Create a skitbetween a young adult who has too muchdebt and a credit counselor. Have the creditcounselor offer advice. Next, act out the skitwith a partner.Chapter 22: Borrowing Money and Buying on Credit 499