Practice Quiz

Paralegal Exam Prep

Category - Legal Envrmt

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In a Chapter 7 bankruptcy:
  1. Abusiness ceases operations and liquidates.
  2. A city reorganizes.
  3. A business or individual reorganizes.
  4. A farmer reorganizes.
  5. An individual reorganizes.
Explanation
Answer: A. In a Chapter 7 bankruptcy, a business ceases operations and liquidates. Individuals can also file for Chapter 7 bankruptcy. In a Chapter 7 bankruptcy, the individual or business does not have money to pay debts, even on an alternative payment schedule. Assets are often sold to pay creditors.
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