CBS Financial Counseling & Risk Assessment 3

Question 1

A Chapter 13 debtor's plan proposes to pay unsecured creditors 15 cents on the dollar over 60 months. The liquidation analysis shows unsecured creditors would receive 20 cents on the dollar in a Chapter 7 liquidation. What is the plan's deficiency?

Accepted Answer

The plan fails the best-interest-of-creditors test

Answer

Under 11 U.S.C. §1325(a)(4), a Chapter 13 plan must pay unsecured creditors at least as much as they would receive in a Chapter 7 liquidation.

Question 2

A financial counselor is reviewing a client's budget for a proposed Chapter 13 plan. Monthly net income is $4,500 and allowed expenses per IRS standards total $3,800. What does the $700 surplus represent?

Accepted Answer

The client's projected disposable income available for plan payments

Answer

The surplus after allowed expenses is the projected disposable income that the debtor must commit to the Chapter 13 plan for applicable commitment period.

Question 3

Which debt cannot be discharged in a Chapter 7 bankruptcy under any ordinary circumstance?

Accepted Answer

Student loans absent undue hardship

Answer

Student loans are non-dischargeable under 11 U.S.C. §523(a)(8) unless the debtor proves undue hardship through the applicable court test.

Question 4

A client owns a home with $40,000 equity in a state with a $25,000 homestead exemption. They are considering Chapter 7. What is the trustee likely to do?

Accepted Answer

Sell the property and distribute the non-exempt $15,000 to creditors

Answer

The trustee will sell the home, pay the debtor the $25,000 exempt amount, and distribute the remaining $15,000 equity to unsecured creditors.

Question 5

A CBS practitioner conducts a risk assessment and determines a client's primary financial stressor is cash flow, not total debt load. Which non-bankruptcy intervention is most appropriate to explore first?

Accepted Answer

Debt management plan through a nonprofit credit counseling agency

Answer

A debt management plan can reduce interest rates and consolidate monthly payments, addressing cash flow problems without a bankruptcy filing.

(CBS) Certified Bankruptcy Specialist Practice Test

(CBS) Certified Bankruptcy Specialist Practice Test

CBS Financial Counseling & Risk Assessment 3