CCDS CCDS Consumer Bankruptcy & Debt Settlement 1

Question 1

Under Chapter 7 bankruptcy in the U.S., what is the typical timeframe for receiving a discharge of eligible debts?

Accepted Answer

3 to 6 months

Answer

Chapter 7 bankruptcy typically results in a discharge of eligible unsecured debts within 3 to 6 months of filing.

Question 2

Which type of bankruptcy allows individuals with regular income to repay debts over a 3- to 5-year plan?

Accepted Answer

Chapter 13

Answer

Chapter 13 bankruptcy enables individuals with regular income to propose a repayment plan lasting 3 to 5 years.

Question 3

What is the 'means test' in Chapter 7 bankruptcy primarily used to determine?

Accepted Answer

Whether the debtor qualifies based on income

Answer

The means test compares the debtor's income to the state median to determine eligibility for Chapter 7.

Question 4

Which of the following debts is generally NON-dischargeable in bankruptcy?

Accepted Answer

Federal student loans

Answer

Federal student loans are generally non-dischargeable in bankruptcy unless the debtor proves undue hardship.

Question 5

In a debt settlement arrangement, what typically happens to the forgiven portion of the debt?

Accepted Answer

It may be treated as taxable income by the IRS

Answer

The IRS generally treats forgiven debt as taxable income, and creditors must issue a 1099-C for amounts of $600 or more.

CCDS - Certified Consumer Debt Specialist Practice Test