Question 1

An individual whose debts are primarily consumer debts is known as a

Accepted Answer

A consumer-debtor is an individual whose debts are primarily incurred for personal, family, or household purposes, distinguishing them from debts incurred for business or commercial purposes.

Question 2

Important details to the bankruptcy process are provided by the debtor in which of the following?

Accepted Answer

The Statement of Financial Affairs is a document that provides detailed information about the debtor's financial history and current financial situation, which is crucial in the bankruptcy process.

Question 3

Adjustments of debts by persons with regular incomes is governed by which of the following?

Accepted Answer

Chapter 13 of the Bankruptcy Code is specifically designed to allow individuals with regular income to develop a plan to repay all or part of their debts under court supervision and protection.

Question 4

Abigail is filing a voluntary petition for bankruptcy. She must provide proof that she

Accepted Answer

Under U.S. bankruptcy law, individuals filing for bankruptcy must generally receive credit counseling from an approved agency within 180 days before filing the petition. This requirement is meant to ensure that filers are informed about alternatives to bankruptcy and the consequences of filing for bankruptcy. The other options listed are not standard requirements for filing a bankruptcy petition.

Question 5

A________ is the party, whether a person or a business, liable for debts and the subject of the bankruptcy proceedings.

Accepted Answer

A debtor is the party responsible for debts and is the subject of bankruptcy proceedings, as they owe money to creditors.

Question 6

Which of the following terms refers to a debtor being relieved of the obligation to pay debts?

Accepted Answer

The terms "discharged" and "extinguished" both refer to a debtor being relieved of the obligation to pay debts. "Discharged" is commonly used in legal contexts, especially in bankruptcy proceedings, while "extinguished" can be used in broader contexts to indicate that a debt is no longer enforceable.

Question 7

Secured debt gives the creditor, called a ____creditor, the right to attempt to get control of the property, such as a house, a car, or other assets, that the debtor originally offered to the lender to obtain a loan.

Accepted Answer

Secured debt is linked to collateral, meaning the creditor has the right to take control of the specific property (collateral) if the debtor fails to meet the terms of the loan agreement. This makes the creditor a "secured" creditor, as their loan is secured by an asset.

Question 8

Which of the following parties cannot be a debtor in a liquidation bankruptcy?

Accepted Answer

Insurance companies are generally excluded from filing for liquidation bankruptcy under Chapter 7 of the United States Bankruptcy Code. This is because they are regulated by state insurance regulatory agencies, which have their own mechanisms for dealing with insolvent insurers.

Question 9

A_______is the party owed debt in bankruptcy proceedings.

Accepted Answer

A creditor is the party owed debt in bankruptcy proceedings, as they are the ones to whom the debt is owed.

Question 10

The debtor in a _____bankruptcy turns all assets over to a bankruptcy trustee.

Accepted Answer

In a Chapter 7 bankruptcy, the debtor surrenders all non-exempt assets to a bankruptcy trustee, who then liquidates those assets to pay off creditors. This process is designed to give the debtor a "fresh start" by discharging most debts.

Question 11

The_____ test is meant to keep upper-income people from abusing the bankruptcy process by filing for Chapter 7 bankruptcy.

Accepted Answer

The means test is specifically designed to prevent individuals with higher incomes from filing for Chapter 7 bankruptcy, ensuring that only those who truly cannot pay their debts are able to discharge them through this process.

Question 12

Once the initial bankruptcy is filed, litigation by creditors is suspended. This is called a(n)

Accepted Answer

The correct term is "automatic stay." It is a provision under U.S. bankruptcy law that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy.

Question 13

A declaration made by a debtor concerning plans for dealing with consumer debts that are secured by property of the debtor is called a statement of

Accepted Answer

A statement of intention is a declaration made by a debtor in a bankruptcy case, detailing plans for handling debts secured by property. This is a requirement under bankruptcy law to inform the court and creditors of how the debtor intends to deal with certain types of debts.

Question 14

Debt that is "backed" by a mortgage, a pledge of collateral, or another lien is called which of the following?

Accepted Answer

Secured debt is debt that is backed by collateral, meaning if the borrower defaults, the lender can seize the asset that was used as collateral to recover the owed amount.

Question 15

Which of the following is true of reorganizations?

Accepted Answer

Reorganizations are governed by Chapter 11 of the Bankruptcy Code, which allows businesses to continue operating while they work out a plan to pay back creditors.

Question 16

Ordinary or straight bankruptcy is also called

Accepted Answer

Ordinary or straight bankruptcy, where the debtor's assets are liquidated to pay off creditors, is most commonly referred to as liquidation. This is typically associated with Chapter 7 bankruptcy in the United States.

Question 17

Child support payments are an example of which of the following?

Accepted Answer

Child support payments are considered nondischargeable debts, meaning they cannot be eliminated through bankruptcy. This ensures that obligations to support children are maintained regardless of the debtor's financial situation.

Question 18

Chapter 13 bankruptcy provides for which of the following?

Accepted Answer

Chapter 13 bankruptcy is designed for the adjustment of debts of individuals with regular income, allowing them to keep their property and pay debts over time, usually three to five years.

Question 19

Which of the following is true of liquidation proceedings?

Accepted Answer

Liquidation proceedings are indeed governed by Chapter 7 of the Bankruptcy Code. This chapter outlines the process for selling a debtor's non-exempt property and distributing the proceeds to creditors.

Question 20

Educational loans are an example of which of the following?

Accepted Answer

Educational loans are generally considered nondischargeable debts in bankruptcy proceedings, meaning they cannot easily be wiped out or forgiven through the bankruptcy process.

Quiz 19: Bankruptcy and Environmental Law