Debt, Credit, and Bankruptcy

Question 1

Secured Debt

Answer 1

Mortgage, car loans, any debt that is secured by real property.

Question 2

Unsecured Debt

Answer 2

Credit Cards, personal loans, and lines of credit. Debt that is not secured by collateral

Question 3

A divorce decree will discharge third-party debts

Answer 3

False

Question 4

Chapter 7 Bankruptcy

Answer 4

Chapter 7 allows you to liquidate all of your assets and use the proceeds to pay off your debts, erasing the debts that cannot be paid in full. All unsecured debts are forgiven, and all assets over statutory minimum protected amounts are forfeited. Creditors have the right to repossess their fair share of the assets. The net proceeds from the sale of the assets are divided pro-rata among the unsecured creditors

Question 5

Chapter 13

Answer 5

Chapter 13 allows you to develop a pay-off plan over a three-year period. The assets may be preserved and the debtor is allowed to pay off all of the secured debt, as well as a portion of the unsecured debt, and discharge the rest of the unsecured debt. The debtor needs to make payments under a plan.

Question 6

What debts cannot be discharged during bankruptcy

Answer 6

Child Support, Spousal support, some student loans, and recent taxes,