Topic 9: Bankruptcy

________ is the legal proceeding than enables an honest but unfortunate debtor who cannot pay their bills an opportunity to get a fresh financial start. (fill in the blank)

A chapter 7 bankruptcy will discharge the legal obligation to pay most or all unsecured debt. (True or False)

A client comes to see you, overwhelmed by their debt. They have $1,500 in dental bills; $550 in credit card debt; a $24,000 truck loan; $31,000 in student loan debt; and 2 mortgages on their home – leaving them with little equity. Is Chapter 7 bankruptcy a good option, which debts would likely be discharged?

During a chapter 7 bankruptcy filing, non-exempt property can be sold to pay the creditors. Your client owns the following property; which are likely non-exempt? Rare baseball card collection, work truck, antique furniture set, home they live in valued at $225,000, 401(k) account.

A client seeks your services as they are considering filing bankruptcy, but are concerned about how it will affect their credit score and for how long. What advice would you give them?

How much debt must a person have to file a chapter 7 bankruptcy?

A client in need of advice has over $500,000 dollars in medical debt, they would like to file a chapter 13 bankruptcy, can they?

The ________ _________ was designed to reserve chapter 7 filings for those who truly need the debt relief protection. It determines if a person can potentially afford to pay off most of their debt through a chapter 13 repayment plan. (fill in the blanks)

What are the 4 different forms of bankruptcy?

There are 4 different forms of bankruptcy. Which one is much like a chapter 13 filing but is for farmers?

A client comes to see you, interested in filing bankruptcy again. They heard that you can only file every 10 years is this true?

Your cousin is planning on filing bankruptcy on some medical bills and credit card debt. He has decided to pay grandma back the $1,500 he owes her before he files so she does not have to be included on the filing. Is this a good idea?

A client has decided to file bankruptcy, she thinks she will cash in her 401(k) retirement account and pay off as many creditors as possible first. Is this a good plan?

Petitioners filing bankruptcy must complete Budget and Credit Counseling within ____ days of filing. (fill in the blank)

Petitioners filing bankruptcy are required to complete an approved Personal Finance Education course. When filing chapter 13, they must complete this before their last payment is due, when must it be completed if filing a chapter 7?

Dischargeable debts are those debts that are forgiven through the bankruptcy filing. Name several debts that would likely be dischargeable.

A client seeks your advice about an upcoming bankruptcy filing. He asks you if his car loan is dischargeable debt. What is your reply?

A discharge order will not cover all types of debt. Name a few debts that are non-dischargeable.

Your brother plans to file chapter 7 bankruptcy. He has a personal loan that your mother co-signed on and she is worried that they will come after her if he files, is she right or wrong?

Often a bankruptcy petitioner will choose to reaffirm a debt, such as a car loan so they are able to keep the vehicle. When is reaffirmation not a good idea?

Your client filed a chapter 13 bankruptcy a year ago, they got in a bad car accident and are now permanently disabled and unable to work. What options do they have as far as the bankruptcy filing is concerned?

If a chapter 13 bankruptcy petitioners filing is dismissed, what happens to the debts?

How long is a typical repayment plan under a chapter 13 bankruptcy filing?

Your client who recently filed bankruptcy is concerned because they received a 1099 tax form in the mail – they are worried that the debt that was discharged will be considered income and they will have to pay taxes on it; is their concern valid?

Is non-exempt property like an RV sold to pay off creditors in a chapter 13 filing?

An automatic stay immediately prohibits creditors from engaging in any type of collection action; when does it go into effect?

Some people believe bankruptcy is a great low cost option to get out of debt fast, is this true?

During a chapter 13 bankruptcy filing, when does the first payment need to be made, who is the payment made to, and when will it be distributed to the creditors?