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The term 'bankruptcy' originates from the Italian phrase 'banca rotta', meaning 'broken bench'.
Answer: True
The term 'bankruptcy' is widely understood to derive from the Italian phrase 'banca rotta,' meaning 'broken bank,' possibly referencing a historical practice of breaking a merchant's bench upon default.
Ancient Athenian law, under Solon's influence, allowed citizens to be enslaved for failing to repay debts.
Answer: False
While ancient Greek law, particularly under Solon's reforms in Athens, addressed debt and debtor obligations, it notably prohibited the enslavement of citizens for debt, offering a degree of protection.
The Statute of Bankrupts, enacted in 1542, was the first English law specifically designed to address bankruptcy and insolvency.
Answer: True
The Statute of Bankrupts, enacted in England in 1542, represented a landmark in English legal history as the first statute specifically designed to address bankruptcy and insolvency.
Historical accounts suggest Genghis Khan's Yassa prescribed banishment for individuals declaring bankruptcy three times.
Answer: False
Historical accounts suggest that Genghis Khan's Yassa, his legal code, included severe penalties for financial misconduct, with some interpretations indicating a death sentence for repeated bankruptcy, rather than banishment.
Philip II of Spain declared bankruptcy only once during the 16th century.
Answer: False
Philip II of Spain experienced multiple sovereign defaults during his reign in the 16th century, with records indicating bankruptcies in 1557, 1560, 1575, and 1596, demonstrating a pattern rather than a single occurrence.
What is the literal translation of the Italian term 'banca rotta', from which the word 'bankruptcy' originates?
Answer: Broken Bank
The Italian term 'banca rotta,' from which 'bankruptcy' is derived, literally translates to 'broken bank'.
Which ancient Greek city-state, through the laws of Solon, notably forbade enslavement for debt?
Answer: Athens
The ancient Greek city-state of Athens, through the legal reforms attributed to Solon, notably prohibited the enslavement of citizens for debt.
What significant development did the Statute of Bankrupts in 1542 mark in English law?
Answer: It was the first statute specifically designed to address bankruptcy and insolvency.
The Statute of Bankrupts, enacted in 1542, represented a landmark in English legal history as the first statute specifically designed to address bankruptcy and insolvency.
According to historical accounts, which leader's legal code reportedly included a provision for the death penalty for individuals declaring bankruptcy three times?
Answer: Genghis Khan
Historical accounts suggest that Genghis Khan's Yassa, his legal code, included provisions that could result in the death penalty for individuals who declared bankruptcy multiple times.
Which 16th-century monarch declared bankruptcy four times, highlighting sovereign default?
Answer: Philip II of Spain
Philip II of Spain declared bankruptcy on four occasions during the 16th century, a notable instance of sovereign default.
Bankruptcy and insolvency are interchangeable terms describing the inability to pay debts.
Answer: False
Bankruptcy is a formal legal process initiated by a court order to provide relief to debtors unable to repay their obligations. Insolvency, conversely, is a broader financial state of being unable to meet debts as they fall due. Thus, while related, they are not interchangeable terms.
Discharging federal student loan debt through bankruptcy in the United States is generally straightforward and does not require proving hardship.
Answer: False
Discharging federal student loan debt in the United States through bankruptcy is exceptionally challenging and typically requires the debtor to demonstrate 'undue hardship' through a rigorous legal standard, such as the Brunner test.
Article 1, Section 8, Clause 4 of the US Constitution grants bankruptcy powers exclusively to individual states.
Answer: False
Article 1, Section 8, Clause 4 of the U.S. Constitution explicitly grants Congress the authority to establish uniform bankruptcy laws across the nation, not exclusive power to individual states.
The primary federal statute governing bankruptcy in the United States is the Bankruptcy Act of 1978.
Answer: False
The primary federal statute governing bankruptcy in the United States is Title 11 of the United States Code, commonly known as the Bankruptcy Code, not the Bankruptcy Act of 1978.
Chapter 7 bankruptcy in the US is commonly known as a 'reorganization' bankruptcy.
