Exam 16: Bankruptcy

When Dudley files his Chapter 7 petition,he lists the following debts: a.$25,000 in back child support and alimony. b.$15,000 for liabilities incurred after drinking and driving. c.$10,000 for past-due student loans. d.$5,000 for past-due rent to his landlord. e.$550 for a past-due phone bill. How will each of these debts be treated by the bankruptcy court.

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Question 1

Correct Answer:

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Certain debts are never discharged and the debtor is fully liable for the debts even after receiving a discharge from the bankruptcy court.These types of debts are generally denied a discharge based on public policy reasons.In this example,the child support and alimony,the liabilities for operating a motor vehicle while under the influence,and school loans guaranteed by the government (unless undue hardship can be established)are nondischargeable debts.Bankruptcy has no effect on these debts.The unpaid rent and phone bill generally will be discharged.

Under the federal Bankruptcy Code,the exemption amount for the debtor's personal residence is:

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Question 2

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The Bankruptcy Code uses the term "bankrupt" to refer to a person who cannot pay his debts.

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Question 3

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In a Chapter 13 bankruptcy,creditors cannot force a debtor into bankruptcy; nor can they vote to confirm or reject a plan of reorganization.

(True/False)

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Question 4

Bankruptcy is regulated by federal law.

(True/False)

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Question 5

Which of the following of the bankruptcy process occurs first:

(Multiple Choice)

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Question 6

Shoe Sunshine,Inc.filed for bankruptcy protection under Chapter 11 and submitted a plan of reorganization within 120 days after filing for relief.Two of the classes of creditors voted against the plan.However,the bankruptcy judge considered the plan to be reasonable,achievable,and fair,and approved it in spite of these creditors' objections.This action by the judge is called a "cramdown."

(True/False)

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Question 7

Creditor claims are divided into classes and the highest class must be satisfied in full before going to the next category.

(True/False)

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Question 8

Peggy's credit card debts are mounting as her costs of insurance and fuel have dramatically increased and her income,from sporadic free-lance jobs,has dropped.Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she keeps most of her assets.

(True/False)

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Question 9

Artistic Framing,a business with $120,000 of unsecured debt,needs to file for bankruptcy,but wants to continue in business.Discuss what chapter of the Bankruptcy Code should be used,and discuss the effect of the 2005 amendment to the Code on the proceedings.

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Question 10

Chapter 7 bankruptcy petitions may only be filed voluntarily..

(True/False)

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Question 11

Creditors of Northern Hydraulics file an involuntary bankruptcy petition against it.What is true of Northern Hydraulics.

(Multiple Choice)

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Question 12

Generally,filing bankruptcy stops the collection activity of creditors.

(True/False)

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Question 13

Alimony and child support obligations are considered priority claims.

(True/False)

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Question 14

Debts that cannot be discharged in bankruptcy include all EXCEPT:

(Multiple Choice)

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Question 15

Francesca cannot serve as a trustee in a bankruptcy case because she is not a lawyer.

(True/False)

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Question 16

Link negligently ran his car into John,causing $50,000 in injuries.Link was intoxicated at the time of the accident.Can Link discharge this debt in bankruptcy?

(Multiple Choice)

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Question 17

Chapter 13 bankruptcy:

(Multiple Choice)

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Question 18

Andy's business is not able to pay its debts,and the prospects for its finances to improve are slim.Andy decides not to continue the business.In this case,Andy should file a voluntary petition for which type of bankruptcy?

(Multiple Choice)

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Question 19

Ramona has received a discharge in bankruptcy,but wants to reaffirm a debt to her sister.To be valid,the reaffirmation:

(Multiple Choice)

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Question 20

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Exam 16: Bankruptcy

Under the federal Bankruptcy Code,the exemption amount for the debtor's personal residence is:

The Bankruptcy Code uses the term "bankrupt" to refer to a person who cannot pay his debts.

In a Chapter 13 bankruptcy,creditors cannot force a debtor into bankruptcy; nor can they vote to confirm or reject a plan of reorganization.

Bankruptcy is regulated by federal law.

Which of the following of the bankruptcy process occurs first:

Creditor claims are divided into classes and the highest class must be satisfied in full before going to the next category.

Peggy's credit card debts are mounting as her costs of insurance and fuel have dramatically increased and her income,from sporadic free-lance jobs,has dropped.Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she keeps most of her assets.

Artistic Framing,a business with $120,000 of unsecured debt,needs to file for bankruptcy,but wants to continue in business.Discuss what chapter of the Bankruptcy Code should be used,and discuss the effect of the 2005 amendment to the Code on the proceedings.

Chapter 7 bankruptcy petitions may only be filed voluntarily..

Creditors of Northern Hydraulics file an involuntary bankruptcy petition against it.What is true of Northern Hydraulics.

Generally,filing bankruptcy stops the collection activity of creditors.

Alimony and child support obligations are considered priority claims.

Debts that cannot be discharged in bankruptcy include all EXCEPT:

Francesca cannot serve as a trustee in a bankruptcy case because she is not a lawyer.

Link negligently ran his car into John,causing $50,000 in injuries.Link was intoxicated at the time of the accident.Can Link discharge this debt in bankruptcy?

Chapter 13 bankruptcy:

Andy's business is not able to pay its debts,and the prospects for its finances to improve are slim.Andy decides not to continue the business.In this case,Andy should file a voluntary petition for which type of bankruptcy?

Ramona has received a discharge in bankruptcy,but wants to reaffirm a debt to her sister.To be valid,the reaffirmation:

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