Chat with AIExam 34: Bankruptcy
T he bankruptcy trustee in a Chapter 7 proceeding is accountable for administering the debtor's estate.
(37) 
VerifiedTrue
eGear is a retail seller of consumer electronic equipment. eGear sells Fiona a $2,400 television set on credit. Fiona pays $100 down and agrees to pay the balance in equal installments. eGear retains a security interest in the set. Two months later, Fiona defaults on the payments to eGear and is involuntarily petitioned into bankruptcy by other creditors. Discuss eGear's right to repossess the TV set or to be paid on the debt.
(34) VerifiedeGear will not be able to repossess the set. The filing of the involuntary petition in bankruptcy operates as an automatic stay of any creditor's action against the debtor or the property of the debtor. If eGear violates the automatic stay, eGear could be liable to any injured party. Therefore, eGear's right of repossession is cut off by the bankruptcy proceeding.
eGear's right to be paid on the debt depends on its status as a secured creditor. A secured creditor has a security interest in collateral that secures the debt. The bankruptcy trustee will evaluate the bankruptcy estate and will assess proofs of claim. eGear will have to provide proof that it is a secured creditor with the set as collateral. The trustee may surrender the set to eGear as part of the property distribution. eGear can enforce the security interest either by accepting the property in full satisfaction of the debt or by selling the collateral and using the proceeds to pay off the debt. Should the collateral be insufficient to cover the secured debt owed, the secured creditor becomes an unsecured creditor for the difference.
Here, eGear is a perfected secured party, and on a sale of the set, eGear is thus entitled to the proceeds up to the amount of balance of the debt.
Only the debtor may file a plan under Chapter 13.
(32) VerifiedTrue
Dana operates Energy Inc., a corporation in the fuel-supply business. Dana wants to create a plan under which the firm pays a portion of its debts, is discharged of the remainder, and is allowed to continue in business. Energy should file a petition in bankruptcy for relief through
(28) In a Chapter 7 proceeding, secured creditors' claims have priority over the claims of unsecured creditors.
(39) Voluntary petitions may be filed to initiate Chapter 7 or Chapter 11, but not Chapter 13, bankruptcies.
(40) Under Chapter 7, to be entitled to receive a portion of a debtor's estate, each creditor must file a proof of claim with the bankruptcy court within ninety days of
(27) Under Chapter 13, after the completion of all payments under the plan, the court will grant a discharge of
(41) Once a petition is properly filed, creditors can commence or continue most legal actions against the debtor to recover claims.
(35) Baby Day Care, a sole proprietorship, has $150,000 in debt and wants to pay as many of its obligations as reasonably possible. It wishes to be discharged of any remaining debt it cannot pay. To accomplish this goal, the proprietorship should file a petition in bankruptcy under Chapter 13 for relief through
(26) To qualify under Chapter 7, a debtor must complete a means test to determine whether the debtor has been living within his or her means.
(36) In a Chapter 13 bankruptcy, debtors retain most of their assets and agree to payments on their debts, most of which are discharged within three years.
(30) Debtors may be forced into involuntary bankruptcy by creditors even though their assets far exceed their liabilities.
(33) Under Chapter 11, a business debtor's obligations most likely to remain and not be discharged include
(31) 
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