Deck 34: Bankruptcy

Question 1

One goal of bankruptcy law is to encourage the continued use of credit.

Answer 1

False

Question 2

A railroad may be a Chapter 7 debtor.

Answer 2

False

Question 3

Bankruptcy law is state law.

Answer 3

False

Question 4

The basic duty of a trustee is to collect the debtor's property and reduce it to money for distribution.

Question 5

To challenge a ruling in a bankruptcy proceeding,a party must appeal to a federal district court.

Question 6

Child-support debts will be suspended by a voluntary bankruptcy filing.

Question 7

In most states,state law determines the amount of a debtor's property that is exempt from dis?tribution on bankruptcy.

Question 8

A preference occurs when a debtor transfers property or money favoring one creditor over others.

Question 9

Before filing for bankruptcy,a consumer-debtor must receive credit counseling.

Question 10

A farmer cannot be forced into involuntary bankruptcy.

Question 11

Concealing assets from a bankruptcy court is a crime.

Question 12

Bankruptcy proceedings are held in federal courts.

Question 13

A husband and wife may file a joint petition for bankruptcy.

Question 14

One goal of bankruptcy law is to protect a debtor.

Question 15

A trustee does NOT have the power to avoid preferences.

Question 16

The filing of a petition for bankruptcy will automatically stay most legal actions against the debtor.

Question 17

Debtors have very few rights.

Question 18

A trustee has the power to avoid a sale of the debtor's property.

Question 19

A Chapter 13 plan can be initiated only by the filing of a voluntary petition.

Question 20

Chapter 7 of the Bankruptcy Code covers liquidations.

Question 21

If a discharge is denied to a debtor in a bankruptcy proceeding,the debtor's creditors are denied a distribution of the debtor's assets.

Question 22

Wilson wants to file an ordinary,or straight,bankruptcy.Wilson should file using

A)Chapter 7.
B)Chapter 11.
C)Chapter 13.
D)his state's bankruptcy code.

Question 23

Mabel files a petition in bankruptcy.The initial proceeding on this peti?tion will be in

A)a federal bankruptcy court.
B)a state bankruptcy court.
C)the highest court in the state in which Mabel is located.
D)the United States Supreme Court.

Question 24

A student loan is discharged under Chapter 13 unless the creditor can show "undue hardship."

Question 25

Lulu joins with other creditors to force Mikhail,a debtor,into bankruptcy.One of the goals of bankruptcy law with respect to creditors is to

A)ensure that creditors will continue to lend to insolvent debtors.
B)protect creditor assets from diminution in value.
C)provide equitable treatment in the competition for debtor assets.
D)make all debtor property available for creditor claims.

Question 26

Once a discharge is granted,it may not be revoked,even if,for example,a debtor concealed property to defraud a creditor.

Question 27

In most Chapter 7 bankruptcies,the proceeds exceed the amount needed to pay all creditors and the debtor receives the amount remaining after all the creditors have been paid.

Question 28

A discharge will be denied to a debtor who received a discharge within eight years of filing the current petition.

Question 29

Carlton files a petition in bankruptcy.One of the goals of bankruptcy law with respect to a debtor is to

A)encourage the continued use of credit to borrow funds.
B)ensure that third parties will continue to guarantee loans.
C)provide a fresh start,free from creditors' claims.
D)shield assets from creditors' claims.

Question 30

If the assets in a debtor's estate in bankruptcy are insufficient to pay fully all creditors,the debtor is liable for the difference.

Question 31

Railroads are eligible for Chapter 11 relief.

Question 32

A Chapter 11 reorganization plan must provide for payment of tax claims over a five-year period.

Question 33

A corporate debtor must have gone out of business before it can obtain a discharge in bankruptcy under Chapter 13.

Question 34

Payments under a Chapter 13 plan must be completed within three to five years,depending on the debtor's family income.

Question 35

Norma Jean files for Chapter 7 bankruptcy.She turns her assets over to Addie,who sells the assets and then distributes the proceeds to Norma Jean's creditors.Addie is a

A)creditor.
B)federal judge.
C)bankruptcy trustee.
D)debtor.

Question 36

Some student loans are dischargeable in a Chapter 7 bankruptcy.

Question 37

Secured parties have priority over unsecured parties to the proceeds from the disposition of collateral on the distribution of a debtor's estate.

Question 38

Unsecured creditors do not have a vote to confirm a Chapter 13 plan.

Question 39

In order of priority,the claims of all of the creditors in a class must be satisfied before any re?maining amounts can be distributed to the next class.

Question 40

Mara wishes to appeal a decision from a federal bankruptcy court.Mara must appeal to

A)a county court.
B)a federal district court.
C)the U.S.Supreme Court.
D)a state court.

Question 41

Gert's Horse Farm owes money to High Sierra Saddle & Tack,which has a security interest in Gert's gear.Gert's files for bankruptcy on May 1.To collect on the debt,High tries to take possession of the gear on May 5.High can obtain

A)any of Gert's assets.
B)any of Gert's exempt assets.
C)Gert's gear only.
D)none of Gert's assets due to the automatic stay.

