Deck 25: Laws of Debtor-Creditor Relations and Consumer Protection

Question 1

According to Article , Section of the U.S. Constitution, the U.S. Congress has the authority to establish "uniform laws" on the subject of bankruptcy throughout the United States.

A) I; 3
B) I; 8
C) II; 3
D) II; 8

Answer 1

B

Question 2

Which of the following is an order issued by a clerk of the court directing the sheriff to seize any of the nonexempt real or personal property of a debtor who refuses to or cannot pay a creditor?

A) garnishment
B) judgment notwithstanding verdict
C) injunction
D) writ of execution

Answer 2

D

Question 3

Which of the following is a court-ordered judgment that allows a local officer of the court to seize a debtor's property?

A) attachment
B) injunction
C) judgment notwithstanding verdict
D) directed verdict

Answer 3

A

Question 4

When a mortgagor cannot make the payments for his or her mortgage, the mortgagee will seek a .

A) garnishment order of the court for the mortgagor's wages
B) court-ordered sale of the mortgaged property
C) mechanic's lien on the mortgaged property
D) loan guarantee from the mortgagor

Question 5

Which of the following is a major goal of the United States Bankruptcy Code?

A) to give creditors access to debtors' wages
B) to discharge debtors from their debts
C) to subsidize banks for unpaid loans
D) to increase unemployment insurance for debtors facing bad times

Question 6

Chapter 7 of the United States Bankruptcy Code deals with .

A) cross-border solvency cases
B) the management and administration of the Code
C) the reorganization and adjustment of the debtor's debts
D) straight bankruptcy

Question 7

Which of the following is a term used for specialists who hear only bankruptcy proceedings?

A) bankruptcy specialists
B) bankruptcy judges
C) bankruptcy juries
D) bankruptcy rulers

Question 8

Jane leaves her television at Sally's small appliances repair shop, but she never returns to pick it up or pay the bill. After a period of time, Sally can attach the television. Which type of lien arises on the television?

A) a contractor's lien
B) a mechanic's lien
C) an artisan's lien
D) an installer's lien

Question 9

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was an attempt to meet the complaints of the business community with regard to the _.

A) increase of unemployment insurance for debtors facing bad times
B) issues related to the Bankruptcy Reform Act of 1978
C) increase in the number of filings for personal bankruptcy
D) allegation that debtors had begun evading payments to creditors

Question 10

Which of the following is a judicial lien?

A) foreclosure
B) injunction
C) contract
D) attachment

Question 11

Attachment involves a court-ordered judgment allowing a local officer of the court (e.g., sheriff) to seize property of a debtor.

Question 12

The most significant changes ever to be made to the Federal Bankruptcy Code took place with the enactment of the Act.

A) 2005
B) 1978
C) 2002
D) 1980

Question 13

Which of the following is an order of the court directed at wages owed by an employer where the debtor has an account?

A) garnishment
B) writ of execution
C) attachment
D) injunction

Question 14

A contractor installed a new furnace in a house that was under construction. If he were not paid for the job, he would most likely place a(n) _ lien on the property.

A) contractor's
B) mechanic's
C) artisan's
D) installer's

Question 15

Describe the mechanic's lien and the artisan's lien.

Question 16

Which of the following is true of a contract of suretyship?

A) There is no debtor in a contract of suretyship.
B) There is no creditor in a contract of suretyship.
C) The suretyship creates an express contract with a creditor, under which the surety is primarily liable.
D) The suretyship creates an express contract with a creditor, under which the surety is secondarily liable.

Question 17

Which of the following is true of a voluntary petition?

A) It is filed by a debtor under Chapter 15.
B) It involves a creditor placing a debtor in bankruptcy.
C) Those who sign the voluntary petition must have unsecured claims of at least $12,300 in the aggregate.
D) The petition must clearly state the debts of a debtor.

Question 18

Personal properties, like a vehicle to get to work with, are not exempt from attachments.

Question 19

A lien is a claim on a debtor's property that must be satisfied before any creditor can make a claim.

Question 20

An artisan's lien is placed on the real property of a debtor when the latter does not pay for the work done by the creditor.

Question 21

Which of the following is true of a debtor's estate?

