Deck 32: Bankruptcy and Reorganization

Question 1

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 included only minor changes to bankruptcy law.

Answer 1

False

Question 2

In a Chapter 7 proceeding, a bankruptcy trustee may at times take over a debtor's business.

Answer 2

True

Question 3

One of the requirements before a collective bargaining agreement can be rejected under Chapter 11 is that the debtor has first presented to the employee's representative the proposed changes to the collective bargaining agreement, and the employees reject the changes without good cause.

Answer 3

True

Question 4

Which of the following titles of the United States Code contains the Bankruptcy Code?

A) Title 9
B) Title 11
C) Title 7
D) Title 15
E) Title 34

Question 5

Which of the following chapters is used as a reorganization of the debtor's financial affairs under supervision of the bankruptcy court?

A) Chapter 7
B) Chapter 9
C) Chapter 11
D) Chapter 14
E) Chapter 15

Question 6

In which of the following did Congress make comprehensive changes to bankruptcy law?

A) The Bankruptcy Trust, Reconciliation, and Remedial Amendments of 2000
B) The Bankruptcy Fraud Protection Act of 2007
C) The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
D) The Bankruptcy Fraud and Consumer Shield Act of 2006
E) The Insolvency Protection Amendments of 2006

Question 7

A debtor must be insolvent to file a voluntary petition for bankruptcy under Chapter 7.

Question 8

Under Chapter 7, liquidation may be voluntary but not involuntary.

Question 9

Which of the following did the court determine in In re Holsinger, the case in the text in which the debtor requested a waiver of debt-counseling under the Bankruptcy Abuse Prevention and Consumer Protection Act?

A) That imminent foreclosure of real property and resultant eviction qualified as exigent circumstances entitling the debtor to a waiver of the debt-counseling requirement.
B) That credit-counseling may be waived when the debtor establishes that work obligations prevent attendance at any counseling session within 20 miles.
C) That credit-counseling may be waived when the debtor establishes that work obligations prevent attendance at any counseling session within 50 miles.
D) That credit-counseling is in effect optional and may be waived when the debtor establishes that attendance would create a hardship, for example, in regard to family matters.
E) That even imminent foreclosure of real property does not entitle a debtor to waiver when other requirements in relation to debt counseling remain unsatisfied.

Question 10

Which of the following chapters is used for a sale of a debtor's assets by a trustee and the distribution of money to creditors?

A) Chapter 7
B) Chapter 9
C) Chapter 11
D) Chapter 13
E) Chapter 15

Question 11

Retirement funds in an IRA are not exempt in a Chapter 7 bankruptcy proceeding.

Question 12

Which of the following is true regarding the law that is relevant to bankruptcy claims?

A) Only federal statutory law is relevant.
B) Only state statutory law is relevant.
C) While bankruptcy law is state law, federal law applies to bankruptcy cases in the sense that federal laws regarding debtor's property and creditor claims may apply.
D) While bankruptcy law is federal law, state law applies to bankruptcy cases in the sense that state laws regarding debtor's property and creditor claims may apply.
E) Only federal common law is relevant to bankruptcy claims.

Question 13

If a debtor fails to appear at the Chapter 7 creditors' meeting, the court may refuse to grant the bankruptcy.

Question 14

Some debts that are dischargeable under Chapter 13 are not dischargeable under Chapter 7.

Question 15

Congress first addressed bankruptcy relief in the ____.

A) Bankruptcy Act of 1898
B) Insolvency Act of 1900
C) Protection Act of 1934
D) Bankruptcy Act of 1934
E) Securities Act of 1934

Question 16

Assets that a debtor gains after filing a voluntary Chapter 7 bankruptcy petition are generally not part of the bankruptcy estate unless they fall under an exemption.

Question 17

Which of the following chapters recognizes insolvency proceedings pending in a foreign country and relief for foreign debtors?

A) Chapter 7
B) Chapter 9
C) Chapter 11
D) Chapter 14
E) Chapter 15

Question 18

Chapter 11 reorganization may be involuntary but not voluntary.

