FiCEP Bankruptcy and Insolvency

Question 1

Under Chapter 7 bankruptcy, what happens to a debtor's non-exempt assets?

Accepted Answer

They are sold by a trustee and the proceeds are distributed to creditors

Answer

They are protected and returned to the debtor after discharge

Answer

They are transferred to the debtor's spouse

Answer

They are frozen for five years until the court reviews the case

Question 2

Which type of bankruptcy allows individuals with regular income to repay debts through a 3-to-5-year court-approved repayment plan?

Accepted Answer

Chapter 13

Answer

Chapter 7

Answer

Chapter 11

Answer

Chapter 9

Question 3

What is the 'automatic stay' in bankruptcy proceedings?

Accepted Answer

An immediate halt to most collection actions, lawsuits, wage garnishments, and foreclosures upon filing for bankruptcy

Answer

A court order requiring the debtor to stay in the jurisdiction during the case

Answer

A delay in discharging debts pending a creditor review period

Answer

A freeze on all bank accounts associated with the debtor

Question 4

Which of the following debts is generally NOT dischargeable in a Chapter 7 bankruptcy?

Accepted Answer

Student loans (in most cases)

Answer

Credit card balances

Answer

Medical bills

Answer

Utility arrears

Question 5

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) requires debtors to complete what before filing for bankruptcy?

Accepted Answer

A credit counseling course from an approved agency within 180 days before filing

Answer

A financial literacy course approved by the IRS

Answer

A two-year waiting period after becoming delinquent on debts

Answer

A court-ordered mediation session with all creditors

Question 6

What is the 'means test' in Chapter 7 bankruptcy?

Accepted Answer

A formula that compares the debtor's income to the state median to determine Chapter 7 eligibility

Answer

A credit score threshold that determines if a debtor qualifies for bankruptcy protection

Answer

An asset evaluation to identify non-exempt property for liquidation

Answer

A court hearing where creditors can challenge the debtor's good faith