Deck 41: The Law of Bankruptcy

Question 1

What Article of the U.S. Constitution grants Congress powers to make bankruptcy laws?

A) Article I
B) Article II
C) Article III
D) Article IV

Answer 1

Article I

Question 2

In the Bankruptcy Code, what term is used in place of the term bankrupt?

A) Defaulter
B) Debtor
C) Nonpayer
D) Insolvent

Answer 2

Debtor

Question 3

What is the main goal of Chapter 11 bankruptcy?

A) Adjustment of debts of individuals
B) Business liquidation
C) Business reorganization
D) Liquidation of debts of individuals

Answer 3

Business reorganization

Question 4

What term describes the acceptance of the case by the bankruptcy court?

A) Restraining order
B) Order for relief
C) Decree
D) Provisional order

Question 5

What term describes a self-operating postponement of debt collection proceedings against the debtor?

A) Automatic stay
B) Automatic suspension
C) All of the above
D) None of the above

Question 6

What term describes a bankruptcy proceeding initiated by creditors?

A) Involuntary bankruptcy
B) Forced bankruptcy
C) Mandatory bankruptcy
D) Compulsory bankruptcy

Question 7

What term describes an eligibility requirement designed to prevent affluent people from filing Chapter 7?

A) Assets calculation
B) Means testing
C) Means disclosure
D) All of the above

Question 8

What types of exemptions exist?

A) Federal exemptions
B) State-granted exemptions
C) Municipal exemptions
D) Both A and B

Question 9

What term describes items that may be retained by the debtor?

A) Res
B) Exemptions
C) Chattels
D) Chose in action

Question 10

Who is appointed by the court to hold a debtor's nonexempt assets in trust?

A) Trustee in bankruptcy
B) Guardian ad litem
C) Administrator de bonis non
D) Administrator pendente lite

Question 11

What term describes a right to payment?

A) Declaration
B) Claim
C) Statement
D) Affirmation

Question 12

What releases the debtor from all debts that were part of the bankruptcy proceeding?

A) Discharge in bankruptcy
B) Promissory estoppel
C) Adverse possession
D) Averments

Question 13

What creditors hold liens on the debtor's property?

A) Principal
B) General
C) Secured
D) Protected

Question 14

How is a Chapter 11 bankruptcy called?

A) Reformation
B) Reorganization
C) Adjustment
D) Restructuring

Question 15

What is a requirement of a reorganization plan?

A) Setting forth a method of repaying debts
B) Separating creditors into various classes
C) Be feasible
D) All of the above

Question 16

Who files a Chapter 12 bankruptcy?

A) Family farmers
B) Family businesses
C) General partnership
D) Joint venture

Question 17

What must a debtor filing Chapter 12 bankruptcy do?

A) Develop a reorganization plan
B) Serve as a debtor-in-possession
C) Perform the functions of a trustee
D) All of the above

Question 18

What must a person filing a Chapter 13 bankruptcy do?

A) Meet with an approved nonprofit credit counselor
B) Make a good-faith effort to repay debts
C) Submit a wage earner's plan
D) All of the above

Question 19

What are priority debts referred to in Chapter 13 bankruptcy?

A) Credit card debt
B) Past property taxes
C) Student loans
D) Medical bills

Question 20

Congress first exercised constitutional powers to make bankruptcy laws with the Bankruptcy Act of 1900.

Question 21

U.S. Bankruptcy Courts have exclusive jurisdiction over bankruptcy cases.

Question 22

There are five principal types of bankruptcy proceedings.

Question 23

Main types of bankruptcy proceedings are named after the respective chapter in the Federal Bankruptcy Code.

Question 24

Businesses cannot file Chapter 7 bankruptcy.

Question 25

When a debtor files a voluntary bankruptcy petition with the court, credit card companies cannot bring suit to collect debts.

Question 26

Only debtors who satisfy the means test are eligible to file for Chapter 7 bankruptcy.

Question 27

If the debtor's average income calculation is above the state median, he or she qualifies for a Chapter 7 filing.

Question 28

States can decide whether their debtors will use the federal exemptions or the state-granted exemptions.

Question 29

Under the Bankruptcy Code, a debtor must be domiciled in a state for ten years for that state's exemption rules to apply.

Question 30

The trustee cannot challenge any creditors' claims.

Question 31

After the trustee has collected and liquidated the debtor's property, he or she distributes the proceeds to creditors.

Question 32

When there is not enough money to pay unsecured creditors in full, their shares are prorated.

