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CS Professional · Insolvency and Bankruptcy - Law and Practice · Bankruptcy Order for Individuals and Partnership Firms

Anita Rao is adjudged bankrupt on a debtor's application. Which of the following is a debt that falls within the Code's definition of 'excluded debt'?

A liability to pay maintenance to any person under any law is an excluded debt, listed along with court fines, damages for negligence or breach, and student loans. Ordinary trade dues, card balances and personal loans are not excluded.

  1. AA trade payable to a supplier for goods bought on credit
  2. BA credit card balance owed to a bank
  3. CA liability to pay maintenance to a person under any law in forceCorrect
  4. DA loan from a friend for a fixed sum repayable in six months

Explanation

Excluded debt covers fines imposed by a court or tribunal, damages for negligence, nuisance or breach of obligation, maintenance under any law, student loans and other prescribed debts. Maintenance is listed expressly. Ordinary trade, card and friend loans are liquidated contractual sums and are not excluded.

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