Deck 31: Bankruptcy Law

Question 1

The type of bankruptcy proceeding most commonly used by corporate debtors is the Chapter 11 reaffirmation.

Answer 1

False

Question 2

Bankruptcy law attempts to balance the rights of the debtors and the creditors.

Answer 2

True

Question 3

The clerk of a bankruptcy court must provide consumer-debtors with information on the types of services available from credit counseling agencies.

Answer 3

True

Question 4

A debtor must be insolvent to file for bankruptcy relief.

Question 5

In the distribution of the debtor's estate, secured creditors take priority over unsecured creditors.

Question 6

An involuntary bankruptcy occurs when the debtor forces his or her creditors into bankruptcy proceedings.

Question 7

When a debtor has not assets, creditors are notified of the debtor's petition for bankruptcy but are instructed not to file a claim.

Question 8

Rulings from bankruptcy courts are final-they cannot be appealed.

Question 9

If the circumstances indicate bad faith, a court can dismiss a debtors' Chapter 13 petition.

Question 10

The right to petition for bankruptcy relief under federal law is an essential aspect of our capitalistic society.

Question 11

All debts are dischargeable in bankruptcy.

Question 12

Generally, in a Chapter 11 case, no orders affecting the estate will be entered without the consent of the creditors' committee or after a hearing in which the judge is informed of the committee's position

Question 13

A bankruptcy court may deny a discharge based on the debtor's conduct.

Question 14

The content of a family-fisherman bankruptcy plan is very different from that of a repayment plan.

Question 15

In a Chapter 13 case, after the debtor has completed all payments, the court grants a discharge of all debts provided for by the repayment plan.

Question 16

The means test forces more people to file for Chapter 7 bankruptcy rather than gave their debts discharged under Chapter 13.

Question 17

In putting together a repayment plan under Chapter 13, a debtor must apply the means test to identify the amount of disposable income that will be available to repay creditors.

Question 18

In a Chapter 11 case, the court cannot confirm a reorganization plan over the objections of a class of creditors.

Question 19

Exceptions to the automatic stay include investigations by a securities regulatory agency, which can continue despite the suspension of other actions against a debtor the moment a bankruptcy petition is filed.

Question 20

An individual debtor cannot exempt or exclude any property from the bankruptcy.

Question 21

Thirty-one days before filing a petition in bankruptcy, Gavin 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 22

To adjust debts and institute a repayment plan that is less expensive and less complicated than other options, Buffalo n' Beef Bar-B-Q Restaurant, a small business, may file a petition in bankruptcy for relief through

A) a liquidation.
B) a reorganization.
C) a repayment plan.
D) a family-farmer bankruptcy plan.

Question 23

Luxuro Furniture & Floors, Inc., files a petition in bankruptcy for relief through reorganization. Luxuro's reorganization 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 24

Sheryl files a petition in bankruptcy. Sheryl'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 25

Best Yogurt Corporation orders refrigeration equipment from Cold Storage, Inc., which has an unperfected security interest in the equipment until it is paid for. Meanwhile, Best Yogurt takes out a loan from Dependable Credit, Inc., subject to a security interest in Best Yogurt's building and equip?ment, which Dependable Credit perfects. Best Yogurt files a petition in bankruptcy for relief in a liquidation proceeding. If the petition is granted, in what or?der will the creditors be paid?

Question 26

Paulina operates a sole proprietorship, a corporation, and a partnership. Paulina wants to ob?tain relief for her individual debts and the debts of her corporation and partnership. For each of these, Paulina may file a petition in bankruptcy for relief through

A) a liquidation.
B) a reorganization.
C) a repayment plan.
D) a family-farmer bankruptcy plan.

Question 27

Leif files a petition in bankruptcy. Among his debts are un?paid taxes, fines owed to the government, student loans owed to Metro University, and support owed to his ex-wife Nadia. Most likely to be dis?charged are

A) back taxes accrued within the previous three years.
B) fines outstanding less than eight years.
C) student loans whose payment would impose undue hardship.
D) spousal-support debts unpaid for more than eighteen months.

