Question 1

Which of the following is called straight bankruptcy?

Accepted Answer

A) Liquidation 
B) Reorganization 
C) Reformation 
D) Rehabilitation 
E) Non-liquidation 
A) Liquidation 
B) Reorganization 
C) Reformation 
D) Rehabilitation 
E) Non-liquidation

Question 2

Which of the following is true regarding the manner in which a secured party may sell collateral after the debtor's default?

Accepted Answer

A) The sale must be at a private sale. 
B) The sale must be at a public sale. 
C) The sale may be at either a private sale or a public sale. 
D) The sale must be at a "without reserve" sale. 
E) The sale must be at a "with reserve" sale. 
A) The sale must be at a private sale. 
B) The sale must be at a public sale. 
C) The sale may be at either a private sale or a public sale. 
D) The sale must be at a "without reserve" sale. 
E) The sale must be at a "with reserve" sale.

Question 3

According to the Uniform Commercial Code,a secured party need not give value in order to create a security interest.

Accepted Answer

A) True 
 B)False

Question 4

In order of priority,list the first four classes of priority claims among unsecured creditors in a Chapter 7 bankruptcy case.

Accepted Answer

The first four classes of priority claim

Question 5

Overextended Debtor.Dennis purchased a big-screen television from ABC Electronics and financed the purchase through ABC Electronics based on an agreement granting ABC Electronics a security interest in the television and requiring that Dennis make monthly payments.Three months later,Dennis was unable to continue making payments on the television because he had bought a boat,a new car,an expensive engagement ring for his girlfriend,and some other items.The manager from ABC Electronics called and asked Dennis to return the television.Dennis refused on the basis that ABC Electronics never perfected its interest in the television.Which of the following is the term for the type of agreement Dennis had with ABC Electronics?

Accepted Answer

A) A pledged-money interest 
B) A collateralized interest 
C) A purchase-money security interest 
D) A security perfection interest 
E) A cash-deferred security interest 
A) A pledged-money interest 
B) A collateralized interest 
C) A purchase-money security interest 
D) A security perfection interest 
E) A cash-deferred security interest

Question 6

Repossession.Tina sold used vehicles.She sold a used pick-up truck to Joan and a used convertible to Barry.She properly obtained a security interest in both vehicles.Both Joan and Barry defaulted on payments owed to Tina for the vehicles.Tina told her assistant Samantha that the only legal remedy was repossession; that she was going after the vehicles; and that Samantha should call law enforcement if she did not show up at the office by 10 a.m.for the next few mornings.Tina decided that she would repossess Joan's pick-up at Joan's house.Therefore,Tina slipped into the driveway at midnight one night and started the engine.Joan immediately ran out and confronted Tina.Tina shoved Joan away and drove off in the pick-up truck.Tina was able to repossess Barry's convertible in a public parking lot with no altercation with him.Which of the following is true regarding whether repossession was the only remedy available to Tina?

Accepted Answer

A) Tina was correct regardless of whether a vehicle or another type of good was involved. 
B) Tina was correct but only because a vehicle was involved. 
C) Tina was incorrect,because only when a vehicle is involved,a party must disregard the collateral and proceed to judgment. 
D) Tina was incorrect,because regardless of whether a vehicle or another type of good was involved,Tina only had the right to ignore the collateral and proceed to judgment. 
E) Tina was incorrect,because regardless of whether a vehicle or another type of good was involved,Tina had the right to either take possession of the collateral or ignore rights in the collateral and proceed to judgment. 
A) Tina was correct regardless of whether a vehicle or another type of good was involved. 
B) Tina was correct but only because a vehicle was involved. 
C) Tina was incorrect,because only when a vehicle is involved,a party must disregard the collateral and proceed to judgment. 
D) Tina was incorrect,because regardless of whether a vehicle or another type of good was involved,Tina only had the right to ignore the collateral and proceed to judgment. 
E) Tina was incorrect,because regardless of whether a vehicle or another type of good was involved,Tina had the right to either take possession of the collateral or ignore rights in the collateral and proceed to judgment.

Question 7

When a debtor sells collateral,he or she receives ________,something that is exchanged for collateral.

Accepted Answer

A) after-acquired property 
B) consideration 
C) proceeds 
D) collateral 
E) value 
A) after-acquired property 
B) consideration 
C) proceeds 
D) collateral 
E) value

Question 8

Which of the following articles of the Uniform Commercial Code governs secured transactions in personal property?

