Deck 12: Bankruptcy

Question 1

In which of the following ways can a bankruptcy happen?

A)voluntary assignment
B)involuntary petition into bankruptcy
C)rejection of a commercial proposal
D)A and C
E)All of the above

Answer 1

E

Question 2

Which of the following statements is FALSE?

A)a receiving order transfers the assets of the debtor to the Trustee in Bankruptcy
B)if a partnership goes bankrupt the partners are not individually petitioned into bankruptcy
C)bankruptcy districts across Canada each have an official receiver the trustee in bankruptcy deals with
D)consumer proposals are almost as common as consumer bankruptcies in Canada
E)a Division 2 proposal can be used by individuals who owe less than $250,000

Answer 2

B

Question 3

Which of the following is an attribute of an "insolvent person" under the Bankruptcy and Insolvent Act?

A)One who is unable to meet his obligations as they generally become due.
B)One with provable liabilities to creditors of at least $1000
C)One who has committed an act of bankruptcy
D)One who has had a proposal rejected
E)A and B

Answer 3

E

Question 4

Which of the following is NOT one of the aims of the Bankruptcy and Insolvency Act?

A)To save an ongoing business where possible
B)To ensure a fair distribution of the bankrupts assets among creditors
C)To make it easier to recover illegal gambling debts
D)To release an honest debtor from debts where the burden is too great
E)All of the above are aims of the Act

Question 5

Which of the following is a prerequisite to being able to initiate the involuntary bankruptcy process?

A)A creditor must be owed a debt of $1000
B)A creditor must be owed a debt of $5000
C)A creditor must be owed a debt of $10,000
D)A creditor must be owed a debt of $2000
E)A creditor must be owed a debt of $500

Question 6

A procedure where a debtor by agreement with their creditors reorganizes their debts without going bankrupt is called

A)an act of insolvency
B)a receiving order
C)a proposal
D)an assignment
E)a conditional proposition

Question 7

Which of the following statements is FALSE?

A)A creditor starts a voluntary bankruptcy
B)A creditor starts an involuntary bankruptcy
C)In a voluntary bankruptcy it must be impossible for the debtor to pay the debts owing.
D)The creditors' rejection of a commercial proposal results in a bankruptcy.
E)The trustee in bankruptcy is an accountant who is licensed as a specialist by the Superintendent of Bankruptcy

Question 8

A receiving order is an order made by a court for a

A)creditor to receive monies from a debtor.
B)debtor's assets to be transferred to a trust.
C)debtor's assets to be transferred to a trustee in bankruptcy.
D)debtor's assets to be transferred to creditors.
E)debtor to receive outstanding monies.

Question 9

In Canada in 2013, which number is closest to the number of personal bankruptcies that occurred that year?

A)5,000
B)10,000
C)20,000
D)50,000
E)70,000

Question 10

What happens if a consumer proposal is rejected?

A)the court must hold a bankruptcy hearing
B)the creditors can seize the assets of the insolvent person
C)the insolvent person is automatically declared bankrupt
D)the Trustee in Bankruptcy must seek a settlement with creditors.
E)the insolvent person can present a new Proposal on the basis of new information

Question 11

What is the Canadian equivalent of an application under Chapter 11 of the US Bankruptcy Code?

A)a consumer proposal under the Bankruptcy and Insolvency Act
B)A commercial proposal under the Bankruptcy Insolvency Act
C)A proposal under the Companies Creditors Arrangement Act
D)A and B
E)All of the above

Question 12

Which of the following statements is TRUE?

A)Only a natural person can be petitioned into bankruptcy.
B)Only a corporation can declare bankruptcy
C)Only a business can declare bankruptcy
D)A natural person can start his own proceedings to declare bankruptcy
E)Both B and C

Question 13

A business realizes that it cannot pay its creditors and seeks relief under the Bankruptcy and Insolvency Act. Which of the following is TRUE?

A)Its only option is to make a voluntary assignment in bankruptcy.
B)Its only option is to wait until petitioned into bankruptcy by its creditors.
C)It can make a proposal under the Bankruptcy and Insolvency Act and creditors will automatically be prevented from suing for a certain period of time.
D)It can only wait for a receiving order to be issued
E)None of the above.

