CBS Bankruptcy Laws & Regulations 2 — Questions and Answers
Question 1: Under 11 U.S.C. § 523(a)(8), student loan debt is generally non-dischargeable unless the debtor proves:
- The loan exceeds the national average
- Repayment would impose an undue hardship (Correct answer)
- The loan was taken more than 10 years ago
- The school closed before graduation
Correct answer: Repayment would impose an undue hardship
Section 523(a)(8) excepts student loans from discharge unless excepting the debt from discharge would impose an undue hardship on the debtor and dependents.
Question 2: The 'median income' test under BAPCPA primarily determines:
- Whether a debtor qualifies for Chapter 13 repayment plans
- Whether a Chapter 7 debtor must complete the means test calculation (Correct answer)
- The amount of the homestead exemption available to the debtor
- How long the automatic stay remains in effect
Correct answer: Whether a Chapter 7 debtor must complete the means test calculation
If a debtor's current monthly income exceeds the state median income, they must complete the full means test calculation under § 707(b)(2) to file Chapter 7.
Question 3: Which section of the Bankruptcy Code governs the rights and duties of a Chapter 7 trustee?
- 11 U.S.C. § 326
- 11 U.S.C. § 704 (Correct answer)
- 11 U.S.C. § 547
- 11 U.S.C. § 362
Correct answer: 11 U.S.C. § 704
Section 704 sets out the duties of a Chapter 7 trustee, including collecting and reducing to money the property of the estate.
Question 4: A Chapter 13 plan must provide that unsecured creditors receive at least as much as they would in a Chapter 7 liquidation. This is known as the:
- Absolute priority rule
- Best interests of creditors test (Correct answer)
- Fair and equitable standard
- Feasibility requirement
Correct answer: Best interests of creditors test
The 'best interests of creditors' test under § 1325(a)(4) requires Chapter 13 plans to pay unsecured creditors at least their Chapter 7 liquidation value.
Question 5: Under the Bankruptcy Code, a 'single asset real estate' case is subject to special rules including:
- Automatic conversion to Chapter 7 after 60 days
- Shortened automatic stay protection unless specific conditions are met (Correct answer)
- Mandatory appointment of a trustee within 30 days
- Prohibition on filing a reorganization plan
Correct answer: Shortened automatic stay protection unless specific conditions are met
Section 362(d)(3) allows relief from the automatic stay in single asset real estate cases unless the debtor files a plan or begins paying interest within 90 days.
Question 6: The 'drop dead' provision in bankruptcy refers to:
- Automatic conversion triggered by missed plan payments
- Termination of the automatic stay if a debtor fails to meet certain deadlines (Correct answer)
- Dismissal of a case when assets are insufficient to pay administrative claims
- Expiration of a debtor's right to convert between chapters
Correct answer: Termination of the automatic stay if a debtor fails to meet certain deadlines
The 'drop dead' provision automatically terminates the automatic stay if the debtor fails to satisfy conditions imposed by the court within the specified time period.
Question 7: Which party bears the burden of proof in a § 523(a) dischargeability action?
- The bankruptcy trustee
- The debtor seeking discharge
- The creditor objecting to discharge (Correct answer)
- The U.S. Trustee
Correct answer: The creditor objecting to discharge
In a § 523(a) nondischargeability proceeding, the creditor bears the burden of proving by a preponderance of the evidence that the debt is excepted from discharge.
CBS Bankruptcy Laws & Regulations 2
Under 11 U.S.C. § 523(a)(8), student loan debt is generally non-dischargeable unless the debtor proves: