Question 1

In a Chapter 7 bankruptcy proceeding, which behaviors may cause a court to not discharge a debt?

Accepted Answer

The following behavior may cause the court to not discharge the debt:
1. The debtor has concealed or destroyed property in an attempt to defraud the creditors.
2. The debtor has concealed or destroyed financial records.
3. The debtor fails to account for a loss of assets.

Question 2

Which of the following is true regarding the number of creditors who must vote to accept a reorganization plan under a Chapter 11 proceeding?

Accepted Answer

A)  For the plan to be accepted, one-third of the class of unsecured creditors must vote to approve it. 
B)  For the plan to be accepted, one-half of the class of secured creditors must vote to approve it. 
C)  For the plan to be accepted, two-thirds of the creditors of each class of creditors must vote to approve it. 
D)  For the plan to be accepted, three-fourth of the creditors of each class of creditors must vote to approve it. 
E)  For the plan to be accepted, one-fourth of the class of unsecured creditors must vote to approve it. 
A)  For the plan to be accepted, one-third of the class of unsecured creditors must vote to approve it. 
B)  For the plan to be accepted, one-half of the class of secured creditors must vote to approve it. 
C)  For the plan to be accepted, two-thirds of the creditors of each class of creditors must vote to approve it. 
D)  For the plan to be accepted, three-fourth of the creditors of each class of creditors must vote to approve it. 
E)  For the plan to be accepted, one-fourth of the class of unsecured creditors must vote to approve it. C

Question 3

Which of the following is false regarding Chapter 12 of the bankruptcy code?

Accepted Answer

A)  A family farmer under Chapter 12 must have regular annual income. 
B)  The family farmer's gross income must be at least 50 percent farm-dependent. 
C)  At least 50 percent of the family farmer's debt must be farm-related. 
D)  The debt must be under a certain debt cap. 
E)  Congress modeled Chapter 12 after Chapter 7 relief. 
A)  A family farmer under Chapter 12 must have regular annual income. 
B)  The family farmer's gross income must be at least 50 percent farm-dependent. 
C)  At least 50 percent of the family farmer's debt must be farm-related. 
D)  The debt must be under a certain debt cap. 
E)  Congress modeled Chapter 12 after Chapter 7 relief. E

Question 4

Which of the following are permitted to file under Chapter 11 reorganization?

Accepted Answer

A)  Stockbrokers 
B)  Commodities brokers 
C)  Banks 
D)  Savings and loan companies 
E)  Corporate debtors 
A)  Stockbrokers 
B)  Commodities brokers 
C)  Banks 
D)  Savings and loan companies 
E)  Corporate debtors

Question 5

Bankruptcy proceedings begin with a letter sent to the party by certified mail that a legal proceeding will begin against them.

Accepted Answer

A) True 
 B)False

Question 6

Before a debtor files for one specific type of relief, the clerk of courts must give the debtor written notice of the other types of relief available.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT something a bankruptcy judge can make decisions on?

Accepted Answer

A)  The administration of bankruptcy proceedings 
B)  What a debtor's assets are 
C)  How a debtor's assets are to be sold 
D)  What assets a debtor can keep 
E)  State law claims. 
A)  The administration of bankruptcy proceedings 
B)  What a debtor's assets are 
C)  How a debtor's assets are to be sold 
D)  What assets a debtor can keep 
E)  State law claims.

Question 8

A moratorium for almost all creditor litigation against a debtor in a Chapter 7 bankruptcy is referred to as which of the following?

Accepted Answer

A)  A stop order 
B)  An automatic stay 
C)  A semi-automatic dismissal 
D)  A semi-discharge 
E)  There is no such moratorium in a Chapter 7 proceeding 
A)  A stop order 
B)  An automatic stay 
C)  A semi-automatic dismissal 
D)  A semi-discharge 
E)  There is no such moratorium in a Chapter 7 proceeding

Question 9

Garland files a Chapter 7 bankruptcy. A(n) ________ is required of all the creditors to schedule a liquidation.

Accepted Answer

A)  logistics meeting 
B)  operational meeting 
C)  creditors' meeting 
D)  enforcement meeting 
E)  due diligence meeting 
A)  logistics meeting 
B)  operational meeting 
C)  creditors' meeting 
D)  enforcement meeting 
E)  due diligence meeting

Question 10

[Friends and Family] Jasleen was very close to her family and friends. She also liked to spend money, and had a large amount of consumer debt for items such as jewelry, clothing, a personal watercraft, and a new car. Jasleen was having problems making her credit card payments as they became due, but she wanted to make every effort to pay her debts. She had borrowed money from her mother for some jewelry and repaid that loan on January 1st. She repaid a loan to her business partner on May 15th of the same year. On September 1st of that year, she also repaid a loan to Friendly Jewelry Store because she wanted to remain on good terms with the manager. Unfortunately, Jasleen was simply unable to continue making payments and on November 1st of that year, she filed a voluntary petition for bankruptcy relief under Chapter 7.
-Assuming the business partner received more than would have been received through bankruptcy proceedings, which of the following is the most likely result of a claim of preferential payment based on the payment to the business partner?

