Question 1

When a business no longer has enough money to pay their bills and maintain operations they are considered to be _____.

Accepted Answer

Insolvent

Question 2

What is the means test? Provide an example of how it would be applied.

Accepted Answer

The means test is the basis for determining if an individual is eligible for Chapter 7 bankruptcy.If the individual's income is less than the median income for their state,they are not eligible for Chapter 7 and must file for 13.The student should provide an example stating the individual's income and the median income followed by a determination of whether or the debtor meets the requirement.

Question 3

A secured creditor does not need to perfect their interest to be protected under the UCC.

Accepted Answer

A) True 
 B)False  True

Question 4

Chapter 13 repayment plans are limited to ________ filing for bankruptcy.

Accepted Answer

The answer of Chapter 13 repayment plans are limited to...

Question 5

In In re Jones Jones graduated from college and then went to law school.He graduated from law school but was unable to pass the bar exam.Over the next decade he worked various jobs before going back to school again for a masters.Jones took out student loans to pay for his education,resulting in $140,000 of debt.He filed for bankruptcy and sought to have the student loans discharged for "undue hardship." The court held that the undue hardship standard:

Accepted Answer

A)  had been met because the amount of money owed was too much for a person in their 50s to be able to pay. 
B)  had been met because Jones demonstrated that he has made diligent efforts to find employment. 
C)  had not been met because a healthy, educated, employable man paying back the loans would not amount to undue hardship. 
D)  is not applicable to student loans and therefore Jones could not discharge the debt 
A)  had been met because the amount of money owed was too much for a person in their 50s to be able to pay. 
B)  had been met because Jones demonstrated that he has made diligent efforts to find employment. 
C)  had not been met because a healthy, educated, employable man paying back the loans would not amount to undue hardship. 
D)  is not applicable to student loans and therefore Jones could not discharge the debt

Question 6

Bankruptcy is primarily governed by what type of law?

Accepted Answer

A)  federal statutes 
B)  state statutes 
C)  blend of state and federal statutes 
D)  administrative regulations 
A)  federal statutes 
B)  state statutes 
C)  blend of state and federal statutes 
D)  administrative regulations

Question 7

Lori owes the bank the full amount of the loan that she guaranteed since collection action against Becky was unsuccessful.

Accepted Answer

A) True 
 B)False

Question 8

A ________ allows the debtor in possession to avoid any obligation that he would otherwise be forced to perform.

Accepted Answer

The answer of A ________ allows the debtor in possession...

Question 9

The bankruptcy trustee is appointed to represent the creditors.

Accepted Answer

A) True 
 B)False

Question 10

A ________ is a contract that specifies the parties,describes the collateral,states the obligations of the debtor,and states the remedies available to the secured party.

Accepted Answer

The answer of A ________ is a contract that specifies...

Question 11

Only business are able to file for Chapter 13 bankruptcy.

Accepted Answer

A) True 
 B)False

Question 12

The court cannot force creditors to agree to a reorganization plan even if it is fair,equitable,and feasible.

Accepted Answer

A) True 
 B)False

Question 13

Which of these is not a purpose of bankruptcy?

Accepted Answer

A)  offer a fresh start to the debtor 
B)  punish the debtor 
C)  create a way for creditors to recover the debt 
D)  prevent creditors from gaining an unfair advantage over one another 
A)  offer a fresh start to the debtor 
B)  punish the debtor 
C)  create a way for creditors to recover the debt 
D)  prevent creditors from gaining an unfair advantage over one another

Question 14

Explain the difference between secured and unsecured creditors.What is the likelihood of financial recovery for each?

Accepted Answer

Secured creditors lend based on collater

Question 15

What does going through the process of accord and satisfaction do?

Accepted Answer

A)  it prevents a creditor from suing while the business is revising its business model 
B)  contract terms with creditors are renegotiated, releasing the debtor from liability by settling debt 
C)  it prevents creditors from filing for involuntary bankruptcy 
D)  it discharges debt 
A)  it prevents a creditor from suing while the business is revising its business model 
B)  contract terms with creditors are renegotiated, releasing the debtor from liability by settling debt 
C)  it prevents creditors from filing for involuntary bankruptcy 
D)  it discharges debt

Question 16

Whose only legal remedy is to bring a lawsuit against a borrower to try to recover the money loaned?

