Which statement is true regarding bankruptcy?

Which statement is true regarding bankruptcy?

• A. A court must recognize a homestead exemption perfected under the state law.
• B. Individuals cannot be denied a discharge in bankruptcy.
• C. The termination of a bankruptcy proceeding is indicated by an order discharging the bankrupt.
• D. All of the above

Answer: (A)

Exemptions protect a debtor’s property in bankruptcy, and state law governs how these exemptions are claimed and recognized. If a homestead exemption is properly perfected under state law, the bankruptcy court must recognize it and allow the debtor to shield the home up to the exemption limit. That makes the statement true because it reflects how state-perfected exemptions are treated by the court. The other statements aren’t universally true. A discharge can be denied under certain circumstances, such as fraud or abuse, so the assertion that individuals cannot be denied a discharge is incorrect. Also, a bankruptcy proceeding isn’t terminated only by a discharge order; the case can end by dismissal or closing after discharge or without it. Because those aspects aren’t always true, the homestead exemption recognition stands as the correct point.

Exemptions protect a debtor’s property in bankruptcy, and state law governs how these exemptions are claimed and recognized. If a homestead exemption is properly perfected under state law, the bankruptcy court must recognize it and allow the debtor to shield the home up to the exemption limit. That makes the statement true because it reflects how state-perfected exemptions are treated by the court.

The other statements aren’t universally true. A discharge can be denied under certain circumstances, such as fraud or abuse, so the assertion that individuals cannot be denied a discharge is incorrect. Also, a bankruptcy proceeding isn’t terminated only by a discharge order; the case can end by dismissal or closing after discharge or without it. Because those aspects aren’t always true, the homestead exemption recognition stands as the correct point.