Answer: False
Chapter 7 bankruptcy in the US is commonly known as 'liquidation' or 'straight' bankruptcy, not 'reorganization' bankruptcy, which typically refers to Chapter 11.
Chapter 11 bankruptcy allows businesses to restructure their debts while continuing operations under court supervision.
Answer: True
Chapter 11 bankruptcy proceedings in the US are designed to allow businesses to reorganize their debts and operations under court supervision, facilitating continued business activity during the restructuring process.
Chapter 13 bankruptcy repayment plans in the US typically last for one to two years.
Answer: False
Chapter 13 bankruptcy repayment plans in the US typically span a duration of three to five years, not one to two years.
The 'means test' in US bankruptcy filings is primarily used to determine eligibility for Chapter 11 reorganization.
Answer: False
The 'means test' in US bankruptcy filings is primarily used to determine a debtor's eligibility for Chapter 7 (liquidation) by assessing their income level and disposable income, rather than for Chapter 11 reorganization.
The 'automatic stay' in US bankruptcy law halts most collection actions against the debtor immediately upon filing a petition.
Answer: True
The 'automatic stay' is a legal injunction that takes effect immediately upon the filing of a bankruptcy petition, halting most creditor collection actions against the debtor.
Bankruptcy exemptions in the US are uniform and identical across all states.
Answer: False
Bankruptcy exemptions in the US are not uniform; they can be based on federal law or state law, and they vary significantly from state to state, impacting the property a debtor can retain.
Before filing for bankruptcy relief under Chapter 7 or Chapter 13 in the US, consumers are required to complete a personal financial management course.
Answer: False
Prior to filing for bankruptcy relief under Chapter 7 or Chapter 13 in the US, consumers are required to complete credit counseling with approved agencies. A personal financial management course is required before debt discharge, not before filing.
Chapter 9 of the US Bankruptcy Code is specifically designed for the reorganization of family farmers and fishermen.
Answer: False
Chapter 9 of the US Bankruptcy Code is specifically designed for the reorganization of municipalities and other governmental units, not family farmers and fishermen, who are covered under Chapter 12.
In the United States, under what specific condition can federal student loan debt typically be discharged in bankruptcy?
Answer: By demonstrating 'undue hardship' via the Brunner test.
Discharging federal student loan debt in the U.S. bankruptcy typically requires proving 'undue hardship,' often assessed through the Brunner test criteria.
Which part of the United States Constitution grants Congress the power to create uniform bankruptcy laws?
Answer: Article 1, Section 8, Clause 4
Article 1, Section 8, Clause 4 of the U.S. Constitution empowers Congress to establish uniform bankruptcy laws throughout the United States.
What is the primary federal statute governing bankruptcy in the United States?
Answer: Title 11 of the United States Code (The Bankruptcy Code)
The primary federal statute governing bankruptcy in the United States is Title 11 of the United States Code, commonly referred to as the Bankruptcy Code.
Which chapter of the US Bankruptcy Code is commonly referred to as 'straight bankruptcy' or 'simple bankruptcy' and involves liquidation?
Answer: Chapter 7
Chapter 7 of the US Bankruptcy Code is widely known as 'straight bankruptcy' or 'simple bankruptcy' and involves the liquidation of a debtor's non-exempt assets.
What is the primary purpose of Chapter 11 bankruptcy in the US?
Answer: Reorganization and rehabilitation of businesses.
Chapter 11 bankruptcy in the US is primarily utilized for the reorganization and rehabilitation of businesses, allowing them to continue operations while restructuring their debts.
What is the typical duration for repayment plans under Chapter 13 bankruptcy in the US?
Answer: 3 to 5 years
Repayment plans under Chapter 13 bankruptcy in the US typically have a duration of three to five years.
What is the function of the 'means test' in US bankruptcy filings?
Answer: To gauge the debtor's income level to determine eligibility for Chapter 7.
The 'means test' in US bankruptcy filings assesses a debtor's income to determine their eligibility for Chapter 7 relief, potentially directing higher-income debtors to Chapter 13.
What provision in US bankruptcy law provides immediate protection by halting most collection actions against the debtor upon filing?
