Introduction to Bankruptcy: A Comprehensive Guide for Law Students

Question 1

Under which Chapter of the Bankruptcy Code can debtors liquidate assets and distribute proceeds to creditors?

Accepted Answer

Chapter 7: Liquidation

Answer

Chapter 11: Reorganization

Answer

Chapter 13: Repayment Plan

Question 2

What is the primary objective of filing for Chapter 11 bankruptcy?

Accepted Answer

To reorganize and restructure business or personal finances

Answer

To discharge all debts

Answer

To sell assets to pay off creditors

Question 3

Which of the following is NOT an eligibility requirement for filing for Chapter 13 bankruptcy?

Accepted Answer

Unsecured debt below $394,725

Answer

Regular income

Answer

Feasibility of repayment plan

Question 4

In a bankruptcy case, what is the primary duty of the appointed trustee?

Accepted Answer

To administer and distribute the debtor's assets

Answer

To represent the debtor's interests in court

Answer

To evaluate the debtor's financial circumstances

Question 5

Which of the following is NOT a right granted to debtors under the Bankruptcy Code?

Accepted Answer

Right to a trial by jury

Answer

Automatic stay of collection actions

Answer

Discharge of eligible debts

Question 6

What is the fundamental distinction between a secured and an unsecured debt in bankruptcy?

Accepted Answer

Secured debts are backed by collateral, while unsecured debts are not.

Answer

Unsecured debts have a higher priority in bankruptcy than secured debts.

Answer

Secured debts are automatically discharged in bankruptcy, while unsecured debts are not.

Question 7

What is the primary effect of an automatic stay in bankruptcy?

Accepted Answer

It temporarily halts most creditor collection actions against the debtor.

Answer

It permanently discharges all debts of the debtor.

Answer

It allows the debtor to continue operating their business without restrictions.

Question 8

What is the purpose of the means test in bankruptcy?

Accepted Answer

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

Answer

To evaluate the feasibility of a Chapter 13 repayment plan.

Answer

To assess the potential impact of bankruptcy on creditors.

Question 9

Which of the following is not a type of bankruptcy proceeding?

Accepted Answer

Chapter 9

Answer

Chapter 7

Answer

Chapter 11

Answer

Chapter 13

Question 10

In which type of bankruptcy proceeding does the debtor liquidate their assets to pay creditors?

Accepted Answer

Chapter 7

Answer

Chapter 11

Answer

Chapter 13

Question 11

What is the purpose of the automatic stay in bankruptcy?

Accepted Answer

To halt collection actions against the debtor

Answer

To allow the debtor time to develop a reorganization plan

Answer

To distribute the debtor's assets to creditors

Question 12

What is the role of the trustee in a Chapter 7 bankruptcy proceeding?

Accepted Answer

To liquidate the debtor's assets and distribute proceeds to creditors

Answer

To develop and implement a reorganization plan

Answer

To assist the debtor in managing their finances

Question 13

What is the difference between a secured and an unsecured claim?

Accepted Answer

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

Answer

An unsecured claim has priority over a secured claim

Answer

A secured claim is discharged in bankruptcy, while an unsecured claim is not

Question 14

Which of the following is a purpose of the Bankruptcy Code?

Accepted Answer

To both of the above

Answer

To provide debtors with an opportunity for a fresh start

Answer

To protect creditors from unfair practices by debtors

Question 15

Which type of bankruptcy allows debtors to liquidate their assets and discharge most of their unsecured debts?

Accepted Answer

Chapter 7

Answer

Chapter 11

Answer

Chapter 13

Question 16

Which of the following is not an advantage of filing for Chapter 13 bankruptcy?

Accepted Answer

Immediate liquidation of assets to satisfy creditors

Answer

Consolidation of debts into a manageable repayment plan

Answer

Potential discharge of remaining debts after completion of the plan

Question 17

What is the primary purpose of the automatic stay in bankruptcy?

Accepted Answer

To prevent creditors from pursuing collection efforts against the debtor

Answer

To allow debtors to reorganize their debts and finances

Answer

To facilitate the liquidation of the debtor's assets

Question 18

Which of the following is not a responsibility of a bankruptcy trustee?

Accepted Answer

Managing the day-to-day operations of the debtor's business

Answer

Investigating the debtor's financial affairs

Answer

Distributing assets to creditors according to the bankruptcy code

Question 19

What type of debt is typically not dischargeable in bankruptcy?

Accepted Answer

Student loans

Answer

Medical expenses

Answer

Credit card balances

Question 20

Which of the following is NOT a type of bankruptcy proceeding available under the United States Bankruptcy Code?

Accepted Answer

Chapter 12

Answer

Chapter 7

Answer

Chapter 11

Answer

Chapter 13

Question 21

In a Chapter 11 bankruptcy, what is the main objective of the debtor?