Question 14

When it is impossible for a corporation to pay its debts, how is bankruptcy declared?

A)The Board of Directors is declared bankrupt
B)The shareholders are declared bankrupt
C)The directors are declared bankrupt
D)The corporation is declared bankrupt
E)B and C

Question 15

Which of the following is NOT considered to be an act of bankruptcy? A debtor

A)admits at a meeting of his creditors that he is unable to pay his debts
B)shows at a meeting of creditors financial statements that show he is insolvent
C)gives notice to his creditors that he has suspended payment of his debts
D)ceases to meet his liabilities generally as they become due.
E)all of the above are considered to be acts of bankruptcy

Question 16

Which of the following is NOT a major cause of personal bankruptcy?

A)divorce
B)illness and medical problems
C)job loss or income reduction
D)financial mismanagement
E)all of the above are major causes of personal bankruptcy

Question 17

If a person or corporation goes bankrupt the role of the Trustee in Bankruptcy is to

A)advocate for the creditors owed money
B)advocate for the debtor who owes money
C)decide what is best course of action to achieve a discharge of debts for the debtor
D)administer the property of the bankrupt for the benefit of creditors
E)administer the property of the bankrupt for the benefit of the debtor

Question 18

What is the test to justify voluntary bankruptcy?

A)It would be inconvenient for the debtor to pay debts
B)The debtor would face financial hardship if he were to pay all debts due
C)The debtor is more than 240 days behind in paying debts.
D)The debtor is more than 120 days behind in paying debts.
E)It would be impossible to pay debts which are due

Question 19

Which of the following statements is TRUE?

A)Bankruptcy and insolvency is a subject within provincial jurisdiction and the individual's place of residence or business's head office will determine which province's Act applies.
B)Bankruptcy and insolvency legislation is aimed at an orderly and fair distribution of a bankrupt's assets as well as the possibility of saving an ongoing business.
C)Bankruptcy and insolvency legislation is aimed at giving honest but unfortunate debtors a fresh start.
D)Both B and C
E)All of the above

Question 20

What are the ways in which bankruptcy can occur?

A)voluntary bankruptcy
B)involuntary bankruptcy
C)rejection of a consumer proposal
D)A and B
E)A, B and C

Question 21

Which of the following is NOT an act of bankruptcy?

A)Juniper Limited gave notice to its creditors that it is about to suspend the payment of its debts.
B)Jennifer has left the country in order to avoid meeting with creditors.
C)Percy has ceased making credit card payments for the past three months.
D)Tetra Limited presented in a meeting of its creditors, a statement showing that it is insolvent.
E)All of the above are acts of bankruptcy

Question 22

Which of the following statements is FALSE? In bankruptcy law

A)secured creditors who are not fully paid when the assets they have a security interest in are sold can then rank as preferred creditors for the unpaid amount
B)lawyers and the trustee in bankruptcy are preferred creditors
C)many unsecured creditors often receive very little of the amount they are owed
D)landlords, the government and employees can all be preferred creditors
E)the trustee can take back assets if the debtor sold them to keep them away from creditors' claims

Question 23

Which of the following statements is FALSE? With a consumer proposal

A)court approval is not required for the proposal to be accepted
B)a landlord cannot terminate their lease while it is in effect
C)the utilities companies cannot cut off the person's services while it is in effect
D)creditors cannot use an acceleration clause to demand full payments now while it is in effect
E)a meeting with all creditors must occur and two-thirds must agree for the proposal to be accepted

Question 24

In a bankruptcy, there was $150,000 left after the secured creditors were paid. The landlord was owed $40,000 for 4 months of unpaid rent, trustee's and lawyer's fees were $30,000, 50 employees were each owed $5,000 in unpaid wages, and there was 2 years of unpaid municipal taxes owing totaling $20,000. How much money will the landlord get?

A)$40,000
B)$30,000
C)$20,000
D)$10,000
E)$0

Question 25

Karl was diagnosed with cancer and had to quit work because he was very sick. Debts began to grow and Karl now owes $100,000 to the bank and credit card companies, plus $12,000 in unpaid child support payments, plus he still owes $80,000 on the mortgage on his condominium. Karl is hoping to avoid going bankrupt. Which of the following should Karl do at this stage?

A)file a Division 1 Proposal
B)file a Division 2 Proposal
C)file a CCAA proposal
D)pay his mortgage but default on his other debts
E)he should declare bankruptcy and all his debts would be erased and he can still keep his condo

Question 26

In a bankruptcy unsecured creditors are owed a total of $900,000. Unsecured creditor A is owed $600,000, unsecured creditor B is owed $200,000 and unsecured creditor C is owed $100,000. There is only $300,000 available to the unsecured creditors. As a result creditor C will get

A)$100,000
B)$75,000
C)$50,000
D)$33,333
E)$0

Question 27

Electro Inc. was trying to avoid going bankrupt so it filed a Division 1 Proposal. The secured creditors voted 100% to accept Electro's proposal. When the unsecured creditors voted though only 50% of them voted to accept Electro's proposal. As a result

A)Electro can submit a new proposal
B)Electro can avoid bankruptcy because the secured creditors accepted its proposal
C)Electro can stay in business but the unsecured creditors must be paid off in full first
D)Electro will now automatically go bankrupt
E)the Trustee will have to negotiate a new proposal that all the unsecured creditors will agree to

Question 28

A Division 1 Proposal can be used by

A)any commercial debtor
B)any consumer debtor
C)any business that owes at least $1,000,000
D)any consumer who owes at least $250,000 excluding a home mortgage
E)both A and D

Question 29

Which of the following would be a secured creditor in a corporate bankruptcy?

A)30 employees each owed $1,500 in wages that have not been paid
B)a bank with $100,000 owing on a chattel mortgage on the company's vehicles
C)the government for $20,000 owing in HST
D)the local hydro company for $12,000 owing on an electrical bill
E)all of the above would be secured creditors

Question 30

In a bankruptcy unsecured creditors are owed a total of $600,000. Unsecured creditor A is owed $300,000, unsecured creditor B is owed $200,000 and unsecured creditor C is owed $100,000. There is only $100,000 available to the unsecured creditors. As a result creditor A will get

A)$100,000
B)$75,000
C)$50,000
D)$33,333
E)whatever amount the trustee decides is fair

Question 31

In a bankruptcy, there was $150,000 left after the secured creditors were paid. The landlord was owed $40,000 for 4 months of unpaid rent, trustee's and lawyer's fees were $30,000, 50 employees were each owed $5,000 in unpaid wages, and there was 2 years of unpaid municipal taxes owing totaling $20,000. How much money will the employees get in total?

A)$250,000
B)$150,000
C)$100,000
D)$50,000
E)$0

Question 32

The CCAA (Companies' Creditors Arrangement Act)is used

A)by any corporation that wants to avoid bankruptcy
B)by any corporation that owes at least $500,000 and wants to avoid bankruptcy
C)by any corporation that owes at least $5 million and wants to avoid bankruptcy
D)by any public corporation that wants to avoid bankruptcy
E)by any corporation if its creditors are trying to force it into bankruptcy

Question 33

A consumer proposal

A)does not show up on a person's credit rating
B)stays on a person's credit rating for 9 months
C)stays on a person's credit rating for 3 years
D)stays on a person's credit rating for 6 years
E)stays on a person's credit rating forever

Question 34

In a bankruptcy, there was $150,000 left after the secured creditors were paid. The landlord was owed $40,000 for 4 months of unpaid rent, trustee's and lawyer's fees were $30,000, 50 employees were each owed $5,000 in unpaid wages, and there was 2 years of unpaid municipal taxes owing totaling $20,000. How much money will the municipal government get for its unpaid taxes?

