Deck 28: Bankruptcy and Reorganization

Question 1

A proof of claim is a document required to be filed by a creditor that states the amount of his or her claim against the debtor.

Answer 1

True

Question 2

The Bankruptcy Reform Act of 1978 made it easier for debtors to file for bankruptcy and have their unpaid debts discharged.

Answer 2

True

Question 3

All creditors must file a proof of interest before a bankruptcy proceeding.

Answer 3

False

Question 4

An order of relief occurs upon the filing of either a voluntary petition or an unchallenged involuntary petition.

Question 5

A voluntary petition is a petition filed by a creditor that states that the debtor has paid his debts.

Question 6

A bankruptcy trustee is a legal representative of a creditor's claim to an estate.

Question 7

A creditor's action of perfecting liens against a debtor's property cannot be stayed.

Question 8

An automatic stay refers to the suspension of certain legal actions by creditors against a debtor or the debtor's property.

Question 9

The bankruptcy judge cannot attend the first meeting of the creditors.

Question 10

A U.S.Trustee is a federal government official who has responsibility for handling and supervising many of the administrative tasks associated with a bankruptcy case.

Question 11

A debtor filing for bankruptcy who is represented by an attorney need not be investigated or verified.

Question 12

There are separate state and federal bankruptcy laws.

Question 13

In a meeting of the creditors,the bankruptcy judge questions the debtor.

Question 14

The 2005 act requires an attorney certification whereby an attorney who represents a client in bankruptcy must certify the accuracy of the information contained in the bankruptcy petition.

Question 15

The Bankruptcy Act of 2005 requires that before an individual debtor receives a discharge in a Chapter 7 or Chapter 13 bankruptcy,the debtor must attend a personal financial management course approved by the U.S.Trustee.

Question 16

A complaint is a document filed with a bankruptcy court that starts a bankruptcy proceeding.

Question 17

Bankruptcy proceedings are carried out at special U.S.Bankruptcy Courts created by the Congress.

Question 18

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 is considered creditor-friendly.

Question 19

A secured creditor whose claim exceeds the value of the collateral may submit a proof of claim and become an unsecured claimant as to the difference.

Question 20

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 makes it more difficult for debtors to file for bankruptcy and have their unpaid debts discharged.

Question 21

Exempt property may not be retained by a debtor who files for bankruptcy.

Question 22

Under Chapter 13,a debtor retains more property than is exempt under Chapter 7 liquidation.

Question 23

Which of the following is true of bankruptcy law in the United States?

A)The 1978 bankruptcy law made it easier for debtors to be relieved of much of their debt.
B)The 1978 bankruptcy law was deemed to be "creditor friendly."
C)The bankruptcy act of 2005 makes it easier debtors be relived of their debts under federal bankruptcy law.
D)The 2005 bankruptcy act has been called "debtor friendly."

Question 24

Sam wants to file a petition for bankruptcy.Which of the following is true in this context?

A)Sam need not submit a list of creditors; it is obtained by the court upon investigation.
B)Sam's bankruptcy petition cannot be filed electronically.
C)Only Sam's attorney can file his bankruptcy petition.
D)Sam's attorney is liable for perjury if information filed by Sam is incorrect.

Question 25

Chapter 7 of the Bankruptcy Code of the bankruptcy act of 2005 primarily deals with ________.

A)reorganization
B)adjustment of debts of a family farmer or fisherman with regular income
C)adjustment of debts of an individual with regular income
D)liquidation

Question 26

The median income test is bankruptcy rule that states that if a debtor's median family income is at or below the state's median family income for a family the same size as the debtor's family,the debtor can receive Chapter 7 relief.

Question 27

An executory contract refers to a contract or lease that has not been fully performed.

Question 28

A reaffirmation agreement is an agreement whereby a creditor agrees to discharge the debtor of certain debts that maybe included in the bankruptcy.

Question 29

The acceptance method is a method whereby the court confirms a plan of reorganization if the creditors accept the plan and if other requirements are met.

Question 30

Unscheduled claims are not dischargeable in bankruptcy.

Question 31

The property of a Chapter 13 estate consists of nonexempt property acquired after the case is closed.

Question 32

Which of the following federal acts substantially amended federal bankruptcy law in 2005?

A)Bankruptcy Reform Act
B)Bankruptcy Abuse Prevention and Consumer Protection Act
C)the Nelson Act
D)the Chandler Act

Question 33

A debtor-in-possession is a debtor who is left in place to operate the business during the reorganization proceeding.

Question 34

Gifts that a debtor is entitled to receive within 180 days after the petition is filed are part of the bankruptcy estate.

Question 35

Unpaid debts that the debtor incurred prior to the date of the order for relief are discharged under Chapter 7.

Question 36

A composition provides a longer period of time for the debtor to pay his or her debts.

Question 37

A Chapter 13 discharge is granted to the debtor before the debtor's plan of payment begins.

Question 38

Which of the following is true of the bankruptcy procedure?

A)A driven petition is a petition filed by a debtor that states that he or she has debts.
B)A debtor must receive prepetition credit counseling within 180 days prior to filing his or her petition for bankruptcy.
C)A voluntary petition is filed by creditors of a debtor,alleging that the debtor is not paying his or her debts as they become due.
D)A complaint is a document filed with a bankruptcy court that starts a bankruptcy proceeding.

Question 39

Liquidation is a form of bankruptcy in which the debtor's exempt property is auctioned.

Question 40

If the value of the collateral securing the secured loan is less than the secured interest,the secured creditor is an oversecured creditor.

Question 41

What is a homestead exemption?

A)investment in realty that a debtor must forfeit
B)equity in a home that a debtor is permitted to retain
C)remainder of the debtor's interest in commercial property that is returned to him after fulfilling creditors' claims
D)all of the debtor's assets converted to cash

Question 42

The ________ is a bankruptcy rule that applies to a debtor who has a median family income that exceeds the state's median family income for families the same size as the debtor's family.

A)means test
B)median income test
C)Chapter 13 discharge
D)Chapter 13 plan of payment

Question 43

Under the 2005 bankruptcy act,if non-exempt personal property of an individual debtor secures a claim or is subject to an unexpired lease,the debtor ________.

A)must surrender the property
B)can appeal for exemption of the property
C)must terminate the lease with immediate effect
D)cannot redeem the property

Question 44

A bankruptcy trustee is a ________.

A)legal representative of a debtor's estate
B)claimant to the debtor's estate on behalf of a creditor
C)federal government official responsible for supervising a bankruptcy case
D)bankruptcy judge,appointed by a U.S.Bankruptcy Court

Question 45

The suspension of certain legal actions by creditors against a debtor or the debtor's property is known as a(n)________.

A)discharge of debt
B)composition
C)automatic stay
D)order for relief

Question 46

Which of the following best defines a proof of claim?

A)a statement by the debtor that states that he or she has debts
B)a document required to be filed by a debtor stating the property that is exempted from constituting the bankruptcy estate
C)a document required to be filed by a creditor that states the amount of his or her claim against the debtor
D)a statement by creditors alleging that the debtor is not paying his or her debts as they become due

Question 47

Which of the following constitutes the bankruptcy estate of a debtor?

A)interest in jewelry worth $1,000
B)unmatured life insurance policy owned by the debtor
C)interests in wrongful death benefits
D)interest of $3,500 in a motor vehicle

Question 48

What is Chapter 7 discharge?

A)The termination of the legal duty of an individual debtor to pay both secured and unsecured secured debts before he or she is granted a court trial.
B)The termination of the legal duty of an individual debtor to pay unsecured debts that remain unpaid upon the completion of a Chapter 7 proceeding.
C)The cancellation of all debts of a debtor that remain unpaid upon the completion of a Chapter 13 proceeding.
D)An instruction to the debtor to propose a plan to pay all or a portion of the debts he or she owes in installments.

Question 49

Why is a discharge of debt granted?

A)to divide the bankruptcy estate equally among all creditors
B)to relieve the debtor of the responsibility to pay some of or all the debt
C)to divide the bankruptcy estate according to the debt owed to each creditor
D)to suspend certain legal actions by creditors against a debtor's property

Question 50

Which of the following is true of the median income test?

A)If a family has median family income equal to the state's median family income,the debtor does not qualify for Chapter 7 bankruptcy.
B)If a family has median family income below the state's median family income,the debtor is subject to the "means" test.
C)If a family has median family income below to the state's median family income,the debtor automatically qualifies for Chapter 7 bankruptcy.
D)A debtor's debts are not discharged if the family median income is more than the state's median family income.

Question 51

A(n)________ is a document required to be filed by an equity security holder that states the amount of his or her interest against the debtor.

A)proof of claim
B)proof of interest
C)voluntary petition
D)involuntary petition

Question 52

The filing of either a voluntary petition or an unchallenged involuntary petition constitutes a(n)________.

A)prayer for relief
B)discharge
C)order for relief
D)composition

Question 53

Which of the following is true of the meeting of the creditors?

A)A meeting of the creditors is called before the court grants an order for relief.
B)The bankruptcy judge cannot attend the meeting of the creditors.
C)In the first meeting of the creditors,a debtor is questioned by a jury constituted for the purpose.
D)Questions regarding the debtor's possible concealment of assets are not permitted during the meeting of the creditors.

Question 54

A(n)________ is an agreement entered into by the creditor and the debtor whereby the debtor agrees to pay the creditor for a debt that is dischargeable in bankruptcy.

A)reaffirmation agreement
B)order for relief
C)discharge agreement
D)acceptance agreement

Question 55

If the value of the secured interest is lesser than the collateral securing the secured loan,the secured creditor is a(n)________.

A)the secured creditor is an undersecured creditor
B)the secured creditor is an oversecured creditor
C)the debtor is at default
D)the debtor does not qualify for Chapter 7 bankruptcy

Question 56

Which of the following is true of Chapter 7 liquidation?

A)The debtor is not permitted to keep any of his or her assets.
B)The 2005 bankruptcy act has eased the process of applying for Chapter 7 bankruptcy.
C)The debtor's future income cannot be reached to pay the discharged debt.
D)Petitioning for Chapter 7 liquidation does not permit the debtor to petition for bankruptcy under any other chapter.

Question 57

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

A)Only intangible personal property constitutes the bankruptcy estate.
B)No property solely owned by the debtor is exempted from constituting the bankruptcy estate.
C)Creditors are allowed to claim exempt property.
D)Government benefits and compensations are exempted from constituting the bankruptcy estate.

Question 58

A means test is used to determine whether ________.

A)the debtor's median family income is less than the state's median family income
B)the debtor's median family income is more than the state's median family income
C)the debtor has the capability to pay prepetition debts out of postpetition income
D)the debtor would qualify to file for bankruptcy under Chapter 13

Question 59

________ is a form of bankruptcy in which the debtor's nonexempt property is sold for cash,the cash is distributed to the creditors,and any unpaid debts are discharged.

A)Abusive filing
B)Dissolution of debt
C)Liquidation
D)Reorganization

Question 60

If a person's debts are subject to a Chapter 7 discharge.What does this mean?

A)that he or she needs to repay only unsecured debts
B)that he or she needs to repay only secured debts
C)that he or she needs to pay his prepetition debts with his postpetition income
D)that he or she need not repay any debt

Question 61

Which of the following is a feature of the Chapter 11 plan of reorganization?

A)an equilateral division of the Chapter 11 estate among all creditors
B)division of the bankruptcy estate according to the debt to be paid to each creditor
C)discharge of a debtor's unsecured debts and payment of secured debts
D)a proposed new capital structure for a debtor to assume when it emerges from Chapter 11 bankruptcy

Question 62

Paulo Dessario is the owner of Paulo's Pizzeria,which has not been doing well in the last year.He files for bankruptcy under Chapter 13.Which of the following is true in accordance with the constitution of the Chapter 13 estate?

