An Involuntary Bankruptcy Occurs When a Debtor

question 5

Multiple Choice

An involuntary bankruptcy occurs when a debtor

• A)files forms designated for the purpose.
• B)is unable to pay his or her debts as they come due.
• C)is forced into bankruptcy proceedings by his or her creditors.
• D)has debts that exceed the fair market value of his or her assets.

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Definitions:

Installment Note

A debt instrument that requires a series of payments over time, typically including both principal and interest components.

Interest Portion

This term represents the part of a payment or financial obligation that covers the interest on a debt, distinct from the principal repayment.

Carrying Amount

The book value of an asset or liability in a company's financial statements, based on its original cost adjusted for factors such as depreciation or amortization.

Contingent Liability

A potential financial obligation that may arise in the future, dependent on the outcome of a specific event or set of circumstances.