Question 1

Bankruptcy is regulated by federal law.

Accepted Answer

A) True 
 B)False  True

Question 2

Individual debtors are allowed to keep some assets in a Chapter 7 bankruptcy.

Accepted Answer

A) True 
 B)False  True

Question 3

Forever Yours,Inc.has a secured and perfected security interest in Sally's big-screen TV.On the filing date of Sally's Chapter 7 petition,the balance of the debt owed to Forever Yours is $2,000.The value of the TV is estimated at $1,500.This means that Forever Yours:

Accepted Answer

A) is secured for the entire debt,$2,000. 
B) is unsecured for $500,the excess of the debt over the value of the TV. 
C) has a high priority claim of $500.This means that Forever Yours,Inc.will be allowed $500 worth of other unsecured property before other unsecured creditors get anything. 
D) is unsecured for the entire debt. 
A) is secured for the entire debt,$2,000. 
B) is unsecured for $500,the excess of the debt over the value of the TV. 
C) has a high priority claim of $500.This means that Forever Yours,Inc.will be allowed $500 worth of other unsecured property before other unsecured creditors get anything. 
D) is unsecured for the entire debt. B

Question 4

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.

Accepted Answer

If Artistic wants to continue in busines

Question 5

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

Accepted Answer

A) $21,625. 
B) $37,100. 
C) $50,725 
D) $80,300. 
A) $21,625. 
B) $37,100. 
C) $50,725 
D) $80,300.

Question 6

Esmeralda is a debtor in a Chapter 7 bankruptcy proceeding.Which of the following is not a duty of Esmeralda under Chapter 7?

Accepted Answer

A) To undergo credit counseling with an approved agency before filing. 
B) To provide a repayment schedule for the debt owed to each creditor listed on the creditor list. 
C) To provide a list of all her assets and debts. 
D) To provide a schedule of all her income and expenditures. 
A) To undergo credit counseling with an approved agency before filing. 
B) To provide a repayment schedule for the debt owed to each creditor listed on the creditor list. 
C) To provide a list of all her assets and debts. 
D) To provide a schedule of all her income and expenditures.

Question 7

Generally,filing bankruptcy stops the collection activity of creditors.

Accepted Answer

A) True 
 B)False

Question 8

Alimony and child support obligations are considered priority claims.

Accepted Answer

A) True 
 B)False

Question 9

Agnes plans to file for bankruptcy under Chapter 7.One month prior to filing,Agnes gives Joe's Filling Station $700 to apply to her gas bill.Joe has been so kind to let her charge the gas she needed for her car over the past year.The bankruptcy trustee appointed to the case:

Accepted Answer

A) can cancel the payment to Joe as a fraudulent transfer. 
B) cannot cancel the payment to Joe because it is payment for an existing debt. 
C) cannot cancel the payment to Joe because he is not an insider. 
D) can cancel the payment to Joe as a voidable preference. 
A) can cancel the payment to Joe as a fraudulent transfer. 
B) cannot cancel the payment to Joe because it is payment for an existing debt. 
C) cannot cancel the payment to Joe because he is not an insider. 
D) can cancel the payment to Joe as a voidable preference.

Question 10

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.

Accepted Answer

Certain debts are never discharged and t

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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."

Accepted Answer

A) True 
 B)False

Question 13

Grand Lighting Co.has filed a petition for voluntary bankruptcy under Chapter 7 of the Code.The following property will be exempt from the bankruptcy process:

Accepted Answer

A) work tools. 
B) up to three company cars. 
C) up to $20,200 in the value of the company's real property. 
D) All of the above. 
E) None of the above. 
A) work tools. 
B) up to three company cars. 
C) up to $20,200 in the value of the company's real property. 
D) All of the above. 
E) None of the above.

Question 14

The correct order of payment of claims from the debtor's estate would be:

Accepted Answer

A) secured claims,priority claims,unsecured claims. 
B) secured claims,unsecured claims,priority claims. 
C) priority claims,secured claims,unsecured claims. 
D) priority claims,unsecured claims,secured claims. 
A) secured claims,priority claims,unsecured claims. 
B) secured claims,unsecured claims,priority claims. 
C) priority claims,secured claims,unsecured claims. 
D) priority claims,unsecured claims,secured claims.