Question 42

Bobby has 15 creditors.To force Bobby into bankruptcy proceedings,at least three creditors must join the petition and their unsecured claims must add up to at least

A)$500.
B)$10,250.
C)$14,425.
D)$50,000.

Question 43

Kofi files a petition for bankruptcy.Kofi must include with the petition

A)a plan to turn over his future income to the trustee.
B)a certificate proving attendance at a credit-counseling briefing.
C)a provision of adequate means for the petition's execution. d a statement of preference for one creditor over another.

Question 44

Thirty-one days before filing a petition in bankruptcy,Dee transfers prop?erty and makes payments that favor one creditor over another.These are

A)affirmation agreements.
B)preferences.
C)secured interests.
D)unsecured debts.

Question 45

Cara is a bankruptcy trustee.As a bankruptcy trustee,Cara cannot

A)cancel fraudulent transactions made by the debtor within two years of the filing of the petition.
B)ask the court for a writ of execution.
C)avoid preferences.
D)pay the lowest priority creditors first.

Question 46

Roger's creditors try to force him into involuntary bankruptcy.The creditors will be unsuccessful if

A)Roger's business employs fewer than ten people.
B)Roger is a farmer.
C)Roger has a medical condition.
D)Roger has to pay child support.

Question 47

Roland files for Chapter 7 bankruptcy.After all his assets have been sold and the proceeds distributed among his creditors,Roland's remaining debts

A)are discharged.
B)paid by the court.
C)must be paid by Roland.
D)are put on hold until Roland has sufficient means to pay them.

Question 48

Jay files a bankruptcy petition under Chapter 7.Among his debts are un?paid taxes,fines owed to the government,student loans owed to Mega University,and support owed to his ex-wife Kris.Most likely to be dis?charged are

A)the back taxes if they accrued within the previous three years.
B)the fines if they have been outstanding less than eight years.
C)the student loans if their payment would impose undue hardship.
D)the support debts.

Question 49

Gerald files a bankruptcy petition.The resulting automatic stay will apply to Gerald's

A)alimony debts.
B)child-support debts.
C)spousal maintenance debts.
D)car payment debts.

Question 50

Pola files a petition in bankruptcy.Pola's non-dischargeable debts include

A)domestic-support obligations.
B)student loans if payment would impose undue hardship.
C)unpaid loans to finance home repairs.
D)unsecured credit-card debt.

Question 51

Mia's voluntary petition for bankruptcy is found to be proper.The order for relief is effective as soon as

A)Mia files the petition.
B)Mia posts a bond to cover the costs of the proceedings.
C)Mia's creditors agree to the terms.
D)the trustee collects and distributes the property of Mia's estate.

Question 52

Elmo files a petition in bankruptcy.If the court concludes that Elmo only seeks an advantage over his creditors and that his financial situation does not warrant relief,the court will most likely

A)dismiss Elmo's petition.
B)discharge Elmo's debts.
C)distribute Elmo's property to Elmo's creditors.
D)issue an automatic stay against any actions by Elmo's creditors.

Question 53

In January,Jazz Dance Studio owes Katy,its musical director,$1,800 for cur?rent wages,receives $700 as a down payment for dance lessons from Lora,and pays a Music,Inc.,a sheet music supplier,$1,500 of $3,000 owed.In February,the studio files for bankruptcy under Chapter 7. Based on the size of the studio's estate in bank?ruptcy,each of Jazz's creditors will get only 10 percent of their claims.Regarding the payment to Music,Inc.,the trustee may

A)not recover it because Music's claim has priority.
B)not recover it unless Music is an in?sider.
C)recover it as a fraudulent transfer.
D)recover it as a preference.

Question 54

Donna goes through an involuntary bankruptcy proceeding.An invol?un?tary bankruptcy occurs when

A)a debtor files forms designated for the purpose in a bankruptcy court.
B)a debtor is unable to pay his or her debts as they come due.
C)a debtor's creditors force the debtor into bankruptcy proceedings.
D)a debtor's debts exceed the fair market value of his or her assets.

Question 55

A petition for a discharge in bankruptcy under Chapter 11 may be filed by

A)Indomitable Insurance Company.
B)Pacific Mountain Railroad.
C)Solid State Bank.
D)Valley Credit Union.

Question 56

AAA Auto Repair receives a discharge in bankruptcy,even though some creditors hold judgments on overdue debts against it and others filed ac?tions to collect on overdue debts before the bankruptcy.AAA's discharge will

A)neither stop actions nor void judgments regarding overdue debts.
B)only stop actions to collect overdue debts.
C)only void uncollected judgments on overdue debts.
D)stop actions and void judgments regarding overdue debts.

Question 57

Lionel files a voluntary petition for bankruptcy under Chapter 7.The court will likely deny a discharge of Lionel's debts if he

A)conceals records of his financial condition with the intent to defraud a creditor.
B)does not have sufficient assets to pay all his secured creditors.
C)filed for bankruptcy 12 years ago.
D)has a criminal record.

Question 58

Joe files a voluntary petition for Chapter 7 bankruptcy.His petition does NOT need to include

A)a list of Joe's secured creditors.
B)a list of Joe's unsecured creditors.
C)a list of the occupations of all Joe's creditors.
D)the addresses of all Joe's creditors.

Question 59

Roy,the owner of Standard Business Company (SBC),sells SBC to Tim for a note payable to Roy for $100,000.Tim does not pay the note and files for bankruptcy under Chapter 7.The debt represented by the note is

A)dischargeable if $100,000 now seems to be a high price for SBC.
B)dischargeable under any circumstances.
C)not dischargeable if Tim concealed assets to defraud Roy.
D)not dischargeable under any circumstances.

Question 60

Mac files a petition for a discharge in bankruptcy.Mac's failure to ap?pear at a meet?ing of the creditors listed in Mac's schedules may result in Mac being

A)denied a discharge of bankruptcy.
B)fined.
C)held in contempt.
D)imprisoned.

Question 61

Checkerboard Pizza,Inc.(CPI),files for bankruptcy under Chapter 11.CPI's Chapter 11 plan must contain

A)a plan to turn over its future income to the trustee.
B)a certificate proving attendance at a credit-counseling briefing.
C)a provision of adequate means for the plan's execution. d a statement of preference for one creditor over another.

Question 62

Zeke files a petition for bankruptcy under Chapter 13.Zeke's Chapter 13 plan must provide for

A)the turnover of his future income to the trustee.
B)his attendance at a credit-counseling briefing.
C)adequate means for the petition's execution. d a preference for one creditor over another.

Question 63

Dorothy files a petition for bankruptcy under Chapter 13.If she is granted a discharge,debts that will most likely be discharged include

A)claims not provided for by the plan.
B)payments on retirement accounts.
C)claims for domestic support obligations.
D)credit-card debt incurred more than one year before filing.

Question 64

Current City (CC) is a retail seller of television sets.CC sells Dhani a $3,000 large-screen,high-definition,LED set on a retail installment security agreement in which he pays $100 down and agrees to pay the balance in equal installments.CC retains a security interest in the set,and perfects that interest by filing a financing statement centrally.Two months later,Dhani is in default on the payments to CC and is involun?tarily petitioned into bankruptcy by other creditors.Discuss CC's right to repossess the TV set and whether CC has priority over the trustee in bankruptcy.

Question 65

Ed is a debtor.Financial Loans,Inc.,and the government are Ed's credi?tors.For these parties,a bankruptcy proceeding under Chapter 13 could be initiated by the filing of a petition by

A)Ed alone or by his creditors jointly.
B)Ed only.
C)Financial Loans only.
D)the government only.

Question 66

Jill believes that she should file a plan for a Chapter 13 discharge in bankruptcy.A court will confirm her bankruptcy plan if it provides for

A)the completion of all payments to all creditors within six years.
B)the payment of 100 percent of all obligations in full.
C)the surrender of all collateral to the creditors.
D)the turnover of the debtor's future income to the trustee.

Question 67

Anthony believes that he needs to obtain a Chapter 13 discharge in bank?ruptcy.A Chapter 13 case can be initiated by a filing of a voluntary pe?tition by

A)a creditor only.
B)a corporation only.
C)a debtor only.
D)a trustee only.

Question 68

Ciera buys a car from Town Motors.Less than a year later,Ciera files for bankruptcy under Chapter 13.Her plan must provide that Town retains a lien on the car until the entire debt is paid

A)under no circumstances.
B)if Town extended credit for all or part of the purchase price of the car.
C)if Ciera surrenders the car to Town.
D)if Ciera's other creditors do not object.

Question 69

A petition for a discharge in bankruptcy under Chapter 13 may be filed by

A)Gracie,the sole proprietor of Home Net Services.
B)Internet Portals & Pages,a partnership.
C)World Web Services,Inc.,a corporation.
D)Internet Portals & Pages or World Web Services,Inc..

Question 70

Gem Jewelers files a voluntary petition for bankruptcy.In listing its as?sets,Gem in?tentionally does not include certain valuable stones.After Gem is granted a discharge,Hasty Catering,one of Gem's unsecured creditors whose claims were discharged,learns of the fraud.Hasty can

A)do nothing.
B)enforce its claim against Gem.
C)file an involuntary petition for bankruptcy against Gem.
D)take possession of the stones with or without a breach of the peace.

Question 71

Shippers Dispatch Corporation orders office equipment from Office Outfitters,Inc.,which has an unperfected security interest in the equipment until it is paid for.Meanwhile,Shippers Dispatch takes out a loan from Capital Credit,Inc.,subject to a security interest in Shippers Dispatch's building and equip?ment,which Capital perfects.Shippers Dispatch files a bankruptcy petition under Chapter 7.If the petition is granted,in what or?der will Shippers Dispatch's creditors be paid?