CCDS CCDS Consumer Bankruptcy & Debt Settlement 2 — Questions and Answers
Question 1: Which federal agency oversees the enforcement of consumer bankruptcy laws in the U.S.?
- CFPB
- U.S. Trustee Program (USTP) (Correct answer)
- FDIC
- FTC
Correct answer: U.S. Trustee Program (USTP)
The U.S. Trustee Program, a component of the Department of Justice, oversees the administration of bankruptcy cases.
Question 2: What is 'reaffirmation' in the context of Chapter 7 bankruptcy?
- A creditor's agreement to settle for less
- A debtor's agreement to remain personally liable on a specific debt (Correct answer)
- A court's confirmation of the repayment plan
- A discharge of secured debt
Correct answer: A debtor's agreement to remain personally liable on a specific debt
Reaffirmation is an agreement by the debtor to continue paying and remain personally liable on a debt that would otherwise be discharged.
Question 3: How long does a Chapter 7 bankruptcy remain on a consumer's credit report?
- 5 years
- 7 years
- 10 years (Correct answer)
- 15 years
Correct answer: 10 years
A Chapter 7 bankruptcy filing remains on a consumer's credit report for 10 years from the date of filing.
Question 4: What is the primary risk for a consumer who enters a debt settlement program?
- Lower monthly payments
- Reduced total debt balance
- Severe credit score damage and potential lawsuits during negotiation (Correct answer)
- Automatic discharge of all debts
Correct answer: Severe credit score damage and potential lawsuits during negotiation
During debt settlement, creditors may sue for unpaid amounts and the consumer's credit score can drop significantly.
Question 5: Which term describes a court-appointed individual responsible for administering a bankruptcy estate and liquidating non-exempt assets?
- Bankruptcy attorney
- Bankruptcy trustee (Correct answer)
- Credit counselor
- Mediator
Correct answer: Bankruptcy trustee
A bankruptcy trustee is appointed by the court to administer the estate, review filings, and distribute proceeds to creditors.
Question 6: What is the 'homestead exemption' in bankruptcy?
- An exemption from filing bankruptcy fees
- Protection of a portion of home equity from creditors (Correct answer)
- A tax break for homeowners who file bankruptcy
- An exemption for vacation homes
Correct answer: Protection of a portion of home equity from creditors
The homestead exemption protects a specified amount of home equity from being seized by creditors in bankruptcy.
CCDS CCDS Consumer Bankruptcy & Debt Settlement 2
Which federal agency oversees the enforcement of consumer bankruptcy laws in the U.S.?