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

Deepa Nair was adjudged bankrupt, and the Adjudicating Authority later passed an order discharging her under section 138. Which description of her status now is correct?

Deepa is no longer an undischarged bankrupt. The Code defines that term as a bankrupt who has not received a discharge order under section 138, and she has now received one, so full repayment of debts is not the test.

  1. AShe remains an undischarged bankrupt until all debts are paid
  2. BShe is no longer an undischarged bankrupt, as that term means a bankrupt who has not received a discharge order under section 138Correct
  3. CShe ceases to be a bankrupt and her bankruptcy debts are unaffected
  4. DShe becomes a bankrupt again for debts incurred after the order

Explanation

An undischarged bankrupt is a bankrupt who has not received a discharge order under section 138. Deepa has received one, so she is no longer in that category. Full payment of debts is not the test in the definition.

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