Question 1

The person who fails to make payments as scheduled is said to have defaulted on a loan.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is the person or party that holds the interest in the secured property?

Accepted Answer

A)  A debtor. 
B)  A transaction party. 
C)  An approved party. 
D)  A secured party. 
E)  An attached party. 
A)  A debtor. 
B)  A transaction party. 
C)  An approved party. 
D)  A secured party. 
E)  An attached party. D

Question 3

What are the two general goals of bankruptcy laws?

Accepted Answer

First, bankruptcy laws provide protection to creditors. Bankruptcy laws ensure that creditors competing for a debtor's assets are treated equally and receive a fair share of the debtor's assets. Second, bankruptcy laws provide opportunities for debtors to gain a fresh financial start.

Question 4

Reference - 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, because Dennis had bought a boat, a new car, an expensive engagement ring for his girlfriend, and some other items, he was unable to continue making payments on the television. 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 or not 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 or not a luxury good was involved, the interest was never perfected.

Question 5

Reference - 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, because Dennis had bought a boat, a new car, an expensive engagement ring for his girlfriend, and some other items, he was unable to continue making payments on the television. 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 correct term for designating the effect of the failure of Dennis to continue making payments?

Accepted Answer

A)  He refused the loan. 
B)  He defaulted on the loan. 
C)  He unsecured the loan. 
D)  He deaffirmed the loan. 
E)  He discharged the loan. 
A)  He refused the loan. 
B)  He defaulted on the loan. 
C)  He unsecured the loan. 
D)  He deaffirmed the loan. 
E)  He discharged the loan.

Question 6

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

Accepted Answer

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

Question 7

Which of the following is an interest in personal property or fixtures which secures payment or performance of an obligation?

Accepted Answer

A)  An approved interest. 
B)  A secured interest. 
C)  A secured transaction. 
D)  A debt transaction. 
E)  A security agreement. 
A)  An approved interest. 
B)  A secured interest. 
C)  A secured transaction. 
D)  A debt transaction. 
E)  A security agreement.

Question 8

By filing a[n] _____________ petition under Chapter 7, creditors can attempt to force a debtor who is not paying debts as they become due into bankruptcy.

Accepted Answer

A)  Voluntary 
B)  Involuntary 
C)  Complaint 
D)  Accusatory 
E)  Dispute 
A)  Voluntary 
B)  Involuntary 
C)  Complaint 
D)  Accusatory 
E)  Dispute

Question 9

Set forth the first four classes of priority claims among unsecured creditors in a Chapter 7 bankruptcy case in order of priority.

Accepted Answer

The first four classes of priority claim

Question 10

Under Chapter 7, liquidation may be voluntary but not involuntary.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is the designation for property acquired by the debtor after a security agreement covering the property is made?

Accepted Answer

A)  Post-dated property. 
B)  After-acquired property. 
C)  Proceeds. 
D)  Post-acquired property. 
E)  Subsequently acquired property. 
A)  Post-dated property. 
B)  After-acquired property. 
C)  Proceeds. 
D)  Post-acquired property. 
E)  Subsequently acquired property.

Question 12

Under the UCC, a secured party's interest in proceeds lasts for _____________ after the debtor receives the proceeds.

Accepted Answer

A)  30 Days. 
B)  60 Days. 
C)  1 Year. 
D)  5 Days. 
E)  10 Days. 
A)  30 Days. 
B)  60 Days. 
C)  1 Year. 
D)  5 Days. 
E)  10 Days.

Question 13

The "bankruptcy estate" consists of the debtor's debts.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a writing that indicates both a monetary obligation and a security interest in specific goods?

Accepted Answer

A)  Chattel paper. 
B)  Combined paper. 
C)  Transactional paper. 
D)  Monetary and secured paper. 
E)  Specific interest paper. 
A)  Chattel paper. 
B)  Combined paper. 
C)  Transactional paper. 
D)  Monetary and secured paper. 
E)  Specific interest paper.

Question 15

Which of the following are examples of goods?

Accepted Answer

A)  Consumer goods. 
B)  Farm products. 
C)  Documents of title. 
D)  Consumer goods, farm products, and documents of title. 
E)  Consumer goods and farm products, but not documents of title. 
A)  Consumer goods. 
B)  Farm products. 
C)  Documents of title. 
D)  Consumer goods, farm products, and documents of title. 
E)  Consumer goods and farm products, but not documents of title.

Question 16

Which of the following is a term used in bankruptcy for debtors who cannot pay their debts in a timely fashion?

Accepted Answer

A)  Statutory debtors 
B)  Insolvent debtors 
C)  Owers 
D)  Transactors 
E)  Acknowledged transactors 
A)  Statutory debtors 
B)  Insolvent debtors 
C)  Owers 
D)  Transactors 
E)  Acknowledged transactors

Question 17

Transfer of collateral to a secured party for the purpose of perfection is called a[n] _____________.

Accepted Answer

A)  Allegiant. 
B)  Pledge. 
C)  Transfer. 
D)  Allonge. 
E)  Release. 
A)  Allegiant. 
B)  Pledge. 
C)  Transfer. 
D)  Allonge. 
E)  Release.

Question 18

When perfection by possession occurs, the parties do not have to create a written security agreement.

Accepted Answer

A) True 
 B)False

Question 19

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 included only minor changes to bankruptcy law.

Accepted Answer

A) True 
 B)False

Question 20

Collateral is the property that is subject to a security interest.

Accepted Answer

A) True 
 B)False

Exam 18: Holder in Due Course, Liability, and Defenses

The person who fails to make payments as scheduled is said to have defaulted on a loan.

Which of the following is the person or party that holds the interest in the secured property?

What are the two general goals of bankruptcy laws?

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

Which of the following is an interest in personal property or fixtures which secures payment or performance of an obligation?

By filing a[n] _____________ petition under Chapter 7, creditors can attempt to force a debtor who is not paying debts as they become due into bankruptcy.

Set forth the first four classes of priority claims among unsecured creditors in a Chapter 7 bankruptcy case in order of priority.

Under Chapter 7, liquidation may be voluntary but not involuntary.

Which of the following is the designation for property acquired by the debtor after a security agreement covering the property is made?

Under the UCC, a secured party's interest in proceeds lasts for _____________ after the debtor receives the proceeds.

The "bankruptcy estate" consists of the debtor's debts.

Which of the following is a writing that indicates both a monetary obligation and a security interest in specific goods?

Which of the following are examples of goods?

Which of the following is a term used in bankruptcy for debtors who cannot pay their debts in a timely fashion?

Transfer of collateral to a secured party for the purpose of perfection is called a[n] _____________.

When perfection by possession occurs, the parties do not have to create a written security agreement.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 included only minor changes to bankruptcy law.

Collateral is the property that is subject to a security interest.

An Introduction to the Fundamentals of Dynamic Business Law

Business Ethics and Social Responsibility

The Us Legal 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

Secured Transactions and Bankruptcy

Agency and Liability to Third Parties

Forms of Business Organization

Corporations: Formation and Organization

Securities Regulation

Employment and Discrimination Law

Consumer Law

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