A)$20,000
B)$15,000
C)$10,000
D)$5,000
E)$0

Question 35

The purpose of the CCAA is

A)to provide an orderly system to pay off creditors when a corporation goes bankrupt
B)to let a corporation restructure its debt so it can return to profitability
C)to attract new investors to a struggling corporation
D)to provide an orderly system to dissolve a corporation and distribute its assets to creditors and shareholders
E)let creditors and shareholders get the maximum rate of return for the debts they are owed by a corporation

Question 36

Which of the following would be a preferred creditor in a corporate bankruptcy?

A)a supplier owed $35,000 for goods it had sold to the corporation
B)40 employees who are each owed $2,000 in wages
C)a landlord owed 2 month's rent totaling $30,000
D)a car dealer with a chattel mortgage of $20,000 on one of the company's trucks
E)both B and C

Question 37

Which of the following could use a Division 2 Proposal?

A)a corporation that owes more than $5 million will have a meeting with all its creditors and the Trustee
B)an individual wants to avoid bankruptcy and owes $90,000
C)a corporation wants to restructure its $500,000 debt to avoid bankruptcy
D)creditors will vote to decide if a corporation should be forced into bankruptcy
E)an individual who owes $300,000 will present a plan to creditors who will vote on it to determine if they person is forced into bankruptcy

Question 38

Susan filed a Division 2 proposal but it was rejected by the creditors. As a result

A)Susan is now automatically bankrupt
B)the trustee in bankruptcy must take control of her assets
C)Susan can amend the terms of the proposal and resubmit it
D)Susan can decide to voluntarily go bankrupt
E)both C and D

Question 39

Navtech Inc. filed a Division 1 proposal. All the secured creditors voted to accept Navtech's proposal. There were 9 unsecured creditors that were owed a total of $1,000,000. Circuits Inc. was one of the unsecured creditors and it was owed $750,000. Circuits voted to accept Navtech's proposal but the other 8 unsecured creditors rejected the proposal. As a result

A)Navtech now is automatically bankrupt
B)Navtech can file a new Division 1 proposal
C)Navtech has avoided bankruptcy and can restructure its debt according to the terms of its proposal
D)the Trustee in bankruptcy can order Navtech to rewrite the proposal so that more unsecured creditors agree
E)Navtech can file a proposal under the CCAA instead

Question 40

Which of the following is NOT a category for creditors in a bankruptcy proceeding?

A)preferred
B)secured
C)unsecured
D)unregistered
E)these are all categories for creditors

Question 41

Kastner Lumber Ltd. supplies lumber to Solti Construction Corp. Solti gets into financial difficulty and Kastner pressures it to return the lumber sent but not paid for. One month after returning the lumber, Solti goes bankrupt. Solti's trustee in bankruptcy wants to recover the value of the returned lumber from Kastner. Which of the following is TRUE?

A)Since it was Kastner's lumber, it had the right to its return.
B)The return was a fraudulent preference and the trustee will be successful in its claim.
C)The lumber was returned before the bankruptcy and therefore the trustee has no claim to it.
D)The lumber was owned by Solti, but since it had not paid for it, Kastner had the right to its return.
E)Kastner and Solti were not dealing at arm's length, so the trustee has the right to have the return of the lumber nullified.

Question 42

Karim Manji owns a small electronics business that is starting to lose money because a big box store opens nearby. As a precaution, he transfers title to his home, which is currently in his name, to his wife. A week later, insolvent, he files for bankruptcy. Which of the following is true respecting the transfer of Karim's interest in the house? This is

A)a fraudulent conveyance
B)a fraudulent preference
C)permissible because a spouse has a half interest in matrimonial home.
D)a reviewable transaction
E)permissible because he transferred it before he filed for bankruptcy

Question 43

Donald Tramp declares bankruptcy. He has significant arrears of spousal and child support. He also owes $500 in parking tickets. It is his first bankruptcy. After nine months, he applies for a discharge. Which of the following is TRUE?

A)A discharge is not available to a natural person.
B)If a discharge is granted, it will not release his spousal and child support obligations
C)A discharge is usually automatic for first time bankrupts
D)The discharge will not release him from amounts owed for parking tickets
E)B, C and D

Question 44

Which of the following would be a preferred creditor in a bankruptcy?

