NALA Exam Bankruptcy Questions & Answers 2024/2025
Purpose of Bankruptcy - ANSWERS-Provide protection to creditors
-Provide opportunities for debtors to gain a "fresh financial start"
-To help the honest but unfortunate debtor
Bankruptcy Abuse Prevention and Consumer Protection Act of 200...
Purpose of Bankruptcy - ANSWERS-Provide protection to creditors
-Provide opportunities for debtors to gain a "fresh financial start"
-To help the honest but unfortunate debtor
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) - ANSWERSLegislative act
that made many changes and overhaul to the bankruptcy code
Changes made:
- Created a means test to qualify for bankruptcy
- Required credit counseling before filing bankruptcy
- Required debtor education/financial management course before discharge
Means Test - ANSWERSAn income qualification that determines ones eligibility to file for Chapter 7
Bankruptcy
Looks at income and ability to repay
Debtor's prisons - ANSWERSAn early form of prison, for those who could not pay their debts
No longer used
Could have a bench warrant issued equal to the amount of the debt owed in some states if a debtor does
not show up to hearings
Common Types of Debt in Bankruptcy - ANSWERSCredit Cards
Online Loans
Car Loans
Mortgages
Student Loans
, Taxes
Other debts
Types of Debts Available to Individuals - ANSWERSChapter 7
Chapter 11
Chapter 12
Chapter 13
Chapter 7 Bankruptcy - ANSWERSA liquidation of assets for individuals who have financial difficulty
preventing them from paying their debtors and who are willing to allow their non exempt property to be
used to pay their creditors with the purpose to have debts discharged
Chapter 11 Bankruptcy - ANSWERSA reorganization form of bankruptcy that is typically used for
businesses but is also available for individuals
Chapter 12 Bankruptcy - ANSWERSA form of bankruptcy that lets family farmers and fisherman to create
a plan for debt repayment over a period of time using future earnings and to discharge some debts that
are not paid
Allows the operations to stay running
Chapter 13 Bankruptcy - ANSWERSA reorganization form of bankruptcy for individuals who have regular
income and would like to pay all or part of their debts in installments over a period of time to discharge
some debts that are not paid
Eligibility for Chapter 7 Bankruptcy - ANSWERSIndividuals and Business can file
Means test --> Below Median
Means test --> No disposable exemption from means test (non-consumer debt)
Eligibility for Chapter 13 Bankruptcy - ANSWERSIndividuals only can file, including sole proprietors
Corporations cannot file for Chapter 13
Must be an individual with monthly income
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