Karen, a talent agent, has hit hard times and needs cash. She borrows $50,000 from her mom. In January 2018 , mom realizes that Karen will not be able to pay her back and forgives the $50,000 debt, telling her daughter she does not need to pay her back. Soon thereafter in February, Karen gives her mom her diamond necklace, valued at approximately $10,000 as a thank you gesture for forgiving the loan. Karen eventually files bankruptcy under Chapter 7 in May 2018. In her bankruptcy schedules she does not list her mom as a creditor nor does she list the transfer of the necklace to her mom. At a meeting of creditors, one of Karen’s creditor tells the Trustee about the necklace because he saw Karen wearing it. Karen explains that she gave it to her mother as a thank you for a loan that was forgiven and she just forgot to schedule it. 1. Does Karen or her mother have any exposure or risks arising out of these transactions? Will Karen get her discharge in bankruptcy?
2. What if Karen owns 100% of the stock in her talent agency, a California corporation. There are no employees; it is just Karen and her assistant. Can Karen keep the stock in her company under the Chapter 7?