Stan commits securities fraud and takes $5,000,000 from a variety of investors.Stan is convicted of a crime and then sued by the investors.Stan files for bankruptcy.What relief will the bankruptcy filing grant Stan?

Question

Quizplus · Accepted Answer

The bankruptcy filing will grant Stan an automatic stay, which temporarily stops any legal action, including the lawsuit brought by the investors. However, since the debt was created through securities fraud, it is considered a "non-dischargeable" debt, meaning that if Stan were to receive a discharge of his debts through bankruptcy, this particular debt would not be included. Therefore, the automatic stay will be granted, but there will be no discharge of the debt incurred through securities fraud.

Stan Commits Securities Fraud and Takes $5,000,000 from a Variety