Question 1

Which of the following behavior may cause a court to not discharge a debt in a Chapter 7 bankruptcy proceeding?

Accepted Answer

The following behavior may cause the court to not discharge the debt:
1. The debtor has concealed or destroyed property in an attempt to defraud the creditors.
2. The debtor has concealed or destroyed financial records.
3. The debtor fails to account for a loss of assets.

Question 2

Congress first addressed bankruptcy relief in the ____.

Accepted Answer

A)  Bankruptcy Act of 1898 
B)  Insolvency Act of 1900 
C)  Protection Act of 1934 
D)  Bankruptcy Act of 1934 
E)  Securities Act of 1934 
A)  Bankruptcy Act of 1898 
B)  Insolvency Act of 1900 
C)  Protection Act of 1934 
D)  Bankruptcy Act of 1934 
E)  Securities Act of 1934 A

Question 3

A debtor must be insolvent to file a voluntary petition for bankruptcy under Chapter 7.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following is false regarding nondischargeable debts under a Chapter 7 bankruptcy filing?

Accepted Answer

A)  Nondischargeable debts include claims of willful or malicious conduct by the debtor that caused injury to another person or property. 
B)  Nondischargeable debts include specific student loans, unless payment of the loans imposes undue hardship on the debtor. 
C)  Nondischargeable debts include debts not discharged in previous bankruptcies. 
D)  Nondischargeable debts include judgments against a debtor for claims resulting from the debtor's drinking and driving. 
E)  Nondischargeable debts include claims for back taxes or government fines within four years of filing for bankruptcy. 
A)  Nondischargeable debts include claims of willful or malicious conduct by the debtor that caused injury to another person or property. 
B)  Nondischargeable debts include specific student loans, unless payment of the loans imposes undue hardship on the debtor. 
C)  Nondischargeable debts include debts not discharged in previous bankruptcies. 
D)  Nondischargeable debts include judgments against a debtor for claims resulting from the debtor's drinking and driving. 
E)  Nondischargeable debts include claims for back taxes or government fines within four years of filing for bankruptcy.

Question 5

Which of the following is false regarding bankruptcy cases?

Accepted Answer

A)  The Bankruptcy Rules set forth procedures for bankruptcy cases. 
B)  Bankruptcy cases are referred to bankruptcy judges, under the authority of the district courts. 
C)  An appeal of a bankruptcy ruling goes to the district court judge. 
D)  A jury is not allowed in a bankruptcy proceeding. 
E)  Bankruptcy cases are filed in federal district courts. 
A)  The Bankruptcy Rules set forth procedures for bankruptcy cases. 
B)  Bankruptcy cases are referred to bankruptcy judges, under the authority of the district courts. 
C)  An appeal of a bankruptcy ruling goes to the district court judge. 
D)  A jury is not allowed in a bankruptcy proceeding. 
E)  Bankruptcy cases are filed in federal district courts.

Question 6

For how many days prior to the filing of a Chapter 7 bankruptcy petition is a debtor assumed insolvent?

Accepted Answer

A)  120 
B)  60 
C)  90 
D)  45 
E)  30 
A)  120 
B)  60 
C)  90 
D)  45 
E)  30

Question 7

Which of the following is an agreement by which the debtor agrees to pay a debt even though it could be discharged?

Accepted Answer

A)  A settlement 
B)  A reaffirmation agreement 
C)  An acknowledgement agreement 
D)  An accord and compromise 
E)  An affirmance 
A)  A settlement 
B)  A reaffirmation agreement 
C)  An acknowledgement agreement 
D)  An accord and compromise 
E)  An affirmance

Question 8

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

Accepted Answer

A)  Corpus 
B)  Remainder 
C)  Residual estate 
D)  Bankruptcy estate 
E)  Relinquished asset pool 
A)  Corpus 
B)  Remainder 
C)  Residual estate 
D)  Bankruptcy estate 
E)  Relinquished asset pool

Question 9

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

Accepted Answer

A)  Under the act, an individual may not generally be considered a debtor unless within 180 days prior to filing, the debtor receives credit counseling from a nonprofit budget and credit counseling agency. 
B)  Under the act, if an individual was a debtor in a bankruptcy case that was dismissed within 180 days of the current case, the individual is generally not eligible to be a debtor under Chapters 7, 11, or 13. 
C)  Under the act, if a previous bankruptcy was completed rather than dismissed, the individual is generally permitted to file for bankruptcy again. 
D)  Under the act if a party completes a Chapter 7 bankruptcy, the party is not permitted to seek a Chapter 7 bankruptcy again for eight years. 
E)  Under the act if a party has at least $10,000 in assets, the party may not file for any type of bankruptcy protection. 
A)  Under the act, an individual may not generally be considered a debtor unless within 180 days prior to filing, the debtor receives credit counseling from a nonprofit budget and credit counseling agency. 
B)  Under the act, if an individual was a debtor in a bankruptcy case that was dismissed within 180 days of the current case, the individual is generally not eligible to be a debtor under Chapters 7, 11, or 13. 
C)  Under the act, if a previous bankruptcy was completed rather than dismissed, the individual is generally permitted to file for bankruptcy again. 
D)  Under the act if a party completes a Chapter 7 bankruptcy, the party is not permitted to seek a Chapter 7 bankruptcy again for eight years. 
E)  Under the act if a party has at least $10,000 in assets, the party may not file for any type of bankruptcy protection.

