CBS Financial Counseling & Risk Assessment 2

Question 1

A debtor seeking Chapter 7 relief has a household of 3 with monthly income of $5,200. The applicable state median income for a household of 3 is $5,000. What is the next required step?

Accepted Answer

Complete the means test Form 22A-2 to calculate disposable income

Answer

When income exceeds the state median, the debtor must complete the full means test (Form 22A-2) to determine whether presumption of abuse arises.

Question 2

Which counseling intervention is most appropriate when a client insists on reaffirming a car loan with a 24% interest rate on a vehicle worth far less than the outstanding balance?

Accepted Answer

Counsel the client on the financial risks and explore surrendering or redemption alternatives

Answer

A CBS specialist must present all options—including surrender and redemption—so the client can make an informed decision about underwater secured debt.

Question 3

In pre-bankruptcy counseling, a practitioner identifies that a client transferred a vacation home to a sibling for $1 six months ago. What is the primary concern?

Accepted Answer

The transfer may be avoided as a fraudulent conveyance under §548

Answer

Transfers made within two years for less than reasonably equivalent value may be avoided by the trustee as fraudulent under 11 U.S.C. §548.

Question 4

A client's financial risk profile shows 80% of unsecured debt is medical bills, no discretionary income, and ownership of exempt assets only. Which outcome metric best captures their repayment risk?

Accepted Answer

High concentration in non-consumer debt with no asset recovery potential for creditors

Answer

Medical debt concentration in an asset-exempt debtor signals near-zero recovery for creditors and very low repayment risk for the debtor's future income.

Question 5

During counseling, a client reveals they withdrew $15,000 from a 401(k) to pay credit cards three months before filing. How should the counselor address this?

Accepted Answer

Discuss the preference payment risk and possible trustee recovery from the creditors paid

Answer

Payments to unsecured creditors totaling more than $600 within 90 days before filing can be recovered by the trustee as preferential transfers under §547.

(CBS) Certified Bankruptcy Specialist Practice Test

(CBS) Certified Bankruptcy Specialist Practice Test

CBS Financial Counseling & Risk Assessment 2