Consumer Protection Laws Flashcards
What federal Act was designed to protect investors in the event of a brokerage firm liquidation, merger, or bankruptcy?
The Securities Investor Protection Act of 1970 (SIPA)
This is the legal process of repaying creditors in a timely and orderly manner when the debtor (the person filing for bankruptcy) can no longer make debt payments.
Bankruptcy
Describe the types of assets that are exempt from bankruptcy liquidation.
The following assets are typically exempt from liquidation to pay creditors:
Value of car up to $3,775
$1,600 in jewelry
$12,625 in household goods
$2,347 in tools used in trade
Spousal and child support
Social Security benefits
Unemployment benefits
Veteran’s benefits
Public assistance
Disability benefits
Certain benefits received in a civil court case
Life insurance
Education assets in a Coverdell ESA or 529 plan made at least two years prior to filing
Qualified retirement plan assets
IRAs up to $1,283,025, adjusted for inflation
Rollover IRAs have 100% exemption regardless of value, because they were previously covered by ERISA, and this protection remains in force throughout the bankruptcy
Duly filed homestead exemption
Describe important differences between Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 involves the immediate discharge of debts and liabilities. Chapter 13 is different from Chapter 7 bankruptcy, as a plan is put in place that takes time to administer. With Chapter 13, the debtor:
Remains in possession of assets
Waits months or years before debts are discharged
Continuins to make payments until debts are paid or discharged
Obtainins protection from lawsuits and garnishments while in bankruptcy
Has a broader elimination of debts
Under what federal Act must financial planners provide clients with a notice of the planner’s privacy policies and practices?
The Gramm-Leach-Bliley Act
In additional to investment advisers and brokerage firms, what other institutions must follow privacy laws?
6 / 10 SHOW ALLHIDESHUFFLE Time Spent: 00:32fc.prot.laws.010_17 Other institutions that must follow privacy laws include: Banks Savings and Loans Credit Unions Insurance Companies Securities Firms and Brokerage Companies Retailers that issue their own credit cards Mortgage Brokers Commodities Brokers Automobile Dealerships that arrange financing Check Cashers Payday and Title Loan lenders Credit Counseling Services Sellers of Money Orders and Traveler's Checks
What agency steps in to protect consumers when a brokerage firm files for bankruptcy protection?
The Securities Investor Protection Corporation (SIPC)
This form of bankruptcy, called Adjustment of Debts of an Individual with Regular Income, is designed for an individual debtor who has a regular source of income.
Chapter 13 bankruptcy
This form of bankruptcy, called liquidation, allows for an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors, subject to the debtor’s right to retain certain exempt property and the rights of secured creditors.
Chapter 7 bankruptcy
What debts are non-dischargeable in a bankruptcy?
Examples of non-dischargeable debts include:
Internal Revenue Service (IRS) liabilities
Local and state tax liabilities
Student loan debt
Money owed to others obtained via criminal or unethical behavior
Government loans
Civil court jury awards
Criminal fines
Money obtained from embezzlement
Liability claims from driving under the influence
Credit card advances
Extravagant purchases made with a credit card(s)
Alimony
Child support
