Bankruptcy Discharge: Understanding Debts Eligible for Discharge

Question 1

In bankruptcy, what is the main reason for entering into a reaffirmation agreement?

Accepted Answer

To reinstate a debt that would otherwise be discharged, making the debtor personally responsible for its repayment.

Answer

To extend the time limit for a debt, giving the creditor more time to collect.

Answer

To transfer the debt to another person, releasing the debtor from any obligation to repay it.

Question 2

In Chapter 13 bankruptcy, what is the primary goal of the plan?

Accepted Answer

To repay creditors in full or in part

Answer

To liquidate the debtor's assets

Answer

To obtain a discharge of debts

Answer

To avoid foreclosure on the debtor's home

Question 3

What type of discharge may be granted in a Chapter 7 bankruptcy where the debtor has engaged in intentional misconduct, such as hiding assets or lying on the bankruptcy petition?

Accepted Answer

Denial of discharge

Answer

Discharge with conditions

Answer

Partial discharge

Answer

Automatic discharge

Question 4

What is the purpose of the means test in Chapter 7 bankruptcy?

Accepted Answer

To determine if the debtor qualifies for Chapter 7 based on income and assets

Answer

To determine if the debtor has sufficient assets to repay creditors

Answer

To determine if the debtor has engaged in misconduct

Answer

To determine if the debtor is eligible for a discharge

Question 5

What is the distinction between a secured and unsecured debt in the context of bankruptcy?

Accepted Answer

A secured debt is backed by collateral, while an unsecured debt is not

Answer

A secured debt has a higher priority than an unsecured debt

Answer

An unsecured debt can be discharged more easily than a secured debt

Answer

A secured debt is always owed to a bank or other financial institution

Question 6

In Chapter 13 bankruptcy, how does the process of reaffirming a debt differ from that in Chapter 7 bankruptcy?

Accepted Answer

In Chapter 13, court approval is required for reaffirmation, but not in Chapter 7.

Answer

In Chapter 7, a reaffirmation agreement must be in writing, but not in Chapter 13.

Answer

In Chapter 13, any type of debt can be reaffirmed, while in Chapter 7, only secured debts can be reaffirmed.

Answer

In Chapter 7, there is a time limit for reaffirming debts, but not in Chapter 13.

Question 7

Which of the following debts is NOT dischargeable under Chapter 7 bankruptcy in the United States?

Accepted Answer

Student loans

Answer

Credit card debt

Answer

Medical bills

Answer

Personal loans

Question 8

In a Chapter 13 bankruptcy, what is the primary purpose of a discharge?

Accepted Answer

To release the debtor from personal liability for remaining debts after the repayment plan is fulfilled.

Answer

To immediately terminate all debt obligations.

Question 9

What is a potential benefit of filing for bankruptcy discharge?

Accepted Answer

Fresh start with reduced or eliminated debt obligations.

Answer

Increased credit score

Answer

Guaranteed job security

Question 10

In a Chapter 13 bankruptcy, when does the discharge typically take effect?

Accepted Answer

Upon completion of the repayment plan

Answer

After the creditors' meeting

Answer

Immediately upon filing the petition

Answer

When the court approves the plan

Question 11

What is the primary purpose of the "means test" in U.S. bankruptcy proceedings?

Accepted Answer

To determine whether a debtor is eligible for Chapter 7 bankruptcy based on income and assets.

Answer

To calculate the amount of debt that can be discharged.

Answer

To determine whether a debtor has committed any bankruptcy fraud.

Question 12

Which of the following is NOT a type of property that is typically exempt from bankruptcy liquidation in the United States?

Accepted Answer

Luxury vehicles

Answer

Primary residence

Answer

Tools of trade

Answer

Necessary clothing

Question 13

What is the effect of a discharge on a co-debtor in the United States?

Accepted Answer

It typically does not release the co-debtor from liability for the debt.

Answer

It discharges the co-debtor even if they did not file for bankruptcy.

Answer

It only discharges the co-debtor if they are married to the debtor.

Question 14

Which of the following is a potential negative consequence of filing for bankruptcy in the United States?

Accepted Answer

Negative impact on credit score

Answer

Improved job prospects

Answer

Guaranteed housing

Answer

Increased income

Question 15

When can student loans be discharged in bankruptcy?

Accepted Answer

Only if the debtor proves undue hardship.

Answer

Always.

Answer

If the debtor has repaid more than half of the loan.

Question 16

How does bankruptcy discharge typically affect an individual's creditworthiness?

Accepted Answer

It gradually recovers over time.

Answer

It remains unchanged.

Answer

It deteriorates permanently.

Answer

It experiences unpredictable fluctuations.

Question 17

Which of the following debts is NOT dischargeable under Chapter 7 bankruptcy?

Accepted Answer

Student loans that were: Incurred during or related to a period of enrollment at an educational institution and necessary for the cost of attendance as an undergraduate

Answer

Medical bills

Answer

Personal loans

Answer

Credit card debts

Question 18

What is the general effect of a bankruptcy discharge?

