Question 1

Under Chapter , the bankruptcy estate includes wages earned after commencement of the case.

Accepted Answer

A)  7 
B)  11 
C)  13 
D)  15 
A)  7 
B)  11 
C)  13 
D)  15 C

Question 2

Fritz is seriously considering bankruptcy because he has a large number of outstanding debts, the principal ones of which are as follows: (1) he owes his ex-wife $25,000 in back alimony and child support; (2) he owes $20,000 in guaranteed student loans; (3) he has a lawsuit pending against him in which his ex-girlfriend is asking for $50,000 in damages (the suit is based upon the intentional tort of battery and arises from an incident in which Fritz got mad at his girlfriend and hit her); and (4) he owes the First Bank $20,000 for the loan securing his new sports car. Should Fritz file for bankruptcy?

Accepted Answer

Unless Fritz has other large debts, he should not file for bankruptcy, because it would probably not benefit him in any way. The alimony and child support, student loans, and intentional tort damages are all non-dischargeable debts under the Bankruptcy Code. Furthermore, the car secures the money he owes to the bank, so that the bank will likely get its money by repossessing the car and reselling it.

Question 3

Which of the following debts would be discharged in bankruptcy?

Accepted Answer

A)  A consumer credit loan for a stove 
B)  Property taxes on a beach house 
C)  Student loans 
D)  Alimony payments past due 
A)  A consumer credit loan for a stove 
B)  Property taxes on a beach house 
C)  Student loans 
D)  Alimony payments past due A

Question 4

Which of the following claims will be paid first from the debtor's estate in a Chapter 7 bankruptcy?

Accepted Answer

A)  A gap creditor with a claim of $2,000 
B)  A state claiming $5,000 in back taxes 
C)  The trustee's expenses of $3,000 
D)  Employees claiming unpaid wages of $4,000 for wages earned within 120 days of the bankruptcy filing 
A)  A gap creditor with a claim of $2,000 
B)  A state claiming $5,000 in back taxes 
C)  The trustee's expenses of $3,000 
D)  Employees claiming unpaid wages of $4,000 for wages earned within 120 days of the bankruptcy filing

Question 5

Under Chapter , certain debts of individuals are not dischargeable despite the debtor's good faith.

Accepted Answer

A)  7 
B)  11 
C)  13 
D)  15 
A)  7 
B)  11 
C)  13 
D)  15

Question 6

The estate of a debtor includes wages earned after commencement of a Chapter 7 liquidation proceeding.

Accepted Answer

A) True 
 B)False

Question 7

One creditor of a debtor may file a bankruptcy petition as long as the debtor owes him more than $5,000 in unsecured claims.

Accepted Answer

A) True 
 B)False

Question 8

A plan of reorganization under Chapter 13 will be confirmed when:

Accepted Answer

A)  the debtor has not been discharged before. 
B)  the unsecured creditors are not discharged. 
C)  the unsecured creditors receive the same amount as the secured creditors. 
D)  the unsecured creditors receive at least as much as they would have if the debtor had liquidated. 
A)  the debtor has not been discharged before. 
B)  the unsecured creditors are not discharged. 
C)  the unsecured creditors receive the same amount as the secured creditors. 
D)  the unsecured creditors receive at least as much as they would have if the debtor had liquidated.

Question 9

Edith files a Chapter 7 petition in bankruptcy. She owns the following property: (1) an automobile valued at $1,000; (2) a homestead valued at $75,000, on which First Bank holds a mortgage of $50,000; (3) personal jewelry valued at $1,100; and (4) monthly disability payments of $1,000. Assuming Edith elects to use the exemptions listed in the
Bankruptcy Code, what property may Edith keep?

Accepted Answer

A)  The disability payments only. 
B)  The disability payments and the homestead only. 
C)  The disability payments plus the automobile, at least part of the equity in the homestead, and the jewelry. 
D)  Nothing. She must sell all of her assets and have the proceeds distributed to the creditors, and she must turn the disability payments over to the trustee. 
A)  The disability payments only. 
B)  The disability payments and the homestead only. 
C)  The disability payments plus the automobile, at least part of the equity in the homestead, and the jewelry. 
D)  Nothing. She must sell all of her assets and have the proceeds distributed to the creditors, and she must turn the disability payments over to the trustee.

Question 10

A lien must be satisfied before the property is available to satisfy the claims of unsecured creditors.

Accepted Answer

A) True 
 B)False

Question 11

A plan for reorganization under Chapter 11 does not have to meet which of the following requirements to be confirmed by the court?