Answer: The automatic stay
The 'automatic stay' is a provision in US bankruptcy law that immediately halts most creditor collection actions upon the filing of a bankruptcy petition.
How do bankruptcy exemptions vary in the United States?
Answer: They can be based on federal or state law and vary significantly by state.
Bankruptcy exemptions in the United States vary considerably, being based on either federal law or state law, which differ significantly from one state to another.
What requirement must US consumers meet *before* filing for bankruptcy relief under Chapter 7 or Chapter 13?
Answer: Undergoing credit counseling with approved agencies.
Before filing for bankruptcy relief under Chapter 7 or Chapter 13 in the US, consumers are required to complete credit counseling with approved agencies.
Which chapter of the US Bankruptcy Code is designated for municipal bankruptcy?
Answer: Chapter 9
Chapter 9 of the US Bankruptcy Code is specifically designed for the reorganization of municipalities and other governmental units.
Which US Bankruptcy Code chapter is specifically designed for family farmers and fishermen?
Answer: Chapter 12
Chapter 12 of the US Bankruptcy Code provides specific provisions for the reorganization of family farmers and fishermen.
What is the primary function of Chapter 7 bankruptcy in the US?
Answer: Liquidation of non-exempt assets
The primary function of Chapter 7 bankruptcy in the US is the liquidation of a debtor's non-exempt assets to satisfy creditor claims.
In Australia, companies undergo bankruptcy proceedings governed by the Bankruptcy Act 1966.
Answer: False
In Australia, corporate insolvency is primarily governed by the Corporations Act 2001, while the Bankruptcy Act 1966 specifically addresses bankruptcy proceedings for individuals.
A bankruptcy typically lasts for three years from the date the Statement of Affairs is filed in Australia.
Answer: True
In Australia, an individual's bankruptcy typically concludes three years after the Statement of Affairs is filed with the Australian Financial Security Authority (AFSA), barring specific circumstances that might extend or annul this period.
In Canada, bankruptcy can be filed if a person or company owes at least $500 that cannot be paid as it becomes due.
Answer: False
In Canada, the threshold for filing for bankruptcy is generally a debt of at least $1,000 that cannot be paid when due, not $500.
Creditors in Canada often accept a consumer proposal because personal bankruptcy usually results in them recovering less money.
Answer: True
Creditors in Canada often find it advantageous to accept a consumer proposal, as personal bankruptcy typically yields a lower recovery rate for creditors compared to a successfully negotiated proposal.
In the United Kingdom, bankruptcy legally applies only to corporations and limited liability partnerships.
Answer: False
In the United Kingdom, bankruptcy legally pertains to individuals and partnerships. Corporate entities face insolvency through distinct procedures such as liquidation or administration.
A creditor in the United Kingdom must be owed at least £1,000 to petition a court for involuntary bankruptcy.
Answer: False
A creditor in the United Kingdom must be owed a minimum of £5,000 to petition a court for involuntary bankruptcy against a debtor.
In Ireland, bankruptcy law applies to natural persons and corporate entities.
Answer: False
In Ireland, bankruptcy law applies exclusively to natural persons (individuals); corporate insolvency is handled through separate legal frameworks.
Israel's Insolvency and Rehabilitation Law of 2018 differentiates bankruptcy proceedings based on the total debt amount.
Answer: True
Israel's Insolvency and Rehabilitation Law of 2018 differentiates bankruptcy proceedings based on the total debt amount, assigning cases to different authorities depending on the claim's value.
The Dutch Bankruptcy Code exclusively covers liquidation procedures for companies.
Answer: False
The Dutch Bankruptcy Code encompasses multiple proceedings, including 'faillissement' (liquidation), 'surseance van betaling' (suspension of payments), and 'schuldsanering' (debt reorganization for individuals), not exclusively liquidation for companies.
In Sweden's 'skuldsanering' (debt arrangement procedure), debts arising from criminal compensation are cancelled along with other debts after the five-year payment plan.
Answer: False
In Sweden's 'skuldsanering' procedure, debts arising from criminal compensation or business bans are typically not cancelled after the five-year payment plan and remain lifelong obligations.