Accepted Answer

To reorganize their debts and continue operating as a business

Answer

To have their debts discharged without repaying any creditors

Answer

To liquidate their assets and distribute the proceeds to creditors

Answer

To sell their assets to the highest bidder and use the proceeds to pay off creditors

Question 22

Who is responsible for overseeing and administering bankruptcy proceedings?

Accepted Answer

The United States Trustee

Answer

The debtor's attorney

Answer

The bankruptcy judge

Answer

The creditors

Question 23

What is the purpose of an automatic stay in bankruptcy?

Accepted Answer

To prevent creditors from pursuing collection actions against the debtor

Answer

To allow the debtor to continue using their assets and income

Answer

To give the debtor time to develop a repayment plan

Answer

To protect the interests of secured creditors

Question 24

True or False: A debtor can file for bankruptcy multiple times in their lifetime.

Accepted Answer

True

Answer

False

Question 25

Which proceeding is NOT a type of bankruptcy under US law?

Accepted Answer

Chapter 9

Answer

Chapter 7

Answer

Chapter 11

Answer

Chapter 13

Question 26

What is the main objective of Chapter 7 bankruptcy?

Accepted Answer

To liquidate the debtor's assets and distribute the proceeds to creditors

Answer

To reorganize and continue the debtor's business

Answer

To create a plan for repaying creditors over time

Answer

To protect the debtor from foreclosure on their home

Question 27

What is the effect of an automatic stay in bankruptcy?

Accepted Answer

It suspends all legal actions against the debtor

Answer

It prevents creditors from contacting the debtor

Answer

It allows the debtor to continue using their credit cards

Answer

It discharges all of the debtor's debts

Question 28

What is the primary purpose of a Chapter 13 bankruptcy plan?

Accepted Answer

To repay creditors over a specified period

Answer

To discharge all of the debtor's debts

Answer

To create a new budget for the debtor

Answer

To protect the debtor's assets from creditors

Question 29

What is the role of the bankruptcy trustee?

Accepted Answer

To manage the debtor's estate

Answer

To represent the interests of the creditors

Answer

To provide financial advice to the debtor

Answer

To determine the debtor's eligibility for bankruptcy

Question 30

What are the primary distinctions between Chapter 7 and Chapter 13 bankruptcy proceedings?

Accepted Answer

Chapter 7 involves liquidating assets, while Chapter 13 focuses on reorganizing debt.

Accepted Answer

Chapter 13 requires debtors to submit a plan outlining how they will repay creditors over time.

Accepted Answer

Chapter 7 typically leads to a complete discharge of debts, whereas Chapter 13 often results in only a partial discharge.

Question 31

Which type of bankruptcy is most commonly filed by individuals?

Accepted Answer

Chapter 7

Answer

Chapter 11

Answer

Chapter 13

Answer

Chapter 15

Question 32

What is the primary objective of Chapter 11 bankruptcy?

Accepted Answer

To allow the debtor to reorganize and continue operating as a going concern

Answer

To liquidate the debtor's assets and distribute the proceeds to creditors

Answer

To provide a temporary halt to creditor actions while the debtor negotiates a repayment plan

Answer

To exempt the debtor from all debts owed to creditors

Question 33

Which feature is unique to Chapter 13 bankruptcy?

Accepted Answer

The debtor is required to submit a repayment plan

Answer

The debtor's assets are liquidated and proceeds are distributed to creditors

Answer

The debtor is typically a business or corporation

Answer

The debtor is not eligible to file for bankruptcy again for a specific period

Question 34

What is the primary role of the bankruptcy trustee?

Accepted Answer

To administer the debtor's assets and oversee the bankruptcy process

Answer

To represent the debtor in negotiations with creditors

Answer

To assess the debtor's financial situation and make recommendations to the court

Answer

To file the bankruptcy petition on behalf of the debtor

Question 35

Which type of debt must be paid in full in Chapter 7 bankruptcy?

Accepted Answer

Child support

Answer

Student loans

Answer

Credit card debt

Answer

Medical bills

Question 36

What is the purpose of the automatic stay in bankruptcy?

Accepted Answer

To prevent creditors from taking collection actions against the debtor

Answer

To allow the debtor to negotiate a settlement with creditors

Answer

To exempt the debtor's assets from being seized by creditors

Answer

To discharge all of the debtor's debts

Question 37

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

Accepted Answer

To determine if the debtor is eligible to file for Chapter 7 bankruptcy

Answer

To calculate the amount of the debtor's monthly payment

Answer

To prioritize the distribution of the debtor's assets to creditors

Answer

To determine if the debtor has committed any bankruptcy fraud

Question 38

Which of the following is an ethical consideration for attorneys involved in bankruptcy proceedings?