A)Paulo must terminate all his business operations in the United States.
B)If the pizzeria is not exempt from Chapter 13 estate,Paulo must surrender it.
C)Paulo is allowed to continue operating the pizzeria,irrespective of it being exempt.
D)Paulo can only operate the pizzeria but cannot remain in possession of it.

Question 63

Which of the following is true of Chapter 13 discharge?

A)It is granted before a Chapter 13 plan of payment is enforced.
B)It is not granted if the debtor has received Chapter 7 discharge in the last four years.
C)It is granted only for the secured unpaid debts of a debtor.
D)All unpaid taxes are discharged under Chapter 13 discharge.

Question 64

Which of the following constitutes the property of a Chapter 13 estate?

A)nonexempt property of the debtor before the case is closed
B)exempt property of the debtor before the case is closed
C)debtor's income before and after the case is closed
D)property that is exempt from Chapter 7 estate

Question 65

Describe the procedure for filing a bankruptcy petition.

Question 66

What is an executory contract?

A)a contract that cannot be discharged under Chapter 13
B)a contract that the debtor is obliged to perform despite filing for bankruptcy
C)an agreement between several creditors and a single debtor,dividing the debtor's property
D)a lease that has not been fully performed

Question 67

What is liquidation? How does the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005 affect the process of liquidation?

Question 68

________ is a rehabilitation form of bankruptcy that permits bankruptcy courts to supervise the debtor's plan for the payment of unpaid debts in installments over the plan period.

A)Chapter 7
B)Chapter 13
C)Chapter 11
D)Chapter 12

Question 69

How does a court order to discharge debts benefit the debtor? Under what consideration do courts grant a discharge?

Question 70

According to the 2005 bankruptcy act,when is a debtor granted Chapter 7 relief?

A)six years following Chapter 11 relief
B)four years following Chapter 11 relief
C)six years following Chapter 12 relief
D)twelve years following Chapter 13 relief

Question 71

A person filing for bankruptcy under Chapter 11 and left in place to operate the business during the reorganization proceeding is known as the ________.

A)trustee
B)debtor-in-possession
C)consignor
D)regent

Question 72

Which of the following is true of Chapter 11 of the Bankruptcy Code?

A)Chapter 11 is a rehabilitation form of bankruptcy that permits bankruptcy courts to supervise the debtor's plan for the payment of unpaid debts.
B)The filing of a Chapter 11 petition immediately enables creditors to recover the debtor's property.
C)Chapter 11 helps the debtor reorganize with a new capital structure so that the debtor emerges from bankruptcy as a viable concern.
D)Chapter 11 does not permit a debtor to reject executory contracts or unexpired leases.

Question 73

Which of the following does a Chapter 11 automatic stay provide?

A)automatic discharge of secured debts
B)suspension of certain legal actions against the debtor
C)creditors' foreclosure on assets given as collateral for loans
D)automatic discharge of unsecured debts

Question 74

Which of the following bankruptcy methods allows the reorganization of the debtor's financial affairs under the supervision of the bankruptcy court?

A)Chapter 11
B)Chapter 13
C)Chapter 7
D)Chapter 12

Question 75

Explain in brief the constitution of a bankruptcy estate.

Question 76

Briefly explain the Chapter 11 plan of reorganization.

Question 77

Which of the following is true of a Chapter 13 petition?

A)It can be filed by all individual debtors,irrespective of their income.
B)The petitioner need not demand an extension or composition.
C)To qualify for Chapter 13,the debts must primarily be consumer debt.
D)Creditors can file a Chapter 13 petition claiming payment from a debtor.

Question 78

A(n)________ provides for the reduction of a debtor's debts.

A)extension
B)liquidation
C)limitation
D)composition

Question 79

A(n)________ provision is a provision whereby the court confirms a plan of reorganization over an objecting class of creditors if certain requirements are met.

A)cram-down
B)acceptance
C)discharge
D)liquidation