Accepted Answer

A) Article 1 
B) Article 4 
C) Article 5 
D) Article 7 
E) Article 9 
A) Article 1 
B) Article 4 
C) Article 5 
D) Article 7 
E) Article 9

Question 9

Overextended Debtor.Dennis purchased a big-screen television from ABC Electronics and financed the purchase through ABC Electronics based on an agreement granting ABC Electronics a security interest in the television and requiring that Dennis make monthly payments.Three months later,Dennis was unable to continue making payments on the television because he had bought a boat,a new car,an expensive engagement ring for his girlfriend,and some other items.The manager from ABC Electronics called and asked Dennis to return the television.Dennis refused on the basis that ABC Electronics never perfected its interest in the television.Which of the following is correct regarding the statement of Dennis that the security interest was not perfected?

Accepted Answer

A) Dennis is wrong because the security interest perfected automatically. 
B) Dennis is wrong because the security interest perfected when he was still in possession of the collateral 30 days after the purchase. 
C) Dennis is wrong because the security interest perfected when he was still in possession of the collateral 60 days after the purchase. 
D) Dennis is correct because in the case of luxury goods,a financing statement must be filed within 10 days. 
E) Dennis is correct because regardless of whether a luxury good was involved,the interest was never perfected. 
A) Dennis is wrong because the security interest perfected automatically. 
B) Dennis is wrong because the security interest perfected when he was still in possession of the collateral 30 days after the purchase. 
C) Dennis is wrong because the security interest perfected when he was still in possession of the collateral 60 days after the purchase. 
D) Dennis is correct because in the case of luxury goods,a financing statement must be filed within 10 days. 
E) Dennis is correct because regardless of whether a luxury good was involved,the interest was never perfected.

Question 10

Which of the following are nondischargeable debts under a Chapter 7 bankruptcy filing?

Accepted Answer

A) Claims of willful or malicious conduct by the debtor that caused injury to another person or property. 
B) Specific student loans,unless payment of the loans imposes undue hardship on the debtor. 
C) Debts not discharged in previous bankruptcies. 
D) Judgments against a debtor for claims resulting from the debtor's drinking and driving. 
E) All of the above. 
A) Claims of willful or malicious conduct by the debtor that caused injury to another person or property. 
B) Specific student loans,unless payment of the loans imposes undue hardship on the debtor. 
C) Debts not discharged in previous bankruptcies. 
D) Judgments against a debtor for claims resulting from the debtor's drinking and driving. 
E) All of the above.

Question 11

List three advantages associated with perfection by possession.

Accepted Answer

First,a secured party does not have to g

Question 12

Which of the following can be considered after-acquired property?

Accepted Answer

A) Inventory 
B) Livestock 
C) Equipment 
D) Inventory,livestock,or equipment 
E) Inventory and equipment,but not livestock 
A) Inventory 
B) Livestock 
C) Equipment 
D) Inventory,livestock,or equipment 
E) Inventory and equipment,but not livestock

Question 13

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

Accepted Answer

A) The trustee may take possession of the debtor's property and have it appraised. 
B) If someone else holds the debtor's property,the trustee has the power to require the person to return that property. 
C) The trustee may temporarily take over the debtor's business. 
D) The trustee may take possession of the debtor's property and have it appraised; if someone else holds the debtor's property,the trustee has the power to require the person to return that property; and the trustee may temporarily take over the debtor's business. 
E) The trustee may take possession of the debtor's property and have it appraised,and if someone else holds the debtor's property,the trustee has the power to require the person to return that property; however,the trustee may not take over the debtor's business even temporarily. 
A) The trustee may take possession of the debtor's property and have it appraised. 
B) If someone else holds the debtor's property,the trustee has the power to require the person to return that property. 
C) The trustee may temporarily take over the debtor's business. 
D) The trustee may take possession of the debtor's property and have it appraised; if someone else holds the debtor's property,the trustee has the power to require the person to return that property; and the trustee may temporarily take over the debtor's business. 
E) The trustee may take possession of the debtor's property and have it appraised,and if someone else holds the debtor's property,the trustee has the power to require the person to return that property; however,the trustee may not take over the debtor's business even temporarily.

Question 14

Which chapter of the Bankruptcy Code is used to reorganize the debtor's financial affairs under the supervision of the bankruptcy court?

Accepted Answer

A) Chapter 7 
B) Chapter 8 
C) Chapter 11 
D) Chapter 14 
E) Chapter 17 
A) Chapter 7 
B) Chapter 8 
C) Chapter 11 
D) Chapter 14 
E) Chapter 17

Question 15

In general,secured parties have priority over unsecured creditors.