A)A landlord
B)A supplier of inventory
C)A contractor that did recent renovations
D)B and C
E)All of the above

Question 45

Jake declared personal bankruptcy in Ontario in 2015. Which of the following assets could Jake NOT keep?

A)$8,000 worth of furniture
B)a $7,000 pick up truck
C)$10,000 in a life insurance policy
D)$5,000 in clothes and hockey equipment
E)he can keep all of these assets

Question 46

Which of the following statements concerning an unpaid supplier of goods to a bankruptcy business is correct?

A)An unpaid supplier has a right to take back all goods that have not been paid for.
B)An unpaid supplier of goods is a secured creditor to the extent of the value of the goods not paid for.
C)An unpaid supplier of goods is an unsecured creditor.
D)A supplier can repossess all goods supplied but not paid for under a purchase money security interest registered under a Personal Property Security Act.
E)Both C and D

Question 47

Duncan Corp. is declared bankrupt. The Royal Bank has a mortgage on its manufacturing plant. Employees have a claim for $1,000 each for unpaid wages. The trustee in bankruptcy's fees are $10,000. An unpaid supplier of steel has a claim for products supplied. Which of the above is a secured creditor?

A)The bank
B)The employees
C)The trustee in bankruptcy
D)The steel supplier
E)Both B and C

Question 48

Duncan Corp. is declared bankrupt. The Royal Bank has a mortgage on its manufacturing plant. Employees have a claim for $1,000 each for unpaid wages. The trustee in bankruptcy's fees are $10,000. An unpaid supplier of steel has a claim for products supplied. Which of the above is a preferred creditor under the BIA?

A)The bank
B)The employees
C)The trustee in bankruptcy
D)The steel supplier
E)Both B and C

Question 49

Karim Manji owns a small electronics business that is starting to lose money because a big box store opens nearby. Knowing that the business is about to go under, he uses the business's cash on hand to pay one of his creditors, Sushil Manji his cousin. A week later, insolvent, he files for bankruptcy. Which of the following is true respecting the payment to Manji?

A)It is a fraudulent conveyance
B)It is a fraudulent preference because Sushil is a non arms length party
C)It is a fraudulent preference because Sushi is one of several creditors
D)It is not a fraud of either type because Karim actually owed the money to Sushil
E)Both B and C

Question 50

Which of the following does not belong in this group?

A)Unsecured
B)Partial secured
C)Preferred
D)Secured
E)Creditor

Question 51

Roger was self-employed and failed to pay his taxes and owed Revenue Canada $85,000 in taxes. He declared bankruptcy in 2004 and never had to repay the tax debt. In 2015 Roger again declared bankruptcy and this time he owed Revenue Canada $120,000 in unpaid taxes. As a result Roger

A)must again be discharged from his tax debt
B)can never be discharged from this tax debt
C)may have the court refuse to discharge this tax debt until he pays some of it
D)will face jail time for this tax debt
E)both B and D

Question 52

Manuel was deeply in debt. Manuel decided to sell his $20,000 car to his cousin for $4,000 and then 9 months later Manuel declared bankruptcy. The court would

A)rule Manual legally had the right to sell his car to his cousin at that time
B)rule Manuel has made a fraudulent preference
C)rule Manuel has committed a deceptive practice
D)order the car be taken back from his cousin and order criminal penalties against Manuel
E)both C and D

Question 53

Martin was owed $10,000 in wages he had earned in the past 2 months but had not been paid by his employer Allsafe Industries Inc. Allsafe has now been forced into bankruptcy by the bank. Which of the following statements is TRUE?

A)Martin can claim $10,000 as a preferred creditor
B)Martin can claim $10,000 as a secured creditor
C)Martin can claim $10,000 as an unsecured creditor
D)Martin can claim $5,000 as a secured creditor and $5,000 as an unsecured creditor
E)Martin can claim $2,000 as a preferred creditor and $8,000 as an unsecured creditor

Question 54

Duncan Corp. is declared bankrupt. The Royal Bank has a mortgage on its manufacturing plant. Ten employees have a claim for $1,000 each for unpaid wages for the week prior to bankruptcy. The trustee in bankruptcy's fees are $10,000. An unpaid supplier of steel has a claim for products supplied. What class of creditor are the employees?