The United Arab Emirates' unified Bankruptcy Law came into effect on December 29, 2018.
Answer: False
The United Arab Emirates' unified Bankruptcy Law came into effect on December 29, 2016, not December 29, 2018.
Russian bankruptcy law outlines stages including monitoring, economic recovery, external control, liquidation, and amicable agreement.
Answer: True
Russian bankruptcy law outlines a sequence of insolvency proceedings that include monitoring, economic recovery, external control, liquidation, and amicable agreement stages.
Brazil's Bankruptcy Law (11.101/05) applies to state-run companies but excludes financial institutions.
Answer: False
Brazil's Bankruptcy Law (11.101/05) applies to public companies but specifically excludes financial institutions and state-run companies from its application.
India's Insolvency and Bankruptcy Code (IBC), which streamlined corporate insolvency laws, was passed in May 2016.
Answer: True
India's Insolvency and Bankruptcy Code (IBC), enacted to streamline corporate insolvency resolution, was passed in May 2016.
In Spain, if mortgage principal is not paid after bankruptcy and foreclosure, the debtor is praised for their efforts.
Answer: False
In Spain, failure to pay mortgage principal after bankruptcy and foreclosure results in the debtor being placed on a list of untrustworthy individuals.
A key duty of a trustee in bankruptcy in Canada includes selling non-exempt assets belonging to the bankrupt.
Answer: True
A principal duty of a trustee in bankruptcy in Canada includes the sale of the bankrupt's non-exempt assets to facilitate distribution to creditors.
In Australia, what federal law governs bankruptcy for individuals?
Answer: The Bankruptcy Act 1966
In Australia, the federal Bankruptcy Act 1966 is the primary legislation governing bankruptcy proceedings for individuals.
How long does a bankruptcy typically last for an individual in Australia?
Answer: Three years from the date the Statement of Affairs is filed.
An individual's bankruptcy in Australia generally concludes three years after the Statement of Affairs is filed with the relevant authority.
What is the minimum debt threshold for an individual or company to file for bankruptcy in Canada?
Answer: $1,000
In Canada, the minimum debt threshold for filing bankruptcy is $1,000 that cannot be paid when due.
What is a consumer proposal in Canada?
Answer: A negotiated agreement between a debtor and creditors.
A consumer proposal in Canada is a formal, negotiated agreement between a debtor and their creditors to settle debts under revised terms.
In the United Kingdom, bankruptcy, in a strict legal sense, applies to which entities?
Answer: Individuals and partnerships.
In the United Kingdom, bankruptcy, in its strict legal definition, applies to individuals and partnerships, while corporate insolvency is managed through different procedures.
What is the minimum debt amount a creditor must be owed to petition for involuntary bankruptcy in the UK?
Answer: £5,000
A creditor in the UK must be owed at least £5,000 to petition a court for involuntary bankruptcy against a debtor.
Which of the following is NOT one of the three distinct legal proceedings covered by the Dutch Bankruptcy Code?
Answer: Insolvency and Rehabilitation
The Dutch Bankruptcy Code covers 'faillissement' (liquidation), 'surseance van betaling' (suspension of payments), and 'schuldsanering' (debt reorganization for individuals), but not a general 'Insolvency and Rehabilitation' procedure as a distinct category.
In Sweden's 'skuldsanering' (debt arrangement procedure), what happens to debts arising from criminal compensation after the five-year payment plan?
Answer: They remain lifelong and are not cancelled.
In Sweden's 'skuldsanering,' debts stemming from criminal compensation or business bans are typically exempt from cancellation and persist beyond the five-year payment plan.
When did the United Arab Emirates' unified Bankruptcy Law come into effect?
Answer: December 29, 2016
The unified Bankruptcy Law of the United Arab Emirates came into effect on December 29, 2016.
Which of the following is NOT listed as a sequential stage of insolvency proceedings in Russian bankruptcy law?
Answer: Reorganization
Russian bankruptcy law outlines stages such as monitoring, economic recovery, external control, liquidation, and amicable agreement. 'Reorganization' is not explicitly listed as a distinct sequential stage in the provided context.