Question 33

Debtors who complete a Chapter 7 bankruptcy must wait at least five years before discharging a second time in Chapter 7.

Question 34

Individuals whose debts exceed the limits allowed for Chapter 13 can choose a Chapter 11 bankruptcy.

Question 35

A Chapter 11 bankruptcy may be only voluntary.

Question 36

A debtor in Chapter 12 bankruptcy must perform the functions of a trustee.

Question 37

To qualify as an individually owned business, the fishing business must receive more than 75 percent of its total income from fishing.

Question 38

Debtors must wait two years before being discharged again in Chapter 13.

Question 39

Chapter 13 bankruptcy can be used to help prevent a foreclosure.

Question 40

Bankruptcy is administered by U.S. ________ Courts.

Question 41

Main types of bankruptcy proceedings are listed in the Federal Bankruptcy ________.

Question 42

Chapter 7 bankruptcy is a proceeding designed to ________ a debtor's property.

Question 43

To file Chapter 7 bankruptcy, a debtor must complete a(n) ________ test.

Question 44

The homestead ________ permits debtors to keep a certain amount of equity from the sale of their home in bankruptcy.

Question 45

Appointed by the court, a(n) ________ in bankruptcy holds the debtor's nonexcluded assets in trust for the creditors' benefit.

Question 46

To be released from debts that were part of the bankruptcy proceeding, a debtor needs to obtain ________ in bankruptcy.

Question 47

The debtor in a Chapter 11 bankruptcy case is referred to as a(n) ________.

Question 48

The debtor in Chapter 12 bankruptcy must develop a(n) ________ plan.

Question 49

Chapter 13 bankruptcy may be filed only ________.

Question 50

Match the terms with their descriptions:

-Wage earner's plan

A) Parties to whom money is owed
B) Items of property excepted from bankruptcy proceedings
C) Bankruptcy proceeding initiated by the debtor
D) Plan for the installment payments of outstanding debts under a Chapter 13 bankruptcy
E) Creditors holding mortgages and other liens on the debtor's property to secure repayment
F) Bankruptcy providing a method for family farmers with regular income to adjust their
Financial affairs while continuing to operate
G) Comparison to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy
H) Reorganization bankruptcy
I) Law governing bankruptcy proceedings
J) Transfers made by the debtor to creditors before the bankruptcy proceeding

Question 51

Match the terms with their descriptions:

-Chapter 11 bankruptcy

A) Parties to whom money is owed
B) Items of property excepted from bankruptcy proceedings
C) Bankruptcy proceeding initiated by the debtor
D) Plan for the installment payments of outstanding debts under a Chapter 13 bankruptcy
E) Creditors holding mortgages and other liens on the debtor's property to secure repayment
F) Bankruptcy providing a method for family farmers with regular income to adjust their
Financial affairs while continuing to operate
G) Comparison to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy
H) Reorganization bankruptcy
I) Law governing bankruptcy proceedings
J) Transfers made by the debtor to creditors before the bankruptcy proceeding

Question 52

Match the terms with their descriptions:

-Federal Bankruptcy Code

A) Parties to whom money is owed
B) Items of property excepted from bankruptcy proceedings
C) Bankruptcy proceeding initiated by the debtor
D) Plan for the installment payments of outstanding debts under a Chapter 13 bankruptcy
E) Creditors holding mortgages and other liens on the debtor's property to secure repayment
F) Bankruptcy providing a method for family farmers with regular income to adjust their
Financial affairs while continuing to operate
G) Comparison to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy
H) Reorganization bankruptcy
I) Law governing bankruptcy proceedings
J) Transfers made by the debtor to creditors before the bankruptcy proceeding

Question 53

Match the terms with their descriptions:

-Secured creditors

A) Parties to whom money is owed
B) Items of property excepted from bankruptcy proceedings
C) Bankruptcy proceeding initiated by the debtor
D) Plan for the installment payments of outstanding debts under a Chapter 13 bankruptcy
E) Creditors holding mortgages and other liens on the debtor's property to secure repayment
F) Bankruptcy providing a method for family farmers with regular income to adjust their
Financial affairs while continuing to operate
G) Comparison to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy
H) Reorganization bankruptcy
I) Law governing bankruptcy proceedings
J) Transfers made by the debtor to creditors before the bankruptcy proceeding

Question 54

Match the terms with their descriptions:

-Means testing

A) Parties to whom money is owed
B) Items of property excepted from bankruptcy proceedings
C) Bankruptcy proceeding initiated by the debtor
D) Plan for the installment payments of outstanding debts under a Chapter 13 bankruptcy
E) Creditors holding mortgages and other liens on the debtor's property to secure repayment
F) Bankruptcy providing a method for family farmers with regular income to adjust their
Financial affairs while continuing to operate
G) Comparison to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy
H) Reorganization bankruptcy
I) Law governing bankruptcy proceedings
J) Transfers made by the debtor to creditors before the bankruptcy proceeding

Question 55

Match the terms with their descriptions:

-Creditors

A) Parties to whom money is owed
B) Items of property excepted from bankruptcy proceedings
C) Bankruptcy proceeding initiated by the debtor
D) Plan for the installment payments of outstanding debts under a Chapter 13 bankruptcy
E) Creditors holding mortgages and other liens on the debtor's property to secure repayment
F) Bankruptcy providing a method for family farmers with regular income to adjust their
Financial affairs while continuing to operate
G) Comparison to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy
H) Reorganization bankruptcy
I) Law governing bankruptcy proceedings
J) Transfers made by the debtor to creditors before the bankruptcy proceeding

Question 56

Match the terms with their descriptions:

-Preferences

A) Parties to whom money is owed
B) Items of property excepted from bankruptcy proceedings
C) Bankruptcy proceeding initiated by the debtor
D) Plan for the installment payments of outstanding debts under a Chapter 13 bankruptcy
E) Creditors holding mortgages and other liens on the debtor's property to secure repayment
F) Bankruptcy providing a method for family farmers with regular income to adjust their
Financial affairs while continuing to operate
G) Comparison to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy
H) Reorganization bankruptcy
I) Law governing bankruptcy proceedings
J) Transfers made by the debtor to creditors before the bankruptcy proceeding

Question 57

Match the terms with their descriptions:

-Chapter 12 bankruptcy

A) Parties to whom money is owed
B) Items of property excepted from bankruptcy proceedings
C) Bankruptcy proceeding initiated by the debtor
D) Plan for the installment payments of outstanding debts under a Chapter 13 bankruptcy
E) Creditors holding mortgages and other liens on the debtor's property to secure repayment
F) Bankruptcy providing a method for family farmers with regular income to adjust their
Financial affairs while continuing to operate
G) Comparison to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy
H) Reorganization bankruptcy
I) Law governing bankruptcy proceedings
J) Transfers made by the debtor to creditors before the bankruptcy proceeding

Question 58

Match the terms with their descriptions:

-Voluntary bankruptcy

A) Parties to whom money is owed
B) Items of property excepted from bankruptcy proceedings
C) Bankruptcy proceeding initiated by the debtor
D) Plan for the installment payments of outstanding debts under a Chapter 13 bankruptcy
E) Creditors holding mortgages and other liens on the debtor's property to secure repayment
F) Bankruptcy providing a method for family farmers with regular income to adjust their
Financial affairs while continuing to operate
G) Comparison to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy
H) Reorganization bankruptcy
I) Law governing bankruptcy proceedings
J) Transfers made by the debtor to creditors before the bankruptcy proceeding

Question 59

Match the terms with their descriptions:

-Exemptions

A) Parties to whom money is owed
B) Items of property excepted from bankruptcy proceedings
C) Bankruptcy proceeding initiated by the debtor
D) Plan for the installment payments of outstanding debts under a Chapter 13 bankruptcy
E) Creditors holding mortgages and other liens on the debtor's property to secure repayment
F) Bankruptcy providing a method for family farmers with regular income to adjust their
Financial affairs while continuing to operate
G) Comparison to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy
H) Reorganization bankruptcy
I) Law governing bankruptcy proceedings
J) Transfers made by the debtor to creditors before the bankruptcy proceeding

Question 60

Identify main legal documents governing bankruptcy proceedings. Discuss purposes of bankruptcy laws.

Question 61

Define a Chapter 7 bankruptcy. Identify eligibility requirements for a voluntary Chapter 7 bankruptcy. Discuss what happens after a debtor files a Chapter 7 bankruptcy.

Question 62

Define a trustee in bankruptcy and identify his or her major functions.

Question 63

While building his house, Paul bought material and tools from Greg and Nicolas. He also took a loan from Omega Bank for $30,000 and used his condominium as collateral. After losing his job, Paul filed for a Chapter 7 bankruptcy. Discuss how Paul's debts will be paid.

Question 64

Ronda, who has many consumer debts, tried to file a Chapter 7 bankruptcy, but did not pass the means testing. What can Ronda do to have a fresh start without debts?