In a Chapter 7 Bankruptcy

question 88

Multiple Choice

In a Chapter 7 bankruptcy:

• A)a small firm gets a second chance by being protected from creditors while a reorganization plan is formulated.
• B)every piece of property the bankrupt debtor owns is subject to court attachment.
• C)loss is limited to $100,000 in unsecured debt and to $350,000 in secured debt.
• D)a debtor simply declares all of his firm's debts,and turns all assets over to a trustee who then sells and distributes them to settle both secured and unsecured debts.

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Definitions:

Shortages

Situations where the demand for a product or service exceeds the available supply, often leading to waiting lists or increased prices.

Incentive Problem

Refers to situations in which the incentive structures, or rewards and punishments, do not encourage the desired behavior among individuals or entities, leading to efficiency or performance issues.

Communist Central Planning

A system where all economic and production decisions are made by the government, with the aim of equal distribution of wealth.

Personal Gain

Refers to the benefit or advantage that an individual receives from a particular action or transaction.