A) A debtor's estate consists of all legal and equitable interests of a debtor in exempt property.
B) A debtor's estate includes property of a debtor that a creditor acquires within 180 days of the debtor's filing of a bankruptcy petition.
C) A debtor's estate does not include proceeds, rents, and profits from the property.
D) A debtor's estate is a separate legal entity created when a bankruptcy case commences.

Question 22

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 added Chapter 15 to the Code for cross-border solvency cases.

Question 23

With reference to the United States Bankruptcy Code, which of the following is a disadvantage of bankruptcy to creditors?

A) Continued operation results in less funds to distribute at liquidation.
B) The going-concern value of an insolvent business is not preserved.
C) Creditor-in-possession is held accountable due to bankruptcy reporting and notice requirements.
D) A creditor cannot file an involuntary petition for relief under Chapter 7.

Question 24

Which of the following occurs under Chapter 13 of the United States Bankruptcy Code?

A) A portion of the consumer-debtor's earnings is paid into court for distribution to creditors over a period of three years.
B) Only involuntary petitions for bankruptcy may be filed under Chapter 13.
C) Creditors can force petitioners into Chapter 13 bankruptcy.
D) A creditor is paid in full for amounts owed by a debtor.

Question 25

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was intended to overhaul, in large part, certain provisions of the Bankruptcy Code.

Question 26

In an involuntary petition, if a debtor has 12 or more creditors, the petition must be signed by a minimum of creditors.

A) 3
B) 4
C) 5
D) 6

Question 27

Bankruptcy judges are appointed by the United States court of appeals for the circuit in which the bankruptcy court is located for a period of 14 years.

Question 28

Which of the following is true of Chapter 7 of the United States Bankruptcy Code?

A) The 2005 Act gives debtors better means to obtain a Chapter 7 bankruptcy.
B) Under Chapter 7, a debtor is denied the right to a trustee.
C) It features a dollar-based means test and a median income test based on a debtor's state of residence.
D) The 2005 Act in effect pushed many debtors out of Chapter 7 and into Chapter 15 debt- adjustment bankruptcy.

Question 29

Which of the following is true of Chapter 12 of the United States Bankruptcy Code?

A) Under Chapter 12, family farmers and fishermen have a right to file for bankruptcy reorganization.
B) A plan for a Chapter 12 reorganization should provide for payments to creditors over no longer than a one-year period.
C) Chapter 12 grants a personal exemption for all farm or fishing equipment.
D) A debtor cannot convert a Chapter 12 reorganization to a Chapter 7.

Question 30

The bankruptcy court will file an order for relief unless a debtor challenges an involuntary petition.

Question 31

State the schedules that must be submitted by an individual debtor filing a voluntary petition.

Question 32

With reference to the United States Bankruptcy Code, which of the following is an advantage of bankruptcy to debtors?

A) It results in a decrease in autonomy.
B) The management's ability to make and implement decisions rapidly is enhanced.
C) Debtors are not subject to legal and accounting expenses.
D) Debtors retain possession of a bankruptcy estate.

Question 33

Chapter 7 of the Bankruptcy Code exclusively deals with transnational insolvency cases between the United States and foreign countries.

Question 34

Family are defined as corporations or partnerships owned by a family or relatives with more than 80 percent of its assets related to farming operation and a total business debt not exceeding $3,273,000.

A) farmers
B) partners
C) debtors
D) creditors

Question 35

The United States Bankruptcy Code (Code) is composed of seven chapters.

Question 36

Debts that were or could have been listed in a previous bankruptcy in which a debtor waived or was denied a discharge can be discharged under Chapter 7 of the Bankruptcy Code.

Question 37

Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a debtor can be granted Chapter 7 relief only after years following Chapter 7 or Chapter 11 bankruptcy.

A) two
B) four
C) six
D) eight

Question 38

Chapter 11 of the United States Bankruptcy Code allows a .

A) portion of a debtor's earnings to be paid into court for distribution to creditors over a period of three years
B) business to reorganize and continue to function while it is arranging for the discharge of its debts
C) portion of a debtor's homestead exemption to be paid into court for distribution to creditors over a period of five years
D) debtor to turn over all assets to a trustee who sells the nonexempt assets and distributes the proceeds to creditors

Question 39

In a Chapter proceeding of the United States Bankruptcy Code, if there is a showing of fraud, dishonesty, or incompetence, a trustee is appointed.

