Certified Financial Planner (CFP) Exam 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 505

Which type of debt is typically discharged in bankruptcy?

Student loans.

Child support.

Alimony.

Consumer debt.

Consumer debt is typically discharged in bankruptcy because it falls under unsecured debt. Unsecured debts can be eliminated through the bankruptcy process, which allows individuals to have a fresh financial start. This category includes debts such as credit card debt, personal loans, and medical bills, which do not have collateral backing them.

In contrast, student loans, child support, and alimony are generally not dischargeable in bankruptcy. Student loans can often only be discharged under specific hardship conditions, while child support and alimony are considered priority debts that must be paid and are not dischargeable in bankruptcy proceedings. Understanding the different types of debt and their treatment in bankruptcy is essential for financial advisors when guiding clients through their options for debt relief.

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