Accepted Answer

A)  Good faith 
B)  Feasibility 
C)  No creditor approval 
D)  Cash payments 
A)  Good faith 
B)  Feasibility 
C)  No creditor approval 
D)  Cash payments

Question 12

The doctrine of subordination of claims might result in two unsecured creditors getting unequal proportions of their debts paid.

Accepted Answer

A) True 
 B)False

Question 13

Able gets a judgment against Baker in state court for $50,000 on July 1. On July 15, Baker files a bankruptcy petition under Chapter 7. Which of the following is true?

Accepted Answer

A)  Able is a lien creditor. 
B)  A creditor with a security interest that was not perfected when the bankruptcy petition was filed has priority over Able. 
C)  The judgment is a preferential transfer that will be invalidated by the trustee. 
D)  Able will not be able to recover any of the judgment. 
A)  Able is a lien creditor. 
B)  A creditor with a security interest that was not perfected when the bankruptcy petition was filed has priority over Able. 
C)  The judgment is a preferential transfer that will be invalidated by the trustee. 
D)  Able will not be able to recover any of the judgment.

Question 14

Most student loans cannot be discharged under Chapter 13.

Accepted Answer

A) True 
 B)False

Question 15

Donald has a $10,000 judgment against him for a debt owed to a creditor. If Donald files for bankruptcy and receives a discharge from the bankruptcy court, he will no longer be obligated to pay the judgment.

Accepted Answer

A) True 
 B)False

Question 16

Non-bankruptcy compromises to give debtors relief while protecting the rights of creditors include all of the following except:

Accepted Answer

A)  mergers. 
B)  nonstatutory assignments for the benefit of creditors. 
C)  receiverships under the direction of a court with equity powers. 
D)  compositions. 
A)  mergers. 
B)  nonstatutory assignments for the benefit of creditors. 
C)  receiverships under the direction of a court with equity powers. 
D)  compositions.

Question 17

In a Chapter 13 proceeding, the bankruptcy estate of an individual includes wages earned after commencement of the proceeding.

Accepted Answer

A) True 
 B)False

Question 18

Garnishment is one form of pre-judgment remedy.

Accepted Answer

A) True 
 B)False

Question 19

A composition would bind to the settlement all of debtor's creditors.

Accepted Answer

A) True 
 B)False

Question 20

When may a trustee not avoid a transfer?

Accepted Answer

A)  When such payment is of a debt incurred in the ordinary course of business or financial affairs of the debtor and the transferee 
B)  When such payment is not made in the ordinary course of business or financial affairs of the debtor and transferee 
C)  When the transfer is made according to extraordinary business terms 
D)  When the transfer is made for new value. 
A)  When such payment is of a debt incurred in the ordinary course of business or financial affairs of the debtor and the transferee 
B)  When such payment is not made in the ordinary course of business or financial affairs of the debtor and transferee 
C)  When the transfer is made according to extraordinary business terms 
D)  When the transfer is made for new value.

Exam 38: Bankruptcy

Under Chapter , the bankruptcy estate includes wages earned after commencement of the case.

Which of the following debts would be discharged in bankruptcy?

Which of the following claims will be paid first from the debtor's estate in a Chapter 7 bankruptcy?

Under Chapter , certain debts of individuals are not dischargeable despite the debtor's good faith.

The estate of a debtor includes wages earned after commencement of a Chapter 7 liquidation proceeding.

One creditor of a debtor may file a bankruptcy petition as long as the debtor owes him more than $5,000 in unsecured claims.

A plan of reorganization under Chapter 13 will be confirmed when:

A lien must be satisfied before the property is available to satisfy the claims of unsecured creditors.

A plan for reorganization under Chapter 11 does not have to meet which of the following requirements to be confirmed by the court?

The doctrine of subordination of claims might result in two unsecured creditors getting unequal proportions of their debts paid.

Able gets a judgment against Baker in state court for $50,000 on July 1. On July 15, Baker files a bankruptcy petition under Chapter 7. Which of the following is true?

Most student loans cannot be discharged under Chapter 13.

Donald has a $10,000 judgment against him for a debt owed to a creditor. If Donald files for bankruptcy and receives a discharge from the bankruptcy court, he will no longer be obligated to pay the judgment.

Non-bankruptcy compromises to give debtors relief while protecting the rights of creditors include all of the following except:

In a Chapter 13 proceeding, the bankruptcy estate of an individual includes wages earned after commencement of the proceeding.

Garnishment is one form of pre-judgment remedy.

A composition would bind to the settlement all of debtor's creditors.

When may a trustee not avoid a transfer?

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