ExpertHard1 markMultiple Choice
CPA · Question 39 · Area II: Business Law
Which of the following acts by a debtor would be grounds for a denial of discharge in a Chapter 7 bankruptcy?
Which of the following acts by a debtor would be grounds for a denial of discharge in a Chapter 7 bankruptcy?
Answer options:
A.
Failure to keep or preserve adequate books and records.
B.
Inability to pay debts as they become due.
C.
Owing taxes to the IRS.
D.
Filing for Chapter 7 bankruptcy 9 years after a previous Chapter 7 discharge.
How to approach this question
Distinguish between 'Non-dischargeable Debt' (specific debt survives) and 'Denial of Discharge' (NO debts are wiped out). Bad behavior (fraud, hiding records) = Denial.
Full Answer
A.Failure to keep or preserve adequate books and records.✓ Correct
A
A denial of discharge (meaning the debtor remains liable for ALL debts) occurs for bad acts, such as fraudulently transferring property, failing to keep books and records, or making a false oath. Specific debts (like taxes) being non-dischargeable is different from a general denial of discharge.
Common mistakes
Confusing non-dischargeable debts (student loans) with denial of discharge (bad acts).
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