Question 10

Which of the following is true regarding the law that is relevant to bankruptcy claims?

Accepted Answer

A)  Only federal statutory law is relevant. 
B)  Only state statutory law is relevant. 
C)  While bankruptcy law is state law, federal law applies to bankruptcy cases in the sense that federal laws regarding debtor's property and creditor claims may apply. 
D)  While bankruptcy law is federal law, state law applies to bankruptcy cases in the sense that state laws regarding debtor's property and creditor claims may apply. 
E)  Only federal common law is relevant to bankruptcy claims. 
A)  Only federal statutory law is relevant. 
B)  Only state statutory law is relevant. 
C)  While bankruptcy law is state law, federal law applies to bankruptcy cases in the sense that federal laws regarding debtor's property and creditor claims may apply. 
D)  While bankruptcy law is federal law, state law applies to bankruptcy cases in the sense that state laws regarding debtor's property and creditor claims may apply. 
E)  Only federal common law is relevant to bankruptcy claims.

Question 11

"Exemptions." Sidney is injured in an automobile accident and cannot work. She cannot pay her bills and files for bankruptcy relief under Chapter 7. Federal exemptions apply, and she lists as exempt $25,000 in equity in her residence; interest in a vehicle of $2,000; interest in jewelry of $400; and retirement funds in her individual retirement account. Her creditors filed an objection to all claimed exemptions except for the home equity claim.
-What is the status of the exemption she claimed on the residence?

Accepted Answer

A)  It will likely be allowed because the value claimed is within the federal exemption allowed. 
B)  It will likely be allowed because although it is more than the federal exemption, no creditor filed an objection to it. 
C)  It will likely be disallowed because the federal limit for an exemption for a residence is $10,000. 
D)  It will likely be disallowed because the federal limit for an exemption for a residence is $5,000. 
E)  The status of the exemption is unclear without further information regarding the resale value of the home. 
A)  It will likely be allowed because the value claimed is within the federal exemption allowed. 
B)  It will likely be allowed because although it is more than the federal exemption, no creditor filed an objection to it. 
C)  It will likely be disallowed because the federal limit for an exemption for a residence is $10,000. 
D)  It will likely be disallowed because the federal limit for an exemption for a residence is $5,000. 
E)  The status of the exemption is unclear without further information regarding the resale value of the home.

Question 12

Which of the following chapters is used for a sale of a debtor's assets by a trustee and the distribution of money to creditors?

Accepted Answer

A)  Chapter 7 
B)  Chapter 9 
C)  Chapter 11 
D)  Chapter 13 
E)  Chapter 15 
A)  Chapter 7 
B)  Chapter 9 
C)  Chapter 11 
D)  Chapter 13 
E)  Chapter 15

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

"Friends and Family." Mindy was very close to her family and friends. She also liked to spend and had a large amount of consumer debt for items such as jewelry, clothing, a personal watercraft, and a new car. Mindy was having problems making her credit card payments as they became due. She, however, wanted to make every effort to pay her debts. She had borrowed money from her mother for some jewelry and repaid that loan on January 1st. She repaid a loan to her business partner on May 15th of the same year. On September 1st of that year, she also repaid a loan to Friendly Jewelry Store because she wanted to remain on good terms with the manager. Unfortunately, Mindy was simply unable to continue making payments and on November 1st of that year, she filed a voluntary petition for bankruptcy relief under Chapter 7.
-Assuming the business partner received more than would have been received through bankruptcy proceedings, which of the following is the most likely result of a claim of preferential payment based on the payment to the business partner?

Accepted Answer

A)  The payment was not preferential because it was made over 90 days before the filing of the bankruptcy petition. 
B)  The payment was not preferential because it was made over 120 days before the filing of the bankruptcy petition. 
C)  The payment was not preferential because it was made over 180 days before the filing of the bankruptcy petition. 
D)  The payment was preferential because it was made to a business partner and made within two years of the filing of the bankruptcy petition unless Mindy can establish that she was not insolvent when the payment was made. 
E)  The payment was preferential on the basis that it was made to a business partner within two years of the filing of the bankruptcy petition only if the trustee is able to demonstrate that Mindy was insolvent when she made the payment. 
A)  The payment was not preferential because it was made over 90 days before the filing of the bankruptcy petition. 
B)  The payment was not preferential because it was made over 120 days before the filing of the bankruptcy petition. 
C)  The payment was not preferential because it was made over 180 days before the filing of the bankruptcy petition. 
D)  The payment was preferential because it was made to a business partner and made within two years of the filing of the bankruptcy petition unless Mindy can establish that she was not insolvent when the payment was made. 
E)  The payment was preferential on the basis that it was made to a business partner within two years of the filing of the bankruptcy petition only if the trustee is able to demonstrate that Mindy was insolvent when she made the payment.

