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Chapter 7 Bankruptcy

Description: This quiz will test your knowledge on Chapter 7 Bankruptcy.
Number of Questions: 14
Created by:
Tags: bankruptcy chapter 7 law
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What is the purpose of Chapter 7 Bankruptcy?

  1. To reorganize debts and allow the debtor to continue operating

  2. To liquidate assets and distribute proceeds to creditors

  3. To provide a fresh start for debtors who are unable to repay their debts

  4. To allow debtors to temporarily stop making payments on their debts

Show answer
Correct Option: B
Explanation:

Chapter 7 Bankruptcy is a form of liquidation bankruptcy in which the debtor's nonexempt property is sold and the proceeds are distributed to creditors.

Who is eligible to file for Chapter 7 Bankruptcy?

  1. Individuals, businesses, and non-profit organizations

  2. Individuals and businesses only

  3. Individuals only

  4. Businesses and non-profit organizations only

Show answer
Correct Option: B
Explanation:

Individuals and businesses are eligible to file for Chapter 7 Bankruptcy. Non-profit organizations are not eligible.

What is the means test in Chapter 7 Bankruptcy?

  1. A test to determine if the debtor has sufficient income to repay their debts

  2. A test to determine if the debtor has sufficient assets to repay their debts

  3. A test to determine if the debtor has sufficient expenses to justify filing for bankruptcy

  4. A test to determine if the debtor has sufficient debts to justify filing for bankruptcy

Show answer
Correct Option: A
Explanation:

The means test in Chapter 7 Bankruptcy is a test to determine if the debtor has sufficient income to repay their debts. If the debtor's income is below the median income for their state and household size, they are presumed to be eligible for Chapter 7 Bankruptcy.

What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

  1. Chapter 7 is a liquidation bankruptcy and Chapter 13 is a reorganization bankruptcy

  2. Chapter 7 is a reorganization bankruptcy and Chapter 13 is a liquidation bankruptcy

  3. Chapter 7 is a bankruptcy for individuals and Chapter 13 is a bankruptcy for businesses

  4. Chapter 7 is a bankruptcy for businesses and Chapter 13 is a bankruptcy for individuals

Show answer
Correct Option: A
Explanation:

Chapter 7 Bankruptcy is a liquidation bankruptcy in which the debtor's nonexempt property is sold and the proceeds are distributed to creditors. Chapter 13 Bankruptcy is a reorganization bankruptcy in which the debtor proposes a plan to repay their debts over time.

What are the consequences of filing for Chapter 7 Bankruptcy?

  1. The debtor's debts are discharged

  2. The debtor's assets are liquidated and the proceeds are distributed to creditors

  3. The debtor is required to make regular payments to creditors

  4. The debtor is prohibited from filing for bankruptcy again

Show answer
Correct Option: B
Explanation:

The consequences of filing for Chapter 7 Bankruptcy include the liquidation of the debtor's nonexempt property and the distribution of the proceeds to creditors. The debtor's debts are discharged, but the debtor may be required to make regular payments to creditors if they have nonexempt property.

What is the waiting period between filing for Chapter 7 Bankruptcy and receiving a discharge?

  1. 6 months

  2. 1 year

  3. 2 years

  4. 3 years

Show answer
Correct Option:
Explanation:

The waiting period between filing for Chapter 7 Bankruptcy and receiving a discharge is 8 years.

What debts are not dischargeable in Chapter 7 Bankruptcy?

  1. Student loans

  2. Taxes

  3. Child support

  4. Alimony

Show answer
Correct Option:
Explanation:

Student loans, taxes, child support, and alimony are not dischargeable in Chapter 7 Bankruptcy.

What is the effect of Chapter 7 Bankruptcy on a debtor's credit score?

  1. It will improve the debtor's credit score

  2. It will have no effect on the debtor's credit score

  3. It will lower the debtor's credit score

  4. It will destroy the debtor's credit score

Show answer
Correct Option: C
Explanation:

Filing for Chapter 7 Bankruptcy will lower the debtor's credit score. The negative impact of bankruptcy on a credit score can last for up to 10 years.

What is the difference between a Chapter 7 Bankruptcy Trustee and a Chapter 13 Bankruptcy Trustee?

  1. A Chapter 7 Bankruptcy Trustee is appointed by the court to oversee the liquidation of the debtor's assets, while a Chapter 13 Bankruptcy Trustee is appointed by the court to oversee the debtor's reorganization plan

  2. A Chapter 7 Bankruptcy Trustee is appointed by the court to oversee the debtor's reorganization plan, while a Chapter 13 Bankruptcy Trustee is appointed by the court to oversee the liquidation of the debtor's assets

  3. A Chapter 7 Bankruptcy Trustee is appointed by the creditors to oversee the liquidation of the debtor's assets, while a Chapter 13 Bankruptcy Trustee is appointed by the creditors to oversee the debtor's reorganization plan

  4. A Chapter 7 Bankruptcy Trustee is appointed by the creditors to oversee the debtor's reorganization plan, while a Chapter 13 Bankruptcy Trustee is appointed by the creditors to oversee the liquidation of the debtor's assets

Show answer
Correct Option: A
Explanation:

A Chapter 7 Bankruptcy Trustee is appointed by the court to oversee the liquidation of the debtor's assets, while a Chapter 13 Bankruptcy Trustee is appointed by the court to oversee the debtor's reorganization plan.