Question 19

Which of the following is a term used in bankruptcy for debtors who cannot pay their debts in a timely fashion?

A) Statutory debtors
B) Insolvent debtors
C) Failed transactors
D) Foreclosed debtors
E) Acknowledged transactors

Question 20

Before a debtor files for one specific type of relief, the clerk of courts must give the debtor written notice of the other types of relief available.

Question 21

Under which of the following may a court presume that an individual is abusing the bankruptcy provisions of Chapter 7 when an individual's debt is primarily consumer debt and the individual's income is above the median income in his or her state?

A) The means test
B) The assets test
C) The median test
D) The liquidation test
E) The bankruptcy test

Question 22

Who calls the creditors' meeting in a Chapter 7 proceeding?

A) The trustee
B) The interim trustee
C) The bankruptcy judge
D) The district court judge
E) At least three of the creditors

Question 23

Which of the following is considered a debtor eligible for Chapter 7 relief in bankruptcy?

A) Banks
B) Railroads
C) Health maintenance organizations
D) Partnerships
E) Insurance companies

Question 24

Which of the following is called straight bankruptcy?

A) Liquidation
B) Reorganization
C) Reformation
D) Acknowledgment
E) Avoidance

Question 25

Which of the following is a meeting of all creditors listed in the Chapter 7 required schedules for liquidation?

A) A debt meeting
B) A control meeting
C) A creditors' meeting
D) An enforcement meeting
E) A counseling meeting

Question 26

Which of the following, if any, is a moratorium for almost all creditor litigation against a debtor in a Chapter 7 bankruptcy?

A) A stop order
B) An automatic stay
C) A semi-automatic dismissal
D) A semi-discharge
E) There is no such moratorium in a Chapter 7 proceeding

Question 27

Which of the following is false regarding rights of a trustee in a Chapter 7 bankruptcy?

A) The trustee takes possession of the debtor's property and has it appraised.
B) If someone else holds the debtor's property, the trustee has the power to require the person to return that properly.
C) The trustee examines the debtor's records but may not even temporarily take over the debtor's business.
D) The trustee can initiate collection actions but must also defend against creditor actions.
E) The trustee separates the exempt property from the nonexempt property and sells the nonexempt property.

Question 28

Which of the following is an individual who takes over administration of the debtor's estate?

A) Administrator
B) Aligner
C) Organizer
D) Reformer
E) Trustee

Question 29

Which of the following is false regarding provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005?

A) Under the act, an individual may not generally be considered a debtor unless within 180 days prior to filing, the debtor receives credit counseling from a nonprofit budget and credit counseling agency.
B) Under the act, if an individual was a debtor in a bankruptcy case that was dismissed within 180 days of the current case, the individual is generally not eligible to be a debtor under Chapters 7, 11, or 13.
C) Under the act, if a previous bankruptcy was completed rather than dismissed, the individual is generally permitted to file for bankruptcy again.
D) Under the act if a party completes a Chapter 7 bankruptcy, the party is not permitted to seek a Chapter 7 bankruptcy again for eight years.
E) Under the act if a party has at least $10,000 in assets, the party may not file for any type of bankruptcy protection.

Question 30

Once a voluntary liquidation proceeding under Chapter 7 is filed, the debtor's prepetition assets form the ____.

A) Corpus
B) Remainder
C) Residual estate
D) Bankruptcy estate
E) Relinquished asset pool

Question 31

Which of the following is false regarding bankruptcy cases?

A) The Bankruptcy Rules set forth procedures for bankruptcy cases.
B) Bankruptcy cases are referred to bankruptcy judges, under the authority of the district courts.
C) An appeal of a bankruptcy ruling goes to the district court judge.
D) A jury is not allowed in a bankruptcy proceeding.
E) Bankruptcy cases are filed in federal district courts.

Question 32

Which of the following is true regarding the effect of an automatic stay on claims of secured creditors in a Chapter 7 proceeding?

