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

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 designation for the television in the agreement between Dennis and the electronic store?

Which of the following is false regarding Chapter 13 of the bankruptcy code?

Which of the following is a meeting of all creditors listed in the Chapter 7 required schedules for liquidation?

Which of the following is false regarding provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005?

Which of the following chapters of the Bankruptcy Code is used as a reorganization of the debtor's financial affairs under supervision of the bankruptcy court?

Under which of the following may a court presume that an individual is abusing the bankruptcy provisions of Chapter 7 when an individual's debt is primarily consumer debt and the individual's income is above the median income in his or her state?

According to the UCC, which of the following should a financing statement list?

A _____________ is a transaction in which the payment of a debt is guaranteed by personal property owned by the debtor.

Once a voluntary liquidation proceeding under Chapter 7 is filed, the debtor's prepetition assets form the _____________.

In a Chapter 7 proceeding, a bankruptcy trustee may at times temporarily take over a debtor's business.

If a debtor fails to appear at the Chapter 7 creditors' meeting, the court may refuse to grant the bankruptcy.

Assets that a debtor gains after filing a Chapter 7 bankruptcy petition are generally not part of the bankruptcy estate unless they fall under an exemption.

Which of the following is the agreement by which the debtor gives the secured interest to the secured party?

Once a financing statement has been filed with a correct agency, for how long is the statement valid under the UCC without renewal?

Before a debtor files for one specific type of bankruptcy relief, the clerk of courts must give the debtor written notice of the other types of relief available.

Everett buys a new bicycle on credit from Bicycle City. Bicycle City has a security agreement for a purchase-money security interest in the bicycle but did not file a financing statement. Everett, however, discovers that he does not have enough money to pay his rent. Therefore, he sells his bicycle to his neighbor, Helen, who is unaware of Bicycle City's security interest in the bicycle. Everett fails to make payments on the bicycle and Bicycle City seeks to repossess it. Discuss the rights and obligations of the parties.

Reference - Claims to Funds. Paul had a great job as a bank executive. Unfortunately, his bank came under scrutiny by federal regulators and while Paul had done nothing illegal, he ended up being fired. Unfortunately for Paul, he had a number of debts. Among his assets were a house worth $250,000 on which he owed $150,000 to a bank which held a security interest; three vehicles; an expensive watch worth $5,000; and $120,000 in an Individual Retirement Account "IRA". He owed $900 per month in child support to his ex-wife Suzy and was behind on payments in the amount of $1,800. He also owed $2,000 in wages consisting of four months of back pay to Bob who took care of Paul's landscaping needs and swimming pool care. Unable to find a job and believing that he had no other option, Paul filed for Chapter 7 bankruptcy. All debtors angrily demanded payment from liquidation of Paul's assets. Paul, on the other hand, claims that he needs all the above mentioned assets and that he should not have to give up anything. Only federal bankruptcy exemptions apply to Paul's case. Which of the following is true in regard to Paul's claim to his vehicles?

If a buyer purchases chattel paper in the ordinary course of business and is unaware of any applicable security interest, the buyer can obtain the good free of any security interest.

Reference - Claims to Funds. Paul had a great job as a bank executive. Unfortunately, his bank came under scrutiny by federal regulators and while Paul had done nothing illegal, he ended up being fired. Unfortunately for Paul, he had a number of debts. Among his assets were a house worth $250,000 on which he owed $150,000 to a bank which held a security interest; three vehicles; an expensive watch worth $5,000; and $120,000 in an Individual Retirement Account "IRA". He owed $900 per month in child support to his ex-wife Suzy and was behind on payments in the amount of $1,800. He also owed $2,000 in wages consisting of four months of back pay to Bob who took care of Paul's landscaping needs and swimming pool care. Unable to find a job and believing that he had no other option, Paul filed for Chapter 7 bankruptcy. All debtors angrily demanded payment from liquidation of Paul's assets. Paul, on the other hand, claims that he needs all the above mentioned assets and that he should not have to give up anything. Only federal bankruptcy exemptions apply to Paul's case. Which of the following is true in regard to the claims of Suzy and Bob in reference to their status as unsecured creditors?

A _____________ is a person or party that has an obligation to the secured party.