Chapter 7 Bankruptcy Overview Quiz

What is the primary goal of Chapter 7 bankruptcy?

• To maximize the return to creditors

• To provide a fresh start to the debtor

• To consolidate debts for easier payment

• To negotiate with creditors for lower debt amounts

What percentage of bankruptcy cases filed in the United States in 2016 were Chapter 7?

• More than 63%

• More than 75%

• Less than 40%

• About 50%

Which of the following assets may be collected and distributed to creditors in a Chapter 7 proceeding?

• Reasonably necessary clothing

• Primary residence

• Personal items deemed necessary

• A second car or truck

What is a major disadvantage of filing for Chapter 7 bankruptcy?

• It depresses the debtor's credit score

• It permanently removes the ability to file for bankruptcy again

• It exempts all personal property from collection

• It significantly increases the debtor's credit score

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

• Credit card debt

• Income taxes less than three years due

• Mortgage payments

• Personal loans from friends

What must a debtor do before filing for Chapter 7 bankruptcy?

• Obtain consent from all creditors

• Repay all dischargeable debts

• Complete credit counseling from an approved agency

• Sell all non-exempt property

What determines a debtor's eligibility to file for Chapter 7 bankruptcy?

• The debtor's employment status

• The total amount of the debtor's debts

• The debtor's current monthly income and disposable income

• The debtor's willingness to sell personal assets

What happens immediately after a Chapter 7 bankruptcy petition is filed?

• All creditors are immediately paid off

• All of the debtor's assets are seized

• The debtor's credit score improves

• An automatic stay takes effect

Who is appointed by the court to handle the bankruptcy estate in a Chapter 7 case?

• A federal judge

• The debtor's financial advisor

• A bankruptcy attorney

• A trustee

What is the purpose of the first meeting of creditors in a Chapter 7 case?

• To elect a representative among the creditors

• To assess the validity of the claimed exemptions

• To finalize the discharge of debts

• To negotiate debt repayment plans