Stan commits securities fraud and takes $5,000,000 from a variety of investors.Stan is convicted of a crime and then sued by the investors.Stan files for bankruptcy.What relief will the bankruptcy filing grant Stan?

A) Automatic stay on all cash advances paid to a creditor under an open-ended credit plan
B) Automatic stay and discharge of any debt created with the securities fraud
C) Automatic stay,but no discharge of any debt created by the securities fraud
D) Automatic stay and discharge of all debts incurred

Question

Mikus McKay · Accepted Answer

Final Answer : C, Explanation :  The bankruptcy filing will grant Stan an automatic stay, which temporarily stops any legal action, including the lawsuit brought by the investors. However, since the debt was created through securities fraud, it is considered a non-dischargeable debt, meaning that if Stan were to receive a discharge of his debts through bankruptcy, this particular debt would not be included. Therefore, the automatic stay will be granted, but there will be no discharge of the debt incurred through securities fraud.

Definitions

Learning Objectives

Learning Objectives

Related questions