Accepted Answer

A) True 
 B)False

Question 16

Overextended Debtor.Dennis purchased a big-screen television from ABC Electronics and financed the purchase through ABC Electronics based on an agreement granting ABC Electronics a security interest in the television and requiring that Dennis make monthly payments.Three months later,Dennis was unable to continue making payments on the television because he had bought a boat,a new car,an expensive engagement ring for his girlfriend,and some other items.The manager from ABC Electronics called and asked Dennis to return the television.Dennis refused on the basis that ABC Electronics never perfected its interest in the television.Which of the following is the proper designation under the Uniform Commercial Code for the television?

Accepted Answer

A) It is a consumer good. 
B) It is a pledge. 
C) It is an allonge. 
D) It is unsecured property. 
E) It is both unsecured and unperfected property. 
A) It is a consumer good. 
B) It is a pledge. 
C) It is an allonge. 
D) It is unsecured property. 
E) It is both unsecured and unperfected property.

Question 17

What must a creditor do to become a secured party?

Accepted Answer

To become a secured party,the creditor m

Question 18

Bankruptcy remedies are available to ________.

Accepted Answer

A) Individuals only 
B) individuals and corporations,but not partnerships 
C) individuals and partnerships,but not corporations 
D) corporations and partnerships,but not individuals 
E) individuals,corporations,and partnerships 
A) Individuals only 
B) individuals and corporations,but not partnerships 
C) individuals and partnerships,but not corporations 
D) corporations and partnerships,but not individuals 
E) individuals,corporations,and partnerships

Question 19

Which of the following are ineligible for Chapter 7 bankruptcy relief?

Accepted Answer

A) Banks 
B) Railroads 
C) Health maintenance organizations 
D) Banks,railroads,and health maintenance organizations 
E) Banks and railroads,but not health maintenance organizations 
A) Banks 
B) Railroads 
C) Health maintenance organizations 
D) Banks,railroads,and health maintenance organizations 
E) Banks and railroads,but not health maintenance organizations

Question 20

A(n)________ is a written federal court order signed by a bankruptcy judge stating that the debtor is immune from creditor actions to collect debts.

Accepted Answer

A) discharge 
B) accord and satisfaction 
C) grant of immunity 
D) relinquishment 
E) abandonment 
A) discharge 
B) accord and satisfaction 
C) grant of immunity 
D) relinquishment 
E) abandonment

Exam 19: Secured Transactions and Bankruptcy

Which of the following is called straight bankruptcy?

Which of the following is true regarding the manner in which a secured party may sell collateral after the debtor's default?

According to the Uniform Commercial Code,a secured party need not give value in order to create a security interest.

In order of priority,list the first four classes of priority claims among unsecured creditors in a Chapter 7 bankruptcy case.

When a debtor sells collateral,he or she receives ________,something that is exchanged for collateral.

Which of the following articles of the Uniform Commercial Code governs secured transactions in personal property?

Which of the following are nondischargeable debts under a Chapter 7 bankruptcy filing?

List three advantages associated with perfection by possession.

Which of the following can be considered after-acquired property?

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

Which chapter of the Bankruptcy Code is used to reorganize the debtor's financial affairs under the supervision of the bankruptcy court?

In general,secured parties have priority over unsecured creditors.

What must a creditor do to become a secured party?

Bankruptcy remedies are available to ________.

Which of the following are ineligible for Chapter 7 bankruptcy relief?

A(n)________ is a written federal court order signed by a bankruptcy judge stating that the debtor is immune from creditor actions to collect debts.

An Introduction to the Fundamentals of Dynamic Business Law

Business Ethics and Social Responsibility

The Uslegal System and Alternative Dispute Resolution

Administrative Law

Constitutional Law

Criminal Law and Business

Tort Law

Real, Personal, and Intellectual Property

Introduction to Contracts and Agreement

Consideration

Capacity and Legality

Reality of Assent

Contracts in Writing and Third-Party Contracts

Discharge and Remedies

Formation and Performance of Sales and Lease Contracts

Sales and Lease Contracts: Performance, Warranties, and Remedies

Negotiable Instruments: Negotiability and Transferability

Holder in Due Course, Liability, and Defenses

Agency and Liability to Third Parties

Forms of Business Organization

Corporations: Formation and Organization

Securities Regulation

Employment and Discrimination Law

Consumer Law

Filters