Accepted Answer

A)  The payment was not preferential because it was made over 90 days before the filing of the bankruptcy petition. 
B)  The payment was not preferential because it was made over 120 days before the filing of the bankruptcy petition. 
C)  The payment was not preferential because it was made over 180 days before the filing of the bankruptcy petition. 
D)  The payment was preferential because it was made to a business partner and made within one year of the filing of the bankruptcy petition unless Jasleen can establish that she was not insolvent when the payment was made. 
E)  The payment was preferential on the basis that it was made to a business partner within one year of the filing of the bankruptcy petition only if the trustee is able to demonstrate that Jasleen was insolvent when she made the payment. 
A)  The payment was not preferential because it was made over 90 days before the filing of the bankruptcy petition. 
B)  The payment was not preferential because it was made over 120 days before the filing of the bankruptcy petition. 
C)  The payment was not preferential because it was made over 180 days before the filing of the bankruptcy petition. 
D)  The payment was preferential because it was made to a business partner and made within one year of the filing of the bankruptcy petition unless Jasleen can establish that she was not insolvent when the payment was made. 
E)  The payment was preferential on the basis that it was made to a business partner within one year of the filing of the bankruptcy petition only if the trustee is able to demonstrate that Jasleen was insolvent when she made the payment.

Question 11

What is the maximum period of a Chapter 13 repayment plan that does not require special court approval?

Accepted Answer

A)  One year 
B)  Two years. 
C)  Three years. 
D)  Four years. 
E)  No limit. 
A)  One year 
B)  Two years. 
C)  Three years. 
D)  Four years. 
E)  No limit.

Question 12

[Friends and Family] Jasleen was very close to her family and friends. She also liked to spend money, and had a large amount of consumer debt for items such as jewelry, clothing, a personal watercraft, and a new car. Jasleen was having problems making her credit card payments as they became due, but she wanted to make every effort to pay her debts. She had borrowed money from her mother for some jewelry and repaid that loan on January 1st. She repaid a loan to her business partner on May 15th of the same year. On September 1st of that year, she also repaid a loan to Friendly Jewelry Store because she wanted to remain on good terms with the manager. Unfortunately, Jasleen was simply unable to continue making payments and on November 1st of that year, she filed a voluntary petition for bankruptcy relief under Chapter 7.
-Which of the following is the most likely result of a claim of preferential payment based on the payment to the jewelry store?

Accepted Answer

A)  The payment was not preferential because it was for a consumer good and was not made within 30 days of the filing of the bankruptcy petition. 
B)  The payment will be considered preferential if the trustee is able to establish that the jewelry store received more through the transfer than it would have received through bankruptcy proceedings. 
C)  The payment will be considered preferential on the basis that it was made within 90 days of the filing of the bankruptcy petition only if the trustee is able to establish Jasleen's insolvency at the time of the payment. 
D)  Because it was for a consumer good, the payment was not preferential unless the bankruptcy trustee can prove intent to defraud. 
E)  The payment was preferential because it was made within 90 days of the filing of the bankruptcy petition. 
A)  The payment was not preferential because it was for a consumer good and was not made within 30 days of the filing of the bankruptcy petition. 
B)  The payment will be considered preferential if the trustee is able to establish that the jewelry store received more through the transfer than it would have received through bankruptcy proceedings. 
C)  The payment will be considered preferential on the basis that it was made within 90 days of the filing of the bankruptcy petition only if the trustee is able to establish Jasleen's insolvency at the time of the payment. 
D)  Because it was for a consumer good, the payment was not preferential unless the bankruptcy trustee can prove intent to defraud. 
E)  The payment was preferential because it was made within 90 days of the filing of the bankruptcy petition.

Question 13

A payment made by an insolvent debtor that gives preferential treatment to one creditor over another is called which of the following?

Accepted Answer

A)  An unfair payment 
B)  An unequal payment 
C)  A preferential payment 
D)  An unendorsed payment 
E)  An unapproved payment 
A)  An unfair payment 
B)  An unequal payment 
C)  A preferential payment 
D)  An unendorsed payment 
E)  An unapproved payment

Question 14

Which of the following is required to file Chapter 12 bankruptcy?

Accepted Answer

A)  At least half of the debt must be farm related? 
B)  At least 90 percent of the debt must be farm related 
C)  Total debt must be under $1 million 
D)  The farmer must be 100 percent insolvent. 
E)  The farmer must be completely unable to pay any money towards creditors 
A)  At least half of the debt must be farm related? 
B)  At least 90 percent of the debt must be farm related 
C)  Total debt must be under $1 million 
D)  The farmer must be 100 percent insolvent. 
E)  The farmer must be completely unable to pay any money towards creditors

Question 15

Which of the following is false regarding rights of a trustee in a Chapter 7 bankruptcy?

