CCDS Consumer Bankruptcy & Debt Settlement Flashcards

Before filing for bankruptcy, individuals are required by law to complete which of the following?

Answer: Mandatory credit counseling from an approved agency

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) requires credit counseling within 180 days before filing.

In a Chapter 13 bankruptcy, which type of debt must be paid in full through the repayment plan?

Answer: Priority debts such as recent taxes and domestic support obligations

Priority debts, including recent taxes and domestic support obligations like alimony and child support, must be paid in full in a Chapter 13 plan.

What does it mean for a debt to be 'secured' in the context of bankruptcy?

Answer: The creditor has a lien on specific collateral backing the debt

A secured debt is backed by collateral, giving the creditor a lien that allows them to repossess or foreclose on the asset if the debtor defaults.

What is 'cram-down' in Chapter 13 bankruptcy?

Answer: Reducing the principal of a secured loan to the collateral's current market value

Cram-down allows a debtor to reduce the principal balance of a secured loan (other than a primary home mortgage) to the asset's current value.

Which of the following BEST describes a 'fresh start' as it relates to bankruptcy?

Answer: The discharge relieves the debtor of personal liability for eligible debts, allowing a financial new beginning

The 'fresh start' concept means that after discharge, the debtor is no longer personally liable for eligible debts and can rebuild financially.

What is the minimum waiting period between two Chapter 7 bankruptcy discharges?

Answer: 8 years

A debtor must wait 8 years from the date of the prior Chapter 7 filing before receiving a discharge in a second Chapter 7 case.