Question 1

A trustee can void any transfer that meets all of the following requirements EXCEPT

Accepted Answer

A) if the transfer was to a creditor of the debtor. 
B) if the pre-petition payment was made in the ordinary course. 
C) if the transfer was used to pay an existing debt. 
D) if the debtor's liabilities exceeded assets at the time of the transfer. 
A) if the transfer was to a creditor of the debtor. 
B) if the pre-petition payment was made in the ordinary course. 
C) if the transfer was used to pay an existing debt. 
D) if the debtor's liabilities exceeded assets at the time of the transfer. B

Question 2

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

Accepted Answer

A) $23,675. 
B) $55,200. 
C) unlimited. 
D) $125,000. 
A) $23,675. 
B) $55,200. 
C) unlimited. 
D) $125,000. A

Question 3

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 explain the plan of reorganization that should be used.

Accepted Answer

If Artistic wants to continue in business,it should file under a reorganization chapter (Chapters 11 or 13)rather than a liquidation chapter (Chapter 7).Although its purpose is to rehabilitate the debtor through reorganization,Chapter 13 is available only to individual debtors with a regular source of income.It is not available to businesses.Chapter 11 is the appropriate chapter for Artistic.Artistic becomes the debtor in possession and,in effect,serves as trustee.Once the bankruptcy petition is filed,an automatic stay goes into effect to provide the debtor with temporary relief from creditors.The next stage is to develop a plan of reorganization that provides for the payment of debts and the continuation of the business. For the first 120 days (which the court can extend up to 18 months),the debtor has the exclusive right to propose a plan.If the debtor fails to file a plan,or if the court rejects it, then creditors and shareholders can develop their own plan.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements concerning a Chapter 11 reorganization plan is true?

Accepted Answer

A) A reorganization plan will be confirmed by the court only if a majority of each class of creditors votes in favor of the plan. 
B) A reorganization plan can be confirmed by the court over objections of some creditors if the court determines that the plan is feasible and fair. 
C) Only the bankruptcy court has the authority to confirm or reject the reorganization plan.Creditors do not have a right to vote on the plan. 
D) A reorganization plan binds only the debtor and not the creditors. 
A) A reorganization plan will be confirmed by the court only if a majority of each class of creditors votes in favor of the plan. 
B) A reorganization plan can be confirmed by the court over objections of some creditors if the court determines that the plan is feasible and fair. 
C) Only the bankruptcy court has the authority to confirm or reject the reorganization plan.Creditors do not have a right to vote on the plan. 
D) A reorganization plan binds only the debtor and not the creditors.

Question 6

Generally,filing bankruptcy stops the collection activity of creditors.

Accepted Answer

A) True 
 B)False

Question 7

Alimony and child support obligations are considered priority claims.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

Chapter 7 bankruptcy is also known as

Accepted Answer

A) reorganization. 
B) reaffirmation. 
C) voluntary bankruptcy. 
D) straight bankruptcy. 
A) reorganization. 
B) reaffirmation. 
C) voluntary bankruptcy. 
D) straight bankruptcy.

Question 12

When Dudley files his Chapter 7 petition,he lists the following debts:
How will each of these debts be treated by the bankruptcy court.
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

Accepted Answer

Certain debts are never discharged,and t

Question 13

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 feasible,fair,and in the best interests of the creditors;the judge approved it in spite of these creditors' objections.This action by the judge is called a "cramdown."

Accepted Answer

A) True 
 B)False

Question 14

Iris received a discharge under a Chapter 7 bankruptcy.She cannot receive another discharge under Chapter 7 for at least

Accepted Answer

A) six years after the prior filing. 
B) eight years after the prior filing. 
C) ten years after the prior discharge. 
D) She cannot file another Chapter 7,but could file a Chapter 11 or 13 bankruptcy. 
A) six years after the prior filing. 
B) eight years after the prior filing. 
C) ten years after the prior discharge. 
D) She cannot file another Chapter 7,but could file a Chapter 11 or 13 bankruptcy.

Question 15

Debts that cannot be discharged in bankruptcy include all EXCEPT

Accepted Answer

A) money owed for alimony. 
B) income taxes for 3 years prior to filing. 
C) money owed to utility companies. 
D) money obtained fraudulently. 
A) money owed for alimony. 
B) income taxes for 3 years prior to filing. 
C) money owed to utility companies. 
D) money obtained fraudulently.

Question 16

A form stating the name of an unsecured creditor and the amount of the claim against the debtor is called a(n)

Accepted Answer

A) order for relief. 
B) automatic stay. 
C) proof of claim. 
D) reaffirmation form. 
A) order for relief. 
B) automatic stay. 
C) proof of claim. 
D) reaffirmation form.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Brad was having financial difficulties and thought bankruptcy might be in his future.He transferred his sports car to his brother with the agreement that if he didn't file for bankruptcy within the next 18 months,his brother would return the car to him.Brad did file for bankruptcy in 10 months.The bankruptcy trustee can void the transfer and bring the car back into Brad's estate for the purpose of providing assets for Brad's creditors.

Accepted Answer

A) True 
 B)False

Question 19

Grand Lighting Co.has filed a petition for voluntary bankruptcy under Chapter 7 of the Code.Which of the following will prohibit creditors from collecting debts that Grand Lighting incurred before the petition was filed?

Accepted Answer

A) an automatic stay 
B) a proof of claim 
C) a voluntary petition 
D) a discharge statement 
A) an automatic stay 
B) a proof of claim 
C) a voluntary petition 
D) a discharge statement

Question 20

In a voluntary petition,a claim of exemptions lists

Accepted Answer

A) the names and addresses of all creditors. 
B) all assets that the debtor is entitled to keep. 
C) the debtor's job,income,and expenses. 
D) the debtor's assets and debts. 
A) the names and addresses of all creditors. 
B) all assets that the debtor is entitled to keep. 
C) the debtor's job,income,and expenses. 
D) the debtor's assets and debts.

Exam 36: Bankruptcy

A trustee can void any transfer that meets all of the following requirements EXCEPT

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

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 explain the plan of reorganization that should be used.

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

Which of the following statements concerning a Chapter 11 reorganization plan is true?

Generally,filing bankruptcy stops the collection activity of creditors.

Alimony and child support obligations are considered priority claims.

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

The Bankruptcy Code uses the term "debtor" 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.

Chapter 7 bankruptcy is also known as

Iris received a discharge under a Chapter 7 bankruptcy.She cannot receive another discharge under Chapter 7 for at least

Debts that cannot be discharged in bankruptcy include all EXCEPT

A form stating the name of an unsecured creditor and the amount of the claim against the debtor is called a(n)

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

Grand Lighting Co.has filed a petition for voluntary bankruptcy under Chapter 7 of the Code.Which of the following will prohibit creditors from collecting debts that Grand Lighting incurred before the petition was filed?

In a voluntary petition,a claim of exemptions lists

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