Which entities are specifically excluded from Brazil's Bankruptcy Law (11.101/05)?
Answer: Financial institutions and state-run companies
Brazil's Bankruptcy Law (11.101/05) specifically excludes financial institutions and state-run companies from its application.
What significant legislative update occurred in India in May 2016 concerning insolvency?
Answer: The passage of the Insolvency and Bankruptcy Code (IBC).
In May 2016, India enacted the Insolvency and Bankruptcy Code (IBC), a significant legislative measure designed to streamline and consolidate corporate insolvency laws.
In Spain, what is the consequence for a debtor if mortgage principal remains unpaid after bankruptcy and foreclosure?
Answer: The debtor is placed on a list of untrustworthy individuals.
In Spain, failure to pay mortgage principal after bankruptcy and foreclosure results in the debtor being placed on a list of untrustworthy individuals.
Which of the following is identified as a key duty of a trustee in bankruptcy in Canada?
Answer: Selling non-exempt assets.
A key duty of a trustee in bankruptcy in Canada includes the sale of the bankrupt's non-exempt assets to facilitate distribution to creditors.
Bankruptcy fraud is a white-collar crime often involving a debtor concealing assets to avoid liquidation.
Answer: True
Bankruptcy fraud is classified as a white-collar crime, frequently involving debtors who intentionally conceal assets or provide false information to evade the liquidation or distribution processes mandated by bankruptcy proceedings.
Strategic bankruptcy is defined as fabricating a state of bankruptcy through deceitful means like concealing assets.
Answer: False
Strategic bankruptcy refers to the utilization of legal bankruptcy procedures, potentially with careful planning, to manage financial difficulties. It is distinct from bankruptcy fraud, which involves deliberate deceitful actions, such as concealing assets.
In the US, failing to disclose assets during a bankruptcy filing can result in the case being reopened and the debtor facing prosecution for fraud.
Answer: True
Failure to disclose all assets during a US bankruptcy filing is a serious offense. It can lead to the reopening of the case, the seizure of previously undisclosed assets, and potential prosecution for fraud or perjury.
What is a common criminal act involved in bankruptcy fraud?
Answer: Concealing assets to avoid liquidation.
A common criminal act associated with bankruptcy fraud involves the debtor's deliberate concealment of assets to prevent their liquidation or distribution to creditors.
How does strategic bankruptcy differ from bankruptcy fraud according to the source?
Answer: Strategic bankruptcy creates a genuine state of bankruptcy, whereas fraud uses deceitful means.
Strategic bankruptcy involves utilizing legal bankruptcy processes, whereas bankruptcy fraud is characterized by deceitful actions, such as the concealment of assets.
What are the potential consequences in the US if a debtor fails to disclose all assets during a bankruptcy filing?
Answer: The case may be reopened, and the debtor could face prosecution.
Failure to disclose assets in a US bankruptcy filing can result in the case being reopened and the debtor facing legal prosecution for fraud or perjury.
Modern insolvency legislation primarily focuses on the complete elimination of businesses that are unable to meet their financial obligations.
Answer: False
Modern insolvency legislation increasingly emphasizes the rehabilitation and restructuring of businesses, aiming to preserve viable enterprises and their economic contributions, rather than solely focusing on their complete elimination.
Comprehensive support, including debt advice and financial education, is considered crucial for individuals undergoing debt restructuring to prevent future financial distress.
Answer: True
Providing comprehensive support, including tailored debt advice and financial education, is considered vital for individuals navigating debt restructuring processes, thereby enhancing their capacity to avoid future financial distress.
What is the primary shift in focus for modern insolvency legislation compared to older practices?
Answer: To remodel financial structures for business rehabilitation.
Modern insolvency legislation has shifted its primary focus from mere liquidation to the rehabilitation and restructuring of businesses, aiming to preserve their operational viability.
Which of the following is considered crucial support for individuals undergoing debt restructuring to prevent future financial distress?
Answer: Financial education and debt advice
Crucial support for individuals undergoing debt restructuring includes financial education and expert debt advice, which are vital for preventing future financial difficulties.