A) The stay affects claims of secured creditors in the same way in which it affects claims of unsecured creditors.
B) Secured creditors with claims of over $5,000 are not affected by the stay.
C) Secured creditors with claims of over $15,000 are not affected by the stay.
D) Secured creditors with claims of over $20,000 are not affected by the stay.
E) The court may exclude secured creditors from the stay if they petition the court to show that they do not have adequate protection under the stay.

Question 33

For how many days prior to the filing of a Chapter 7 bankruptcy petition is a debtor assumed insolvent?

A) 120
B) 60
C) 90
D) 45
E) 30

Question 34

How is a determination made regarding the identity of the trustee in a Chapter 7 proceeding?

A) The bankruptcy judge appoints the trustee.
B) The district court judge appoints the trustee.
C) The court clerk appoints the trustee.
D) The debtor appoints the trustee.
E) The creditors elect the trustee.

Question 35

Which of the following is false regarding actions that may be taken while an automatic stay is in effect in a Chapter 7 proceeding?

A) Creditors cannot attempt to repossess property during bankruptcy proceedings.
B) A creditor who received a judgment against a debtor prior to the bankruptcy filing may not act to enforce the judgment.
C) Legal actions to collect child support payments are subject to the stay.
D) The court may exclude secured creditors from the stay if they petition the court to show that they do not have adequate protection under the stay.
E) If the debtor was a debtor in a bankruptcy case that was dismissed within a year of the current bankruptcy case filing, the stay automatically terminates 30 days after the current filing.

Question 36

Which of the following occurs when a debtor turns over all assets to a trustee?

A) Liquidation
B) Reorganization
C) Reformation
D) Acknowledgment
E) Avoidance

Question 37

Which of the following is false regarding bankruptcy proceedings in Spain?

A) In order to be effective, an arrangement representing a proposed settlement between the debtor and creditors must be approved by creditors representing at least 20 percent of the debtor's liabilities and by the judge.
B) A failure to obtain the necessary approval of a proposed settlement between the debtor and creditors may result in the debtor's liquidation.
C) Bankruptcy proceedings start with a finding of insolvency.
D) Insolvency means that the business has failed to meet at least some financial obligations for at least six months.
E) The bankruptcy filing may be done voluntarily by the debtor company, or it may be done involuntarily by the debtor's creditors in an enforced bankruptcy.

Question 38

Which of the following is a payment made by an insolvent debtor that gives preferential treatment to one creditor over another?

A) An unfair payment
B) An unequal payment
C) A preferential payment
D) An unendorsed payment
E) An unapproved payment

Question 39

By filing a[n] ______ petition under Chapter 7, creditors can attempt to force a debtor into bankruptcy.

A) Voluntary
B) Involuntary
C) Complaint
D) Accusatory
E) Dispute

Question 40

Which of the following means that bankruptcy relief is ordered and that the bankruptcy proceedings can continue?

A) An order of relief
B) A stay enforcement order
C) An approval order
D) A liquidation order
E) A documentation order

Question 41

"Friends and Family." Mindy was very close to her family and friends. She also liked to spend and had a large amount of consumer debt for items such as jewelry, clothing, a personal watercraft, and a new car. Mindy was having problems making her credit card payments as they became due. She, however, wanted to make every effort to pay her debts. She had borrowed money from her mother for some jewelry and repaid that loan on January 1st. She repaid a loan to her business partner on May 15th of the same year. On September 1st of that year, she also repaid a loan to Friendly Jewelry Store because she wanted to remain on good terms with the manager. Unfortunately, Mindy was simply unable to continue making payments and on November 1st of that year, she filed a voluntary petition for bankruptcy relief under Chapter 7.

-Assuming the business partner received more than would have been received through bankruptcy proceedings, which of the following is the most likely result of a claim of preferential payment based on the payment to the business partner?

A) The payment was not preferential because it was made over 90 days before the filing of the bankruptcy petition.
B) The payment was not preferential because it was made over 120 days before the filing of the bankruptcy petition.
C) The payment was not preferential because it was made over 180 days before the filing of the bankruptcy petition.
D) The payment was preferential because it was made to a business partner and made within two years of the filing of the bankruptcy petition unless Mindy can establish that she was not insolvent when the payment was made.
E) The payment was preferential on the basis that it was made to a business partner within two years of the filing of the bankruptcy petition only if the trustee is able to demonstrate that Mindy was insolvent when she made the payment.