A)Unsecured
B)Secured
C)Preferred
D)General
E)Common

Question 55

Which of the following would NOT be discharged in a bankruptcy?

A)a student loan taken out three years ago
B)debt on a bank guarantee
C)credit card debts under $10,000
D)bank loans
E)loans from a non-arm's length party

Question 56

Duncan Corp. is declared bankrupt. The Royal Bank has a mortgage on its manufacturing plant. Employees have a claim for $1,000 each for unpaid wages. The trustee in bankruptcy's fees are $10,000. An unpaid supplier of steel has a claim for products supplied. What class of creditor is the supplier of steel?

A)Unsecured
B)Secured
C)General
D)Common
E)Preferred

Question 57

Which of the following statements is FALSE?

A)a first time bankruptcy stays on a person's credit rating for 6 years
B)a discharge is only given to a corporation if it pays all its debts in full
C)a discharge is only given to a person if they pay all their debts in full
D)a consumer proposal stays on a person's credit rating for 3 years
D)discharge does not have to be granted in a personal bankruptcy

Question 58

At the time of its bankruptcy, Lederhosen Ltd. had the following assets: a sewing machine with a fair market value of $35,000, accounts receivable of $15,000, and general business assets of $3,000. Its creditors, and the amounts owing to them, were the following: the provincial Workers' Compensation Fund - $8,000; a leather supplier - $3,000; an unsecured business lender - $5,000; and a bank - $40,000, for a loan secured by a general security agreement which had been perfected under the Personal Property Security Act. Bankruptcy expenses in involved trustee fees of $2,500 and legal fees of $2,000. In this case the money remaining to be divided among the unsecured creditors is:

A)$0
B)$500
C)$2,500
D)$5,000
E)$5,500

Question 59

Buta Corp.,a shoe manufacturer, makes a commercial proposal under the Bankruptcy and Insolvency Act. The company's premises are heated by gas. Cowhide Co. normally supplies the leather for making the shoes. Which of the following is TRUE?

A)The gas company must continue to supply gas on credit.
B)The gas company must continue to supply gas but only if it is paid for any gas supplied after the date of the proposal.
C)Cowhide must continue to supply leather on credit.
D)Cowhide must continue to supply leather but only if it is paid for the leather after the date of the proposal.
E)Both B and D

Question 60

Which of the following debts is NOT discharged in a personal bankruptcy?

A)$10,000 owed to VISA
B)$5,000 owed to a cell phone company
C)$4,000 owed to a bank for a personal loan
D)$ 18,000 owing on a student loan and the person graduated 6 years ago
E)none of these debts would be discharged

Question 61

Marissa declared personal bankruptcy in Ontario on May 1, 2015. Which of the following assets can Marissa NOT keep?

A)$5,000 in jewelry and clothes
B)a van worth $5,500
C)$15,000 in a RRSP of which she last contributed $1,000 on November 1, 2014
D)furniture and appliances worth $10,000
E)she can keep all of these assets

Question 62

A Division 1 Proposal can be used by any corporation or a consumer who owes more than $250,000 excluding a home mortgage.

Question 63

If a person declares personal bankruptcy for the second time, they are usually automatically discharged from all their debts within

A)9 months
B)18 months
C)24 months
D)36 months
E)72 months

Question 64

Only individuals not corporations are entitled to voluntary bankruptcy.

Question 65

As soon as she hears that a creditor is going to sue her, a wife transfers her interest in the matrimonial home to her husband. This transfer is a fraudulent conveyance

Question 66

Al owns all the shares in Star Manufacturing Inc. Star became $800,000 in debt and declared bankruptcy. Al then went to his brother and got a loan for $150,000 and Al then incorporated a new corporation called Nova Manufacturing Inc. Al owns all the shares in Nova. When the trustee in bankruptcy had a sale of all the assets of Star Manufacturing Inc., Al went to the sale on behalf of Nova and bought all the assets of Star for $100,000 (about 10% of their original value)as there were no other bidders on the equipment. Al is now carrying on his same business as before but under the name of Nova Manufacturing. The Star creditors who were owed $800,000 and only got a small percentage of what they were owed and are furious that Al is still in business. This is

