Module 9 - Specialty Areas and Other Considerations Flashcards
(13 cards)
What is Chapter 7 Bankruptcy?
A type of bankruptcy filing that allows you to liquidate all of your assets and use the proceeds to pay off your debts, erasing your debts that cannot be paid off in full.
All unsecured debts are forgiven and all assets over statutory minimum protected amounts are forfeited.
What is Chapter 13 Bankruptcy?
Type of bankruptcy filing that allows you to develop a pay-off plan over a 3-year period. Some of the debts may be discharged.
This type of bankruptcy is often used by individuals with regular income.
What does COBRA stand for?
Consolidated Omnibus Budget Reconciliation Act
COBRA law was passed in 1986.
What is the main purpose of COBRA?
It allows an ex-spouse to continue to receive health insurance coverage from their former spouse’s employer for up to three years after the divorce.
This applies if the employer has at least 20 employees.
How long can an employee receive COBRA coverage after leaving a job?
18 months.
This is the normal COBRA provision, but it is extended to three years in the case of divorce.
What is credit?
The measure of trustworthiness of repayment of a loan based on income, past credit history, assets, and liabilities.
After divorce, past credit history might affect the ex-spouse.
What is Qualified Principal Residence Indebtedness?
Any debt incurred in acquiring, constructing, or substantially improving a principal residence and which is secured by the principal residence.
It includes certain refinancing debt as long as it does not exceed the amount refinanced.
What is secured debt?
A loan secured by collateral to reduce the risk associated with lending.
Examples include mortgages and auto loans.
What is tax debt in the context of divorce?
For three years after a divorce, the IRS can perform random audits of joint tax returns.
The divorce agreement should provide instructions for handling audits.
What is unsecured debt?
A loan that is not secured by an underlying asset.
Includes credit cards, personal bank loans, lines of credit, and loans from family or friends.
Fill in the blank: Chapter 7 Bankruptcy allows you to _______ all of your assets to pay off debts.
liquidate
True or False: Chapter 13 Bankruptcy can discharge all debts.
False
Some debts may be discharged, but not all.
Fill in the blank: COBRA allows an ex-spouse to continue receiving health insurance for up to _______ years after divorce.
three