Question 42

Which of the following was the result in Margaret Kawaauhau v. Paul W. Geiger, the case in the text in which the plaintiff claimed that the defending doctor, who had no malpractice insurance, could not discharge in bankruptcy a judgment for malpractice on the basis that he deliberately chose less effective treatment to cut costs while knowing that he was providing substandard care.

A) That the defendant could not discharge the judgment because he was negligent.
B) That the defendant could not discharge the judgment because he was reckless.
C) That as a matter of public policy, the defendant could not discharge the judgment because he failed to carry malpractice insurance.
D) That the defendant could discharge the judgment because as a matter of public policy, all malpractice judgments may be discharged.
E) That the defendant could discharge the judgment because he did not intend to cause injury.

Question 43

"Exemptions." Sidney is injured in an automobile accident and cannot work. She cannot pay her bills and files for bankruptcy relief under Chapter 7. Federal exemptions apply, and she lists as exempt $25,000 in equity in her residence; interest in a vehicle of $2,000; interest in jewelry of $400; and retirement funds in her individual retirement account. Her creditors filed an objection to all claimed exemptions except for the home equity claim.

-What is the status of the exemption she claimed for individual retirement account funds?

A) She will not be able to claim that exemption.
B) The status of the exemption is unclear without further information regarding beneficiaries of the IRA.
C) She will be able to claim that exemption.
D) She will be able to claim that exemption but only up to $50,000.
E) She will be able to claim that exemption but only up to $25,000.

Question 44

Which of the following provides for adjustment of debts of family farmers?

A) Chapter 6
B) Chapter 8
C) Chapter 10
D) Chapter 12
E) Chapter 20

Question 45

"Consumer Debt." Mona had not been keeping up with her spending and bought several expensive items. She had numerous credit cards and some unsecured loans. She had a total of 14 creditors. All her debt was consumer debt, and Mona really wished that she had not put all those new clothes on her credit card. Although Mona was struggling, she did not want to file for bankruptcy because she did not want a bad credit score. Three of her credit card companies, however, who had unsecured claims against her totaling $14,500, signed and filed an involuntary bankruptcy petition against her under Chapter 7. Mona is unsure about how to proceed. While she is several months behind on a number of payments, including alimony payments she believes were unfairly awarded to her ex-husband, she does not particularly want to go bankrupt. She believe that the creditors have been unfair in not allowing her additional time in which to pay. On the other hand, she would really like to be rid of her excessive debt and stop collection efforts on the part of her ex-husband.

-Which of the following is true regarding the claims of Mona's ex-husband for alimony?

A) Any efforts to collect on the past due alimony are stayed by the bankruptcy proceeding, and the claim for alimony is subject to discharge.
B) Any effort to collect on the past due alimony are stayed by the bankruptcy proceeding, but alimony payments are nondischargeable.
C) Efforts to collect on past due alimony payments accrued prior to the filing of the bankruptcy petition are stayed, but efforts to collect on alimony payments accruing after the filing of the bankruptcy petition are not stayed; and alimony payments are nondischargeable.
D) Efforts to collect on past due alimony payments accrued only after the filing of the bankruptcy petition are stayed, but efforts to collect on alimony payments accrued before the filing of the bankruptcy petition are not stayed; and alimony payments are nondischargeable.
E) Legal action to collect alimony is not subject to the stay, and alimony payments are nondischargeable.

Question 46

"Exemptions." Sidney is injured in an automobile accident and cannot work. She cannot pay her bills and files for bankruptcy relief under Chapter 7. Federal exemptions apply, and she lists as exempt $25,000 in equity in her residence; interest in a vehicle of $2,000; interest in jewelry of $400; and retirement funds in her individual retirement account. Her creditors filed an objection to all claimed exemptions except for the home equity claim.

-What is the status of the exemptions she claimed in the car and jewelry?