A)illegal as since Al owned all the shares in both corporations Nova is liable for Star's debt
B)illegal as it is a fraud on the creditors
C)legal as Star and Nova are separate legal entities and Nova is not liable for Star's debts
D)legal but Star creditors can sue Al personally for the money they are still owed
E)both A and B
TRUE/FALSE QUESTIONS

Question 67

Persons who cannot meet their debts as they fall due will be automatically declared bankrupt.

Question 68

Ali declares personal bankruptcy for the first time. Three months after the bankruptcy proceedings begin Ali gets a job and he is earning $3,014 per month and he is a single. The threshold level that year for a single person is $2,014. As a result Ali

A)will have to pay $1,507 per month to the trustee to be used for creditors' claims
B)will have to pay $1,000 per month to the trustee to be used for creditors' claims
C)will have to pay $500 per month to the trustee to be used for creditors' claims
D)will be able to keep all his monthly income himself
E)will only have to pay some money to the trustee for the next 6 months until he is discharged from bankruptcy

Question 69

There are two forms of bankruptcy: voluntary and involuntary.

Question 70

If a person becomes employed during their bankruptcy period and makes over a specific net income (threshold level), the money above that level is

A)surplus income and must be paid to the trustee to be distributed to the creditors
B)surplus income and 50% must be paid to the trustee to be distributed to the creditors
C)surplus income and 25% must be paid to the trustee to be distributed to the creditors
D)surplus income and it will be used to pay any preferred creditor still owed money
E)earned income and it cannot be taken by the trustee

Question 71

An insolvent person is legally bankrupt.

Question 72

If a person declares personal bankruptcy for the first time they are usually automatically discharged from all their debts within

A)6 months
B)9 months
C)12 months
D)24 months
E)36 months

Question 73

A person may be able to keep money that is in a life insurance policy and a RRSP even if they go bankrupt.

Question 74

The CCAA encourages creditors to cooperate with a view to saving a still viable but struggling business.

Question 75

A business can pay one creditor before another immediately before bankruptcy as long as the money is actually owed.

Question 76

Tony was in debt $20,000 when his wealthy friend Marco told him to come with him on a "once in a lifetime" vacation for a few months. Tony said "You only live once, let's do it." So Tony quit his job and Marco and Tony travelled the world, staying in luxury hotels, eating in expensive restaurants and running up large gambling debts. Three months later Tony arrived home with an additional $150,000 in debt. If Tony files for personal bankruptcy most likely a court would

A)discharge him from his full $170,000 debt
B)discharge him from his earlier $20,000 debt only
C)discharge him from his recent $150,000 debt only
D)refuse to discharge him from any of his debt
E)require Marco to pay for half of Tony's debt

Question 77

If a person declares personal bankruptcy for the second time, the bankruptcy stays on their credit rating for

A)18 months
B)3 years
C)6 years
D)14 years
E)forever

Question 78

Workers have a preferred claim for unpaid wages.

Question 79

Which of the following statements is FALSE?

A)a person who declares bankruptcy and then earns income before they are discharged may have the time period for discharge extended to 21 months
B)if you declared bankruptcy and have not yet been discharged, extra debts you incur will not be discharged by that bankruptcy if you failed to warn the creditor of your bankrupt status
C)a corporation that declares bankruptcy is not discharged from its debts unless the debts are fully paid off
D)a person may be able to keep some money in an RRSP or RRIF even if they declare bankruptcy
E)an income tax debt of $175,000 cannot be discharged in a personal bankruptcy

Question 80

Vince declares personal bankruptcy in 2015. Which of the following debts will NOT be discharged by the bankruptcy?

A)$12,000 he owes his ex-wife for spousal support
B)$9,000 he owes the bank on a line of credit
C)$8,000 he owes in unpaid rent
D)$20,000 he owes in unpaid income tax
E)none of these debts would be discharged in a personal bankruptcy