What is the role of the Bankruptcy Court in Chapter 7 Bankruptcy?

  1. To approve or deny the debtor's petition for bankruptcy

  2. To appoint the Chapter 7 Bankruptcy Trustee

  3. To oversee the liquidation of the debtor's assets

  4. To discharge the debtor's debts

Show answer
Correct Option:
Explanation:

The Bankruptcy Court plays a vital role in Chapter 7 Bankruptcy. It approves or denies the debtor's petition for bankruptcy, appoints the Chapter 7 Bankruptcy Trustee, oversees the liquidation of the debtor's assets, and discharges the debtor's debts.

What is the difference between a secured debt and an unsecured debt in Chapter 7 Bankruptcy?

  1. A secured debt is a debt that is backed by collateral, while an unsecured debt is a debt that is not backed by collateral

  2. A secured debt is a debt that is owed to a creditor who has a security interest in the debtor's property, while an unsecured debt is a debt that is owed to a creditor who does not have a security interest in the debtor's property

  3. A secured debt is a debt that is owed to a creditor who has a lien on the debtor's property, while an unsecured debt is a debt that is owed to a creditor who does not have a lien on the debtor's property

  4. A secured debt is a debt that is owed to a creditor who has a mortgage on the debtor's property, while an unsecured debt is a debt that is owed to a creditor who does not have a mortgage on the debtor's property

Show answer
Correct Option:
Explanation:

A secured debt is a debt that is backed by collateral, while an unsecured debt is a debt that is not backed by collateral. A secured debt is a debt that is owed to a creditor who has a security interest in the debtor's property, while an unsecured debt is a debt that is owed to a creditor who does not have a security interest in the debtor's property. A secured debt is a debt that is owed to a creditor who has a lien on the debtor's property, while an unsecured debt is a debt that is owed to a creditor who does not have a lien on the debtor's property. A secured debt is a debt that is owed to a creditor who has a mortgage on the debtor's property, while an unsecured debt is a debt that is owed to a creditor who does not have a mortgage on the debtor's property.

What is the effect of Chapter 7 Bankruptcy on a debtor's co-debtors?

  1. The co-debtors are also discharged from their debts

  2. The co-debtors are not discharged from their debts

  3. The co-debtors are discharged from their debts only if they file for bankruptcy themselves

  4. The co-debtors are discharged from their debts only if the debtor files for bankruptcy under Chapter 13

Show answer
Correct Option: B
Explanation:

Co-debtors are not discharged from their debts when the debtor files for Chapter 7 Bankruptcy. The co-debtors remain liable for the debt and the creditor can still pursue them for payment.

What is the effect of Chapter 7 Bankruptcy on a debtor's future employment?

  1. It will make it more difficult for the debtor to get a job

  2. It will have no effect on the debtor's ability to get a job

  3. It will make it easier for the debtor to get a job

  4. It will depend on the type of job the debtor is applying for

Show answer
Correct Option: D
Explanation:

The effect of Chapter 7 Bankruptcy on a debtor's future employment will depend on the type of job the debtor is applying for. Some employers may be reluctant to hire someone who has filed for bankruptcy, while others may not be concerned about it.

What is the difference between a Chapter 7 Bankruptcy discharge and a Chapter 13 Bankruptcy discharge?

  1. A Chapter 7 Bankruptcy discharge is a complete discharge of all of the debtor's debts, while a Chapter 13 Bankruptcy discharge is a partial discharge of the debtor's debts

  2. A Chapter 7 Bankruptcy discharge is a partial discharge of the debtor's debts, while a Chapter 13 Bankruptcy discharge is a complete discharge of the debtor's debts

  3. A Chapter 7 Bankruptcy discharge is a discharge of all of the debtor's unsecured debts, while a Chapter 13 Bankruptcy discharge is a discharge of all of the debtor's secured debts

  4. A Chapter 7 Bankruptcy discharge is a discharge of all of the debtor's secured debts, while a Chapter 13 Bankruptcy discharge is a discharge of all of the debtor's unsecured debts

Show answer
Correct Option: A
Explanation:

A Chapter 7 Bankruptcy discharge is a complete discharge of all of the debtor's debts, while a Chapter 13 Bankruptcy discharge is a partial discharge of the debtor's debts. In a Chapter 13 Bankruptcy, the debtor is required to make regular payments to creditors over a period of time. At the end of the repayment period, the remaining debts are discharged.

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