A) 13
B) 15
C) 2
D) 12(b)(6)

Question 40

Reorganization under Chapter 11 of the United States Bankruptcy Code must be involuntary.

Question 41

Which of the following is an example of puffery?

A) an advertisement stating that a car can run 50,000 miles without an oil change
B) an advertisement stating that 13 out of 15 dentists use a particular toothpaste
C) an advertisement stating that an anti-aging cream reduces wrinkles in exactly a week
D) an advertisement stating that a fast food chain sells the world's finest chicken

Question 42

A company can sue a competitor under the , which forbids "false description or representation."

A) Wheeler-Lea Act of 1938
B) Lanham Act of 1947
C) Nutrition Labeling and Education Act of 1990
D) Franchising Rule of 1979

Question 43

The Federal Trade Commission works with the sectors to regulate fraud issues.

A) telemarketing
B) securities fraud
C) communications
D) advertising and sales practices

Question 44

Discuss how the role of government in the area of economics has been that of an actor and a referee between consumers and the business community.

Question 45

The refusal of courts during the nineteenth century to interfere with the freedom of parties to enter into contracts can be traced, in part, to the writings of .

A) Karl Marx
B) Milton Friedman
C) Adam Smith
D) Thomas Paine

Question 46

Puffery involves .

A) offering a free item to a customer who buys an item at a regular price
B) advertising one product at a low price to entice customers into the store and then switching their attention to a higher-priced product
C) making an exaggerated recommendation in a sales talk to promote the product
D) using factually wrong statements to promote a product

Question 47

Under the Fair Packaging and Labeling Act, which of the following governmental units promulgates rules governing the labeling and packaging of products?

A) the Federal Trade Commission
B) the Occupational Safety and Health Administration
C) the Interstate Commerce Commission
D) the Department of Health and Human Services

Question 48

As Adam Smith's laissez-faire philosophy gained popularity in the eighteenth and nineteenth centuries, the freedom-to-contract doctrine evolved through case law out of our federal court system.

Question 49

Since the 1930s, state courts have expanded the freedom-to-contract doctrine.

Question 50

The U.S. courts throughout the nineteenth century upheld the principle of caveat emptor.

Question 51

Which of the following could be an example of deception?

A) an advertisement stating that 14 out of 15 dentists use a particular toothpaste
B) an advertisement stating that a fast food chain sells the world's finest chicken
C) an advertisement stating that a particular deodorant is the world's best
D) an advertisement stating that a retail chain sells the freshest vegetables

Question 52

List the powers of a bankruptcy trustee.

Question 53

A professional basketball player states in an advertisement that a particular brand of sports gear will improve one's performance on the court. Which of the following methods of deceptive advertising does this example depict?

A) testimonial
B) puffery
C) black marketing
D) unfair advertising

Question 54

Debate continues among economists, political scientists, and legal scholars as to what role, if any, the government should play in the relationship between consumers and business organizations.

Question 55

Which of the following statements is true with regard to the Federal Trade Commission (FTC) staff proving deceptive advertising under Section 5 of the FTC Act?

A) They need not prove that the consumers are acting reasonably under the circumstances.
B) They need to show that the misrepresentation or omission is material.
C) They need not show that there is a misrepresentation or omission likely to mislead consumers.
D) They need to show the intent of an advertiser to deceive a consumer.

Question 56

The freedom-to-contract doctrine has been limited by the implied warranty doctrine, as well as by the courts' relaxation of strict privity relationships between manufacturers and consumers.

Question 57

The freedom-to-contract doctrine evolved through law out of the court system(s).

A) case; state
B) case; federal
C) enacted; state
D) enacted; federal

Question 58

Governed by the freedom-to-contract doctrine, United States courts throughout the nineteenth century generally refused to interfere in contractual relations merely because one party was more economically powerful or better able to drive a hard bargain.

Question 59

The freedom-to- doctrine states that parties who are legally competent are allowed to enter into whatever contracts they wish.

A) compete
B) enter
C) sign
D) contract

Question 60

Which of the following is the leading federal consumer protection agency?