Accepted Answer

It releases the debtor from personal liability for the discharged debts

Answer

It transfers the debtor's property to the bankruptcy trustee

Answer

It voids all contracts entered into by the debtor

Question 19

What is the "fresh start" principle in bankruptcy?

Accepted Answer

It is the concept that allows debtors to obtain a discharge of their debts in order to start anew financially

Answer

It prohibits creditors from collecting on discharged debts

Answer

It grants debtors a second chance to file for bankruptcy

Question 20

What is the "means test" in bankruptcy?

Accepted Answer

It is a test used to determine a debtor's eligibility for Chapter 7 bankruptcy

Answer

It is a test used to determine the amount of debt that a debtor can discharge

Answer

It is a test used to determine the amount of income that a debtor must have to file for bankruptcy

Question 21

Which of the following is NOT a type of property that is generally exempt from bankruptcy?

Accepted Answer

Luxury vehicles

Answer

Homestead property

Answer

Retirement accounts

Question 22

Under Chapter 7 bankruptcy, which of the following types of debt is generally dischargeable?

Accepted Answer

Unsecured consumer debt

Answer

Secured debt

Answer

Debts incurred through fraud or intentional misconduct

Answer

Priority debts, such as taxes and child support

Question 23

In the context of bankruptcy discharge, what does the term 'reaffirmation' refer to?

Accepted Answer

A debtor's voluntary agreement to repay a debt that is otherwise dischargeable

Answer

A creditor's acceptance of a partial payment in exchange for waiving the remaining debt

Answer

A court order requiring a debtor to repay a debt that was not discharged

Question 24

Which of the following is an effect of a bankruptcy discharge?

Accepted Answer

Elimination of personal liability for dischargeable debts

Answer

Immediate improvement of credit score

Answer

Automatic restoration of property that was foreclosed upon prior to bankruptcy

Question 25

In a Chapter 13 bankruptcy, what is the role of a Chapter 13 trustee?

Accepted Answer

Administering the bankruptcy estate, overseeing the debtor's repayment plan, and distributing payments to creditors

Answer

Representing the debtor in bankruptcy court

Answer

Negotiating with creditors on behalf of the debtor

Question 26

What is the primary difference between a Chapter 7 and a Chapter 13 bankruptcy discharge?

Accepted Answer

Chapter 7 discharges eligible debts immediately, while Chapter 13 involves a repayment plan and potential discharge upon completion

Answer

Chapter 7 requires the liquidation of all non-exempt property, while Chapter 13 does not

Answer

Chapter 7 is only available to individuals, while Chapter 13 is available to both individuals and businesses

Question 27

Which of the following debts is specifically excluded from discharge in Chapter 7 bankruptcy?

Accepted Answer

Student loans obtained after filing for bankruptcy

Answer

Personal loans

Answer

Credit card debt

Answer

Medical bills

Question 28

The automatic stay in bankruptcy:

Accepted Answer

Prohibits creditors from initiating or continuing certain collection actions against the debtor

Answer

Discharges all of the debtor's debts without any further action

Answer

Allows the debtor to sell their assets and distribute the proceeds to creditors

Question 29

The means test in bankruptcy is used to determine:

Accepted Answer

Whether a debtor is eligible to file for Chapter 7 bankruptcy based on their income and assets

Answer

Whether a debtor is eligible for Chapter 13 bankruptcy

Answer

The amount of debt that can be discharged in bankruptcy

Question 30

Which of the following is a type of debt that is secured by collateral?

Accepted Answer

Auto loan

Answer

Personal loan

Answer

Credit card debt

Answer

Student loan

Question 31

The cramdown provision in bankruptcy allows a Chapter 13 debtor to:

Accepted Answer

Modify the terms of a secured debt, such as reducing the interest rate or extending the repayment period

Answer

Discharge all secured debts without having to repay them

Answer

Sell secured property and use the proceeds to pay off the debt in full

Question 32

Which type of bankruptcy is primarily focused on reorganizing a business's debts and operations?

Accepted Answer

Chapter 11

Answer

Chapter 7

Answer

Chapter 12

Answer

Chapter 13

Question 33

The primary purpose of a Chapter 13 bankruptcy plan is to:

Accepted Answer

Allow the debtor to repay their debts over an extended period of time, typically 3 to 5 years

Answer

Reorganize the debtor's business and continue operating it

Answer

Liquidate the debtor's assets and distribute the proceeds to creditors

Answer

Discharge all of the debtor's debts without any repayment

Question 34

In Chapter 7 bankruptcy, which types of debts are not dischargeable?

Accepted Answer

Student loans, certain taxes, and domestic support obligations

Answer

Personal loans

Answer

Credit card debt

Answer

Medical bills

Question 35

In Chapter 13 bankruptcy, what is the maximum time period for a repayment plan?

Accepted Answer

60 months for most debtors, 84 months for those with higher incomes or complex cases

Answer

36 months

Answer

Indefinite

Answer

120 months

Question 36

Which of the following is a condition for obtaining a bankruptcy discharge?

Accepted Answer

Completion of debtor education courses, and compliance with court orders

Answer

Proof of exceptional circumstances

Answer

Payment of all debts in full

Answer

Filing for bankruptcy multiple times

Question 37

What is the key difference between a reaffirmation agreement and a redemption agreement in bankruptcy?

Accepted Answer

Reaffirmation maintains the debt and restores the debtor's obligation to pay it, while redemption buys back the property securing the debt and removes the lien.

Answer

Redemption maintains the debt, while reaffirmation buys back the property securing the debt.

Answer

Both reaffirmation and redemption eliminate the debt and release the debtor from liability.

Question 38

What are the consequences of failing to comply with the terms of a Chapter 13 repayment plan?

Accepted Answer

Revocation of discharge or conversion to Chapter 7 bankruptcy

Answer

Automatic dismissal of the bankruptcy case

Answer

No consequences

Question 39

What is the legal doctrine that prevents creditors from pursuing discharged debts?

Accepted Answer

Res judicata

Answer

Estoppel

Answer

Subrogation

Answer

Eminent domain

Question 40

Which of the following is a benefit of obtaining a bankruptcy discharge?

Accepted Answer

Relief from overwhelming debt and a fresh financial start

Answer

Increased credit score

Answer

Automatic restoration of all rights and privileges

Answer

Enhanced employment opportunities

Question 41

Which of the following debts is NOT dischargeable under Chapter 7 bankruptcy in the United States?

Accepted Answer

Student loans

Answer

Medical bills

Answer

Unsecured personal loans

Answer

Credit card debt

Question 42

Which of the following can prevent a discharge in bankruptcy in the United States?

Accepted Answer

Fraudulent behavior

Answer

Excessive debt

Answer

Inability to repay creditors

Answer

Low income

Question 43

What is the purpose of a reaffirmation agreement in bankruptcy in the United States?

Accepted Answer

To reaffirm a debt that would otherwise be discharged

Answer

To increase the amount of debt owed

Answer

To extend the repayment period

Question 44

Which of the following is true about Chapter 11 bankruptcy in the United States?

Accepted Answer

It is a reorganization bankruptcy for businesses and large corporations

Answer

It automatically liquidates all assets

Answer

It is only available to individuals

Question 45

What is the difference between a secured debt and an unsecured debt in bankruptcy in the United States?

Accepted Answer

A secured debt is backed by collateral, while an unsecured debt is not

Answer

An unsecured debt is always dischargeable

Answer

A secured debt has a higher interest rate

Question 46

What are the potential consequences of filing for bankruptcy in the United States?

Accepted Answer

Negative impact on credit score, difficulty obtaining credit, loss of property

Answer

Improved financial stability

Answer

Increased income

Question 47

Which of the following is NOT a factor considered in determining whether a Chapter 13 plan is feasible in the United States?

Accepted Answer

The debtor's age

Answer

The debtor's current expenses

Answer

The amount of debt owed

Answer

The length of the repayment period

Question 48

What is the role of the bankruptcy trustee in the United States?

Accepted Answer

To administer the bankruptcy estate and distribute assets to creditors

Answer

To determine whether a discharge is granted

Answer

To represent the debtor in court

Question 49

Which of the following statements about bankruptcy discharge in the United States is true?

Accepted Answer

It releases the debtor from personal liability for dischargeable debts

Answer

It always includes all debts owed by the debtor

Answer

It is guaranteed to be granted in all cases

Question 50

Which of the following is NOT a debt that can be discharged under Chapter 7 bankruptcy?

Accepted Answer

Student loans

Answer

Medical bills

Answer

Personal loans

Answer

Credit card debt

Question 51

Under Chapter 13 bankruptcy, debtors are required to:

Accepted Answer

Develop and adhere to a plan to repay creditors over a period of time

Answer

Liquidate all assets to pay off debts

Answer

Surrender their entire income to the bankruptcy trustee

Question 52

Which of the following is NOT a factor considered by the bankruptcy court when determining whether to grant a discharge?

Accepted Answer

The debtor's age

Answer

The debtor's income

Answer

The debtor's living expenses

Question 53

Which of the following debts is NOT considered a priority debt in bankruptcy?

Accepted Answer

Unsecured personal loans

Answer

Wages

Answer

Taxes

Answer

Domestic support obligations

Question 54

The automatic stay in bankruptcy:

Accepted Answer

Prohibits creditors from initiating or continuing collection efforts against the debtor

Answer

Allows creditors to seize assets immediately

Answer

Requires the debtor to surrender all property to the bankruptcy trustee

Question 55

Which of the following is NOT a ground for objecting to a bankruptcy discharge?

Accepted Answer

The debtor's religious beliefs

Answer

The debtor's fraudulent activity

Answer

The debtor's excessive spending

Answer

The debtor's failure to list all assets and liabilities

Question 56

Which of the following statements about bankruptcy discharge is true?

Accepted Answer

A discharge is not final until the bankruptcy case is closed and all administrative matters are resolved.

Answer

A discharge is always permanent and irrevocable

Answer

A discharge can be revoked at any time