Accepted Answer

A)  secured creditors 
B)  unsecured creditors 
C)  mortgager 
D)  government agency 
A)  secured creditors 
B)  unsecured creditors 
C)  mortgager 
D)  government agency

Question 17

Fast Feet,a manufacturer of running shoes,gave Rick's Running,merchandise for their store on credit.Rick's is required to sign an agreement that describes the merchandise as collateral and the Rick's will pay Fast Feet weekly based on the sales of the shoes.Fast Feet files a statement of notice with the appropriate government agency.Fast Feet's shoes are not selling fast enough to pay their debts and continue their operations.They are now insolvent.What options does Fast Feet have?

Accepted Answer

Fast Feet may simply go out of existence

Question 18

A Chapter 11 debtor may use bankruptcy as an excuse for not performing contractual obligations.

Accepted Answer

A) True 
 B)False

Question 19

How does a secured creditor establish their rights to the collateral securing a first priority position?

Accepted Answer

A secured creditor must perfect his inte

Question 20

Chris wanted to get a loan from the bank but he has bad credit.In order to get the money he convinced Eric to cosign as surety.Now Chris has stopped making the payments.When is Eric liable for repayment of the loan?

Accepted Answer

A)  at any point 
B)  when Chris stopped making payments 
C)  only after the bank attempts to recover the full amount from Chris 
D)  never because Eric was not the one actually using the money 
A)  at any point 
B)  when Chris stopped making payments 
C)  only after the bank attempts to recover the full amount from Chris 
D)  never because Eric was not the one actually using the money

Exam 20: Creditors Rights and Bankruptcy

When a business no longer has enough money to pay their bills and maintain operations they are considered to be _____.

What is the means test? Provide an example of how it would be applied.

A secured creditor does not need to perfect their interest to be protected under the UCC.

Chapter 13 repayment plans are limited to ________ filing for bankruptcy.

Bankruptcy is primarily governed by what type of law?

Lori owes the bank the full amount of the loan that she guaranteed since collection action against Becky was unsuccessful.

A ________ allows the debtor in possession to avoid any obligation that he would otherwise be forced to perform.

The bankruptcy trustee is appointed to represent the creditors.

A ________ is a contract that specifies the parties,describes the collateral,states the obligations of the debtor,and states the remedies available to the secured party.

Only business are able to file for Chapter 13 bankruptcy.

The court cannot force creditors to agree to a reorganization plan even if it is fair,equitable,and feasible.

Which of these is not a purpose of bankruptcy?

Explain the difference between secured and unsecured creditors.What is the likelihood of financial recovery for each?

What does going through the process of accord and satisfaction do?

Whose only legal remedy is to bring a lawsuit against a borrower to try to recover the money loaned?

A Chapter 11 debtor may use bankruptcy as an excuse for not performing contractual obligations.

How does a secured creditor establish their rights to the collateral securing a first priority position?

Chris wanted to get a loan from the bank but he has bad credit.In order to get the money he convinced Eric to cosign as surety.Now Chris has stopped making the payments.When is Eric liable for repayment of the loan?

Legal Foundations

Business and the Constitution

The American Judicial System,Jurisdiction,and Venue

Resolving Disputes: Litigation and Alternative Dispute Resolution Options

Business,Societal,and Ethical Contexts of Law

Overview and Formation of Contracts

Contract Performance: Conditions, Breach, and Remedies

Contracts for the Sale of Goods

Torts and Product Liability

Agency and Employment Relationships

Employment Regulation and Labor Law

Employment Discrimination

Choice of Business Entity, Sole Proprietorships, and Partnerships

Limited Liability Partnerships, limited Liability Companies, and Other Business Arrangements

Corporations

Regulation of Securities, corporate Governance, and Financial Markets

Administrative Law

Environmental Law

Antitrust and Regulation of Competition

Consumer Protection Law

Criminal Law and Procedure in Business

Personal Property, Real Property, and Land Use Law

Intellectual Property

International Law and Global Commerce

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