Question 15

Which of the following cannot file a bankruptcy petition under the Code?

Accepted Answer

A) Aztec,a foreign corporation doing business in the United States. 
B) Milan,a citizen of Bosnia,who owns property in the United States. 
C) Debra,a resident of Michigan,whose liabilities do not exceed assets. 
D) Stan,an American citizen,who refuses to undergo credit counseling. 
E) All of the above. 
A) Aztec,a foreign corporation doing business in the United States. 
B) Milan,a citizen of Bosnia,who owns property in the United States. 
C) Debra,a resident of Michigan,whose liabilities do not exceed assets. 
D) Stan,an American citizen,who refuses to undergo credit counseling. 
E) All of the above.

Question 16

The start of the bankruptcy process is:

Accepted Answer

A) the submission of a plan of repayment. 
B) the bankruptcy court's issuance of an order for relief. 
C) a meeting of creditors. 
D) the appointment of a trustee. 
A) the submission of a plan of repayment. 
B) the bankruptcy court's issuance of an order for relief. 
C) a meeting of creditors. 
D) the appointment of a trustee.

Question 17

Which of the following is a requirement for an involuntary Chapter 7 bankruptcy petition?

Accepted Answer

A) The debtor must owe at least $150,000 in unsecured claims to the creditors who file. 
B) The debtor must have at least three creditors join in the petition if the debtor has 12 or more creditors.If the debtor has fewer than 12 creditors,any single creditor or group can file a petition. 
C) The creditors must have tried to help the debtor overcome the financial difficulties. 
D) The debtor must have a majority of the creditors file the petition. 
A) The debtor must owe at least $150,000 in unsecured claims to the creditors who file. 
B) The debtor must have at least three creditors join in the petition if the debtor has 12 or more creditors.If the debtor has fewer than 12 creditors,any single creditor or group can file a petition. 
C) The creditors must have tried to help the debtor overcome the financial difficulties. 
D) The debtor must have a majority of the creditors file the petition.

Question 18

Under all chapters of the Bankruptcy Code,most of the debtor's assets are distributed to creditors and the debtor has no obligation to share future earnings with creditors.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

What are the three main purposes of the federal Bankruptcy Code? How are these purposes supported and fostered in the Code?

Accepted Answer

The primary goals of the Bankruptcy Code

Exam 24: Bankruptcy

Bankruptcy is regulated by federal law.

Individual debtors are allowed to keep some assets in a Chapter 7 bankruptcy.

Forever Yours,Inc.has a secured and perfected security interest in Sally's big-screen TV.On the filing date of Sally's Chapter 7 petition,the balance of the debt owed to Forever Yours is $2,000.The value of the TV is estimated at $1,500.This means that Forever Yours:

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.

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

Esmeralda is a debtor in a Chapter 7 bankruptcy proceeding.Which of the following is not a duty of Esmeralda under Chapter 7?

Generally,filing bankruptcy stops the collection activity of creditors.

Alimony and child support obligations are considered priority claims.

Agnes plans to file for bankruptcy under Chapter 7.One month prior to filing,Agnes gives Joe's Filling Station $700 to apply to her gas bill.Joe has been so kind to let her charge the gas she needed for her car over the past year.The bankruptcy trustee appointed to the case:

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

Grand Lighting Co.has filed a petition for voluntary bankruptcy under Chapter 7 of the Code.The following property will be exempt from the bankruptcy process:

The correct order of payment of claims from the debtor's estate would be:

Which of the following cannot file a bankruptcy petition under the Code?

The start of the bankruptcy process is:

Which of the following is a requirement for an involuntary Chapter 7 bankruptcy petition?

Under all chapters of the Bankruptcy Code,most of the debtor's assets are distributed to creditors and the debtor has no obligation to share future earnings with creditors.

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

What are the three main purposes of the federal Bankruptcy Code? How are these purposes supported and fostered in the Code?

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