Accepted Answer

A)  The trustee takes possession of the debtor's property and has it appraised. 
B)  If someone else holds the debtor's property, the trustee has the power to require the person to return that properly. 
C)  The trustee examines the debtor's records but may not even temporarily take over the debtor's business. 
D)  The trustee can initiate collection actions but must also defend against creditor actions. 
E)  The trustee separates the exempt property from the nonexempt property and sells the nonexempt property. 
A)  The trustee takes possession of the debtor's property and has it appraised. 
B)  If someone else holds the debtor's property, the trustee has the power to require the person to return that properly. 
C)  The trustee examines the debtor's records but may not even temporarily take over the debtor's business. 
D)  The trustee can initiate collection actions but must also defend against creditor actions. 
E)  The trustee separates the exempt property from the nonexempt property and sells the nonexempt property.

Question 16

Who organizes the creditors' meeting in a Chapter 7 proceeding?

Accepted Answer

A)  The trustee 
B)  The interim trustee 
C)  The bankruptcy judge 
D)  The district court judge 
E)  At least three of the creditors 
A)  The trustee 
B)  The interim trustee 
C)  The bankruptcy judge 
D)  The district court judge 
E)  At least three of the creditors

Question 17

In a Chapter 11 filing, reorganization may be either voluntary or involuntary.

Accepted Answer

A) True 
 B)False

Question 18

[Exemptions] Liane is injured in an automobile accident and cannot work. She cannot pay her bills and files for bankruptcy relief under Chapter 7. Federal exemptions apply, and Liane lists as exempt $25,000 in equity in her residence; interest in a vehicle of $2,000; interest in jewelry of $400; and retirement funds in her individual retirement account. Her creditors filed an objection to all claimed exemptions except for the home equity claim.
-What is the status of the exemption Liane claimed for individual retirement account funds?

Accepted Answer

A)  She will not be able to claim that exemption. 
B)  The status of the exemption is unclear without further information regarding beneficiaries of the IRA. 
C)  She will be able to claim that exemption. 
D)  She will be able to claim that exemption but only up to $50,000. 
E)  She will be able to claim that exemption but only up to $25,000. 
A)  She will not be able to claim that exemption. 
B)  The status of the exemption is unclear without further information regarding beneficiaries of the IRA. 
C)  She will be able to claim that exemption. 
D)  She will be able to claim that exemption but only up to $50,000. 
E)  She will be able to claim that exemption but only up to $25,000.

Question 19

Which of the following is true regarding who may receive a discharge of debt under Chapter 7 of the bankruptcy code?

Accepted Answer

A)  Individuals, partnerships, and corporations may all receive a discharge. 
B)  Partnerships and individuals may receive a discharge, but corporations may not. 
C)  Corporations and individuals may receive a discharge, but partnerships may not. 
D)  Individuals may receive a discharge, but partnerships and corporations may not. 
E)  Corporations may receive a discharge, but individuals and partnerships may not. 
A)  Individuals, partnerships, and corporations may all receive a discharge. 
B)  Partnerships and individuals may receive a discharge, but corporations may not. 
C)  Corporations and individuals may receive a discharge, but partnerships may not. 
D)  Individuals may receive a discharge, but partnerships and corporations may not. 
E)  Corporations may receive a discharge, but individuals and partnerships may not.

Question 20

Denise, who has several credit cards and lots of unsecured debt, cannot make her payments but does not want to file for bankruptcy protection. She knows that you are taking business law and asks you whether she can be forced into Chapter 7 bankruptcy and, if so, under what circumstances. What would you tell her?

Accepted Answer

She should be informed that if she has 1

Exam 32: Bankruptcy and Reorganization

In a Chapter 7 bankruptcy proceeding, which behaviors may cause a court to not discharge a debt?

Which of the following is true regarding the number of creditors who must vote to accept a reorganization plan under a Chapter 11 proceeding?

Which of the following is false regarding Chapter 12 of the bankruptcy code?

Which of the following are permitted to file under Chapter 11 reorganization?

Bankruptcy proceedings begin with a letter sent to the party by certified mail that a legal proceeding will begin against them.

Before a debtor files for one specific type of relief, the clerk of courts must give the debtor written notice of the other types of relief available.

Which of the following is NOT something a bankruptcy judge can make decisions on?

A moratorium for almost all creditor litigation against a debtor in a Chapter 7 bankruptcy is referred to as which of the following?

Garland files a Chapter 7 bankruptcy. A(n) ________ is required of all the creditors to schedule a liquidation.

What is the maximum period of a Chapter 13 repayment plan that does not require special court approval?

A payment made by an insolvent debtor that gives preferential treatment to one creditor over another is called which of the following?

Which of the following is required to file Chapter 12 bankruptcy?

Which of the following is false regarding rights of a trustee in a Chapter 7 bankruptcy?

Who organizes the creditors' meeting in a Chapter 7 proceeding?

In a Chapter 11 filing, reorganization may be either voluntary or involuntary.

Which of the following is true regarding who may receive a discharge of debt under Chapter 7 of the bankruptcy code?

An Introduction to Dynamic Business Law

Business Ethics

The Us Legal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title, Risk of Loss, and Insurable Interest

Performance and Obligations Under Sales and Leases

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, Holder in Due Course, and Defenses

Liability, Defenses, and Discharge

Checks and Electronic Fund Transfers

Secured Transactions

Other Creditors Remedies and Suretyship

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organization

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, Terminations

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, Personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

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