Question

When a debtor files for bankruptcy all debt collection actions against the debtor must stop, but civil lawsuits against the debtor may continue.

True

False

A Chapter 7 bankruptcy allows a debtor to liquidate his or her assets, distribute them to the creditors, and exit the bankruptcy with all nonexempt debts discharged.

True

False

Which of the following can be discharged in a bankruptcy?

Back taxes that are 3 years overdue

Student Loans

Alimony

Child Support

Which of the following personal items cannot be exempted from liquidation in a bankruptcy?

Some interest in the debtor's residence

Some interest in the debtor's personal vehicle

The debtor's life insurance

The debtor's municipal bonds

A court ordered Lien allows a creditor to seize a debtor’s bank accounts or wages.

True

False

A secured transaction occurs when repayment of a debt is guaranteed, or secured, by personal property owned by the debtor, and the property that secures the debt is called collateral.

True

False

Answer 1

1. True. Bankruptcy filing only stops the debt collection, however, any civil lawsuits such as for committing fraud will continue.

2. True. Chapter 13 bankruptcy deals with repayment structures and Chapter 7 bankruptcy all non-exempt properties are liquidated to pay off creditors.

3. Alimony and Child support cannot be discharged in bankruptcy. Student loans and back taxes can be discharge but are difficult. Student loans can be discharged if you satisfy the condition that paying the loan will place undue hardship.

Correct answer = Back taxes that are 3 years overdue can be easily discharged.

4. The debtor's municipal bonds are not exempted. The ownership is transferred.

5. True. When a creditor obtains a judgement lien they can seize debtor's bank account and wages.

6. True. A secured debt is backed by an asset such as property. This property becomes the collateral,