Business Law (Chapter 6)

What is the main purpose of bankruptcy?

• To punish people for not paying debts

• To help debtors hide assets

• To provide debt relief and ensure fair treatment of creditors

• To avoid paying taxes

What is a “debtor” in the context of bankruptcy?

• A person who collects debts

• A lawyer who files for bankruptcy cases

• An individual or business that owes money

• A judge in a bankruptcy case

Which of the following is true about the automatic stay?

• It stops creditors from collecting debts once bankruptcy is filed

• It increases the debtor’s wages

• It sells the debtor’s property

• It allows creditors to continue lawsuits

What is one common reason why people file for bankruptcy?

• Excessive online shopping

• Medical emergencies and overwhelming bills

• Gambling addiction only

• Changing bank accounts

Which type of debt is usually NOT discharged through bankruptcy?

• Credit card debt

• Medical bills

• Personal loans

• Student loans

How long does a Chapter 7 bankruptcy stay on a credit report?

• 5 years

• 7 years

• 10 years

• 15 years

What is the historical origin of the term “bankruptcy”?

• From Italian "banca rotta" meaning broken bench

• From Latin "ruptus creditus" meaning broken bench

• From English "bank ledger" meaning broken bench

• From French "banque route" meaning broken bench

What was a major result of the Bankruptcy Reform Act of 1978?

• Eliminated all student debt

• Made bankruptcy illegal for businesses

• Created modern bankruptcy chapters like 7, 11, and 13

• Introduced the first U.S. bankruptcy laws

What was the purpose of the 2005 BAPCPA law?

• Made all debt dischargeable

• Reduced legal fees for debtors

• Toughened eligibility for Chapter 7 to prevent abuse

• Allowed states to bypass federal bankruptcy laws

Which of the following entities can file for bankruptcy?

• Only individuals

• Only businesses

• Only government institutions

• Individuals, businesses, and municipalities