A) Interstate Commerce Commission
B) Federal Trade Commission
C) Occupational Safety and Health Administration
D) Federal Accountability Act

Question 61

State the prohibited practices under the Telephone Consumer Protection Act of 1991.

Question 62

The new Bureau will regulate mortgage, credit cards, some payday lenders and check cashing companies, and lenders that provide private student loans.

A) Bankruptcy Protection
B) Federal Consumer Protection
C) Consumer Financial Protection
D) Consumer Credit Protection

Question 63

The Fair Debt Collection Practices Act is designed to address _.

A) harassment of consumer-debtors by credit reporting agencies
B) discrimination by banks and credit unions in the enforcement of consumer loan contracts
C) errors in electronic transactions related to debt collection
D) harassment of consumer-debtors by creditors or debt collectors

Question 64

All written warranties of consumer products that cost less than $10 must be designated as "full" or "limited."

Question 65

Under the Act, the Federal Reserve Board determines what constitutes a reasonable and proportional fee for debit card transactions.

A) Dodd-Frank
B) Federal Consumer Protection
C) Bankruptcy Reform
D) Consumer Credit Protection

Question 66

Identity theft may be defined as the use of another's name to obtain some illegal gain through financial instruments held or owned by another.

Question 67

Which of the following regulations of the Truth-in-Lending Act requires lenders to disclose certain information to borrowers?

A) Regulation W
B) Regulation X
C) Regulation Y
D) Regulation Z

Question 68

Which of the following is true of an open-end credit transaction?

A) An open-end transaction gives a debtor the option to pay in installments.
B) An open-end transaction includes a personal customer loan or a student loan.
C) An open-end transaction is for a limited time period.
D) An open-end transaction must be in writing.

Question 69

The Act seeks to make creditors disclose all terms of a credit arrangement before they enter into an agreement with a consumer-debtor.

A) Dodd-Frank
B) Sherman
C) Truth-in-Lending
D) Securities Exchange

Question 70

Which of the following is a correct statement regarding residential mortgages?

A) Lenders are no longer allowed to pay mortgage brokers a commission based on the interest rate for a home loan.
B) The Dodd-Frank Act would require borrowers to pay a portion of the closing cost up front and include the rest within the loan in the form of a higher interest rate.
C) Prepayment penalties are unlimited unless they are capped in the mortgage agreement.
D) Lenders are not required to determine whether the borrower could afford the monthly mortgage/payments, combined with insurance and assessments.

Question 71

fees are fees that banks charge retailers when consumers pay with debit cards.

A) Punitive
B) Mixed
C) Transfer
D) Interchange

Question 72

Bob's debit card was stolen on Wednesday. He notifies his bank of the theft the following morning. Meanwhile, the thief has used his card to purchase $800 worth of goods and services. Based on this scenario, which of the following is true of the Electronic Fund Transfer Act?

A) Bob is liable for $50 of the $800.
B) Bob is liable for $300 of the $800.
C) Bob is liable for $500 of the $800.
D) Bob is liable for the whole amount.

Question 73

Describe the consumer rights and remedies provided by the Electronic Fund Transfer Act (EFTA) of 1978.

Question 74

Which of the following refers to the effective annual rate of interest being charged by a creditor, which depends on the compounding period used by the creditor?

A) annual compound rate
B) annual percentage rate
C) annual interest rate
D) annual creditor rate

Question 75

A consumer has a right to cancel a home loan seven days after entering the contract.

Question 76

The Magnuson-Moss Warranty Act gives an individual consumer, or a class of consumers, the right to bring a private action for a breach of an oral warranty.

Question 77

Which of the following is a purpose of the Fair Packaging and Labeling Act?

A) It forces manufacturers to package goods in the most efficient manner.
B) It gives competitors of manufacturers a private right of action in cases of deceptive advertising.
C) It allows consumers to compare prices on the basis of uniform measures of content.
D) It expands the Federal Trade Commission's jurisdiction over manufactured goods in interstate commerce.

Question 78

State the violations of the Equal Credit Opportunity Act.

Question 79

Corporations and persons applying for more than $25,000 in credit (except for buying a home) are not covered by the Truth-in-Lending Act of 1969.

Question 80

The Federal Trade Commission can have no more than three commissioners from the same political party.