Question 28

Patsy files a petition in bankruptcy. At the moment of filing

A) an automatic stay goes into effect.
B) Patsy's debts are discharged.
C) Patsy's petition is dismissed.
D) Patsy's property is distributed to her creditors.

Question 29

Daniel is a trustee for a federal bankruptcy court. Daniel's duties include

A) collecting the debtor's available estate.
B) establishing priority for the payment of unsecured creditors.
C) operating a debtor's business to obtain maximum profit for creditors.
D) submitting to an examination under oath by the creditors.

Question 30

Bess wishes to appeal a decision of a bankruptcy court. Bess may appeal to

A) no court-there is no appeal from a bankruptcy court decision.
B) a federal district court.
C) the U.S. Supreme Court.
D) a state court.

Question 31

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

A) proof of each creditor's claim.
B) a list of creditors and the amount of the debt owed to each.
C) all of his debit and credit cards to be disposed of by the court. d an affidavit testifying to his having read the Bankruptcy Code.

Question 32

Builders Construction files a voluntary petition for bankruptcy. In listing its as?sets, Builders in?tentionally omits certain assets, including plots of undeveloped real estate. After Builders is granted a discharge, Commercial Electric Company, one of Builders' unsecured creditors whose claims were discharged, learns of the fraud. Commercial Electric can

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

Question 33

Fruit & Flowers Mail Order Corporation's creditors agree to a workout with the firm. This is

A) an agreement to pay a debt dischargeable in bankruptcy.
B) an accountant's summary of a debtor's financial situation.
C) a private, negotiated adjustment of creditor-debtor relations.
D) a reorganization of corporate debts and debtors.

Question 34

Roland files a petition in bankruptcy. After all his assets have been sold and the proceeds distributed among his creditors, Roland's remaining debts

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

Question 35

Norma files a petition in bankruptcy. She turns her assets over to O'Brien, who sells them and then distributes the proceeds to Norma's creditors. O'Brien is a

A) preferred creditor.
B) bankruptcy court judge.
C) bankruptcy trustee.
D) debtor.

Question 36

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

A) provide that creditors will continue to lend to insolvent debtors.
B) protect creditor assets from diminution in value.
C) ensure equitable treatment of creditors who are competing for a debtor's assets.
D) make all debtor property available for creditors.

Question 37

Dorothy files a petition for bankruptcy in bankruptcy for relief through an individual's repayment plan. 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 38

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

A) creditors are forced to accept a discharge of a debtor's debts.
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 39

Eduardo is a debtor. Furniture Mart is Eduardo's employer. Guaranty Credit, Inc., and the government are Eduardo's credi?tors. For these parties, a petition in bankruptcy for relief through an individual's repayment plan could be filed by

A) Eduardo alone, Furniture Mart alone, or Guaranty Credit and the government jointly.
B) Eduardo only.
C) Guaranty Credit and the government only.
D) the government only.

Question 40

Chi-Lan files a petition in bankruptcy for relief through an individual's repayment plan. Chi-Lan's plan must provide for

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

Question 41

Federal Bank is a secured party on a $50,000 loan to Gigi, who owns Home HealthCare, an assisted living facility. When Gigi experiences financial difficulty, creditors other than Federal Bank petition her into involuntary bankruptcy. The value of the secured collateral has substantially decreased in value. On its sale, the debt to Federal Bank is reduced to $25,000. Gigi's estate consists of $100,000 in exempt assets and $20,000 in nonexempt assets. After the bankruptcy costs and back wages to Gigi's employees are paid, nothing is left for unsecured creditors. Gigi receives a discharge in bankruptcy. Later she decides to go back into business. By selling a few exempt assets and getting a small loan, she is able to buy Indulgence, a small, profitable nightclub. Gigi goes to Federal Bank for the loan. The bank claims that the balance of its secured debt was not discharged in Gigi's bankruptcy. She signs an agreement to pay Federal Bank the $25,000, and the bank makes a new unsecured loan to her. Is Federal Bank correct that the balance of its secured debt was not discharged in bankruptcy? What is the legal effect of Gigi's agreement to pay the bank $25,000 after the discharge in bankruptcy?