A) Both exemptions will likely be granted because their type and value are within allowable federal exemptions.
B) The exemption claimed for the jewelry will likely be granted; but in order to ascertain the status of the vehicle, further information is needed in regard to whether it is used in business.
C) The exemption claimed for the vehicle will likely be granted, but the exemption claimed for the jewelry will likely be disallowed because no exemption may be claimed for jewelry.
D) The exemption claimed for the vehicle will likely be granted, but the exemption claimed for the jewelry will likely be disallowed because a federal exemption may only be claimed for jewelry consisting of a wedding band worth less than $400.
E) The exemption claimed or the jewelry will likely be allowed, but the exemption claimed for the vehicle will likely be denied because the federal exemption for a vehicle is limited to $1,000.

Question 47

"Consumer Debt." Mona had not been keeping up with her spending and bought several expensive items. She had numerous credit cards and some unsecured loans. She had a total of 14 creditors. All her debt was consumer debt, and Mona really wished that she had not put all those new clothes on her credit card. Although Mona was struggling, she did not want to file for bankruptcy because she did not want a bad credit score. Three of her credit card companies, however, who had unsecured claims against her totaling $14,500, signed and filed an involuntary bankruptcy petition against her under Chapter 7. Mona is unsure about how to proceed. While she is several months behind on a number of payments, including alimony payments she believes were unfairly awarded to her ex-husband, she does not particularly want to go bankrupt. She believe that the creditors have been unfair in not allowing her additional time in which to pay. On the other hand, she would really like to be rid of her excessive debt and stop collection efforts on the part of her ex-husband.

-If Mona convinces the judge that the creditors have filed the involuntary bankruptcy frivolously, which of the following is true regarding what amounts, if any, the court may force the creditors to pay?

A) The court may award attorney costs, fees of the debtor, and punitive damages.
B) The court may award attorney costs and fees of the debtor, but not punitive damages.
C) The court may award fees of the debtor, but not attorney costs or punitive damages.
D) The court may award punitive damages, but not attorney costs or fees of the debtor.
E) The judge may dismiss the involuntary bankruptcy petition, but no other relief is available.

Question 48

Which of the following is false regarding nondischargeable debts under a Chapter 7 bankruptcy filing?

A) Nondischargeable debts include claims of willful or malicious conduct by the debtor that caused injury to another person or property.
B) Nondischargeable debts include specific student loans, unless payment of the loans imposes undue hardship on the debtor.
C) Nondischargeable debts include debts not discharged in previous bankruptcies.
D) Nondischargeable debts include judgments against a debtor for claims resulting from the debtor's drinking and driving.
E) Nondischargeable debts include claims for back taxes or government fines within four years of filing for bankruptcy.

Question 49

Which of the following is true regarding who may receive a discharge of debt under Chapter 7 of the bankruptcy code?

A) Individuals, partnerships, and corporations may all receive a discharge.
B) Partnerships and individuals may receive a discharge, but corporations may not.
C) Corporations and individuals may receive a discharge, but partnerships may not.
D) Individuals may receive a discharge, but partnerships and corporations may not.
E) Corporations may receive a discharge, but individuals and partnerships may not.

Question 50

"Consumer Debt." Mona had not been keeping up with her spending and bought several expensive items. She had numerous credit cards and some unsecured loans. She had a total of 14 creditors. All her debt was consumer debt, and Mona really wished that she had not put all those new clothes on her credit card. Although Mona was struggling, she did not want to file for bankruptcy because she did not want a bad credit score. Three of her credit card companies, however, who had unsecured claims against her totaling $14,500, signed and filed an involuntary bankruptcy petition against her under Chapter 7. Mona is unsure about how to proceed. While she is several months behind on a number of payments, including alimony payments she believes were unfairly awarded to her ex-husband, she does not particularly want to go bankrupt. She believe that the creditors have been unfair in not allowing her additional time in which to pay. On the other hand, she would really like to be rid of her excessive debt and stop collection efforts on the part of her ex-husband.

-Which of the following is true regarding the involuