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Thought for the Day: Paying Creditors From an Estate and/or After Bankruptcy

Let's say Moe has died; baruch dayan ha'emes.  Moe had a beautiful funeral, lovingly and (of course) tearfully remembered by friends and loved ones.  In fact, there were three attendees -- Larry, Curly Joe, and Shemp -- who were weeping somewhat more than the rest of the gathered assemblage.  It is now a few days later and finances need to be settled.  As it turns out Moe had owed money to Larry, Curly Joe, and Shemp; ah, that explains why they were at the funeral.  Moe's estate is valued at $3000, Shemp is owed $10,000, Curly Joe is owed $20,000, and Larry is owed $30,000; ah, that explains the excess weeping.  How do we divide up the estate to pay the creditors?
Note: we are taking the case here where all notes have the same due date and we are not discussing the difference in whether paid in real estate or cash.
The answer is based on a mishna (K'subos 93a): A man who had three wives died.  (It doesn't discuss the cause of death, but I think it's pretty obvious.)  One wife is owed one manah (a unit of currency in talmudic times), the second wife was owed two mannah, and the third three.  The mishna says they split it evenly.
Background: as part of the Orthodox Jewish marriage, the man gives his wife a contract (known as a k'suva) that spells out his monetary, emotional, and physical obligations to his wife; it also spells out his (or his estate's) financial obligations to her in the case of divorce or death.
 That is the source for how creditors are paid from an estate.  The rub, as they say, is how to interpret "evenly".  There are two main opinions.  Rashi says evenly means what it says, each gets an equal portion of the estate.  In our example, Shemp, Curly Joe, and Larry will each get $1000.  Tosefos calls "foul!" -- that just can't be fair.  Tosefos, therefore, brings the opinion of Rabeinu Chananel who says "evenly" means "equal percentage based on the debt owed."  In our case, the total debt owed by Moe's (alav ha'shalom) estate is $60,000.  Shemp is owed 1/6 of the total debt, Curly Joe 1/3, and Larry is owed 1/2.  Therefore, Shemp will get $500, Curly Joe $1000, and Larry $1,500.

What about if Larry actually had three separate notes?  Do we split the estate according to the creditors or according to the notes?  According to Rabeinu Chananel it doesn't matter, but according to Rashi it makes a big difference. If we split according to the creditors, the split is as outlined.  If we split, though, according to the number of notes, we have five noteshere.  Therefore Shemp and Curly Joe (who each have one note) will get $600 each; Larry, though, will get $1800.  The logic of the second opinion is, "And just why do you think he made Moe, alav ha'shalom, sign three notes?  Precisely in order to be sure he got paid on each as a separate obligation, of course!"

There are a few cases where we don't pay evenly.  One such case is where one creditor is wealthy and the other is destitute, the one with no visible means of support is paid first.  That's the thing about Torah Law -- very strict, very fair.  It can be that way because it's not a consensus of opinion -- it is rather the Opinion of The One.

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