Question 15

"Consumer Debt." Mona had not been keeping up with her spending and bought several expensive items. She had numerous credit cards and some unsecured loans. She had a total of 14 creditors. All her debt was consumer debt, and Mona really wished that she had not put all those new clothes on her credit card. Although Mona was struggling, she did not want to file for bankruptcy because she did not want a bad credit score. Three of her credit card companies, however, who had unsecured claims against her totaling $14,500, signed and filed an involuntary bankruptcy petition against her under Chapter 7. Mona is unsure about how to proceed. While she is several months behind on a number of payments, including alimony payments she believes were unfairly awarded to her ex-husband, she does not particularly want to go bankrupt. She believe that the creditors have been unfair in not allowing her additional time in which to pay. On the other hand, she would really like to be rid of her excessive debt and stop collection efforts on the part of her ex-husband.
-Which of the following is true regarding the claims of Mona's ex-husband for alimony?

Accepted Answer

A)  Any efforts to collect on the past due alimony are stayed by the bankruptcy proceeding, and the claim for alimony is subject to discharge. 
B)  Any effort to collect on the past due alimony are stayed by the bankruptcy proceeding, but alimony payments are nondischargeable. 
C)  Efforts to collect on past due alimony payments accrued prior to the filing of the bankruptcy petition are stayed, but efforts to collect on alimony payments accruing after the filing of the bankruptcy petition are not stayed; and alimony payments are nondischargeable. 
D)  Efforts to collect on past due alimony payments accrued only after the filing of the bankruptcy petition are stayed, but efforts to collect on alimony payments accrued before the filing of the bankruptcy petition are not stayed; and alimony payments are nondischargeable. 
E)  Legal action to collect alimony is not subject to the stay, and alimony payments are nondischargeable. 
A)  Any efforts to collect on the past due alimony are stayed by the bankruptcy proceeding, and the claim for alimony is subject to discharge. 
B)  Any effort to collect on the past due alimony are stayed by the bankruptcy proceeding, but alimony payments are nondischargeable. 
C)  Efforts to collect on past due alimony payments accrued prior to the filing of the bankruptcy petition are stayed, but efforts to collect on alimony payments accruing after the filing of the bankruptcy petition are not stayed; and alimony payments are nondischargeable. 
D)  Efforts to collect on past due alimony payments accrued only after the filing of the bankruptcy petition are stayed, but efforts to collect on alimony payments accrued before the filing of the bankruptcy petition are not stayed; and alimony payments are nondischargeable. 
E)  Legal action to collect alimony is not subject to the stay, and alimony payments are nondischargeable.

Question 16

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 17

Which of the following is a payment made by an insolvent debtor that gives preferential treatment to one creditor over another?

Accepted Answer

A)  An unfair payment 
B)  An unequal payment 
C)  A preferential payment 
D)  An unendorsed payment 
E)  An unapproved payment 
A)  An unfair payment 
B)  An unequal payment 
C)  A preferential payment 
D)  An unendorsed payment 
E)  An unapproved payment

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Retirement funds in an IRA are not exempt in a Chapter 7 bankruptcy proceeding.

Accepted Answer

A) True 
 B)False

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)  Release 
C)  Grant of immunity 
D)  Relinquishment 
E)  Abandonment 
A)  Discharge 
B)  Release 
C)  Grant of immunity 
D)  Relinquishment 
E)  Abandonment

Exam 32: Bankruptcy and Reorganization

Which of the following behavior may cause a court to not discharge a debt in a Chapter 7 bankruptcy proceeding?

Congress first addressed bankruptcy relief in the ____.

A debtor must be insolvent to file a voluntary petition for bankruptcy under Chapter 7.

Which of the following is false regarding nondischargeable debts under a Chapter 7 bankruptcy filing?

Which of the following is false regarding bankruptcy cases?

For how many days prior to the filing of a Chapter 7 bankruptcy petition is a debtor assumed insolvent?

Which of the following is an agreement by which the debtor agrees to pay a debt even though it could be discharged?

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

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

Which of the following is true regarding the law that is relevant to bankruptcy claims?

Which of the following chapters is used for a sale of a debtor's assets by a trustee and the distribution of money to creditors?

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

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

Which of the following is a payment made by an insolvent debtor that gives preferential treatment to one creditor over another?

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

Retirement funds in an IRA are not exempt in a Chapter 7 bankruptcy proceeding.

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 Dynamic Business Law

Business Ethics

The US Legal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title, Risk of Loss, and Insurable Interest

Performance and Obligations Under Sales and Leases

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, Holder in Due Course, and Defenses

Liability, Defenses, and Discharge

Checks and Electronic Fund Transfers

Secured Transactions

Other Creditors Remedies and Suretyship

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organization

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, Terminations

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, Personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

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