CCC CCC Bankruptcy & Credit Recovery 1 — Questions and Answers
Question 1: Under U.S. bankruptcy law, which chapter allows individuals to eliminate most unsecured debts through a liquidation process?
- Chapter 7 (Correct answer)
- Chapter 11
- Chapter 13
- Chapter 9
Correct answer: Chapter 7
Chapter 7 bankruptcy is a liquidation process that allows eligible individuals to discharge most unsecured debts after a means test.
Question 2: What is the primary purpose of the credit counseling requirement under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005?
- To allow debtors to skip the means test
- To ensure debtors receive counseling about alternatives to bankruptcy within 180 days before filing (Correct answer)
- To provide post-bankruptcy financial management education only
- To waive mandatory court fees for low-income filers
Correct answer: To ensure debtors receive counseling about alternatives to bankruptcy within 180 days before filing
BAPCPA requires debtors to complete credit counseling from an approved agency within 180 days before filing for bankruptcy.
Question 3: Which type of debt CANNOT typically be discharged in a Chapter 7 bankruptcy?
- Medical bills
- Credit card debt
- Federal student loans (Correct answer)
- Personal loans
Correct answer: Federal student loans
Federal student loans are generally non-dischargeable in bankruptcy unless the debtor can prove undue hardship under the Brunner test.
Question 4: In a Chapter 13 bankruptcy, what is the typical repayment plan duration?
- 6 to 12 months
- 1 to 2 years
- 3 to 5 years (Correct answer)
- 7 to 10 years
Correct answer: 3 to 5 years
Chapter 13 repayment plans must last 3 years for below-median-income debtors and up to 5 years for above-median-income debtors.
Question 5: What is an 'automatic stay' in the context of bankruptcy?
- A court order requiring the debtor to remain in the state during proceedings
- An immediate injunction that halts most collection actions against the debtor upon filing (Correct answer)
- A delay in discharging debts until creditors are notified
- A mandatory waiting period before a second bankruptcy can be filed
Correct answer: An immediate injunction that halts most collection actions against the debtor upon filing
The automatic stay is a powerful injunction triggered automatically upon filing that stops most creditor collection efforts, lawsuits, and garnishments.
Question 6: How long does a Chapter 7 bankruptcy typically remain on a consumer's credit report?
- 5 years from the filing date
- 7 years from the discharge date
- 10 years from the filing date (Correct answer)
- 7 years from the filing date
Correct answer: 10 years from the filing date
A Chapter 7 bankruptcy can remain on a credit report for up to 10 years from the filing date under the Fair Credit Reporting Act.
CCC CCC Bankruptcy & Credit Recovery 1
Under U.S. bankruptcy law, which chapter allows individuals to eliminate most unsecured debts through a liquidation process?