Accepted Answer

Maintaining confidentiality of client information

Accepted Answer

Avoiding conflicts of interest

Accepted Answer

Giving legal advice that is in the best interest of the client

Answer

Engaging in aggressive tactics to maximize client recovery

Question 39

Which of the following is NOT a type of bankruptcy proceeding under the United States Bankruptcy Code?

Accepted Answer

Chapter 14

Answer

Chapter 11

Answer

Chapter 7

Answer

Chapter 13

Question 40

What is the primary purpose of filing for Chapter 7 bankruptcy?

Accepted Answer

Liquidation of assets to pay creditors

Answer

Adjustment of debts

Answer

Dismissal of all debts

Answer

Reorganization of debts

Question 41

Which of the following is a potential benefit of filing for bankruptcy?

Accepted Answer

Protection from creditor harassment and collection actions

Answer

Immediate improvement in credit score

Answer

Guaranteed forgiveness of all debts

Question 42

Who is eligible to file for bankruptcy under the United States Bankruptcy Code?

Accepted Answer

Individuals, partnerships, and corporations

Answer

Only individuals with low incomes

Answer

Only partnerships with more than 10 partners

Answer

Only corporations with large debts

Question 43

What is the purpose of the automatic stay in bankruptcy?

Accepted Answer

To temporarily stop creditors from taking actions to collect debts from the debtor

Answer

To discharge the debtor from all debts

Answer

To allow the debtor to continue operating their business as usual

Question 44

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

Accepted Answer

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

Answer

To prioritize the payment of debts to creditors

Answer

To calculate the amount of debt that a debtor can discharge

Question 45

What are the potential consequences of receiving a discharge in bankruptcy?

Accepted Answer

Most debts are discharged, but some debts may remain non-dischargeable, such as student loans or certain taxes.

Answer

The debtor is immediately eligible for new credit without restrictions.

Answer

The debtor's credit score will be permanently damaged.

Question 46

Which of the following is NOT a duty of a debtor in a bankruptcy proceeding?

Accepted Answer

To make false statements about their financial situation or assets

Answer

To cooperate with the bankruptcy trustee

Answer

To provide complete and accurate financial information

Question 47

What is the primary role of a bankruptcy trustee in a bankruptcy proceeding?

Accepted Answer

To administer the bankruptcy estate, liquidate assets, and distribute proceeds to creditors

Answer

To determine if the debtor is eligible for bankruptcy

Answer

To represent the debtor in court

Question 48

Which chapter of the Bankruptcy Code facilitates a 'fresh start' for debtors?

Accepted Answer

Chapter 7

Answer

Chapter 13

Answer

Chapter 11

Answer

Chapter 12

Question 49

In a Chapter 11 bankruptcy, what is the primary objective of the debtor entity?

Accepted Answer

To reorganize its debts and continue operating as a going concern.

Answer

To obtain discharge of all dischargeable debts.

Answer

To liquidate assets and distribute proceeds to creditors.

Answer

To sell assets and pay off creditors in full.

Question 50

What is the primary function of the automatic stay in bankruptcy?

Accepted Answer

To temporarily halt creditor actions against the debtor, providing a 'breathing spell'

Answer

To authorize the sale of the debtor's assets and distribution of proceeds to creditors.

Answer

To require the debtor to discharge their debts within a specified timeframe.

Question 51

What is the primary responsibility of a bankruptcy trustee?

Accepted Answer

To administer and oversee the bankruptcy estate, ensuring compliance with legal requirements.

Answer

To make recommendations to the bankruptcy judge regarding the debtor's financial situation.

Answer

To represent the debtor in court proceedings.

Answer

To negotiate settlements with creditors on behalf of the debtor.

Question 52

What is the primary purpose of a Chapter 13 bankruptcy plan?

Accepted Answer

To establish a structured repayment schedule for the debtor's debts over a period of time.

Answer

To discharge all of the debtor's debts immediately.

Answer

To liquidate the debtor's assets and distribute proceeds to creditors.

Question 53

Which of the following is a potential advantage of filing for bankruptcy?

Accepted Answer

It can provide temporary relief from foreclosure or eviction proceedings.

Answer

It can eliminate all of the debtor's debts without any consequences.

Answer

It can significantly improve the debtor's credit score.

Question 54

What is the fundamental difference between voluntary and involuntary bankruptcy?

Accepted Answer

Voluntary bankruptcy is initiated by the debtor, while involuntary bankruptcy is initiated by creditors.

Answer

Voluntary bankruptcy is always filed under Chapter 7, while involuntary bankruptcy can be filed under Chapter 11 or Chapter 13.

Answer

Voluntary bankruptcy is only available to individuals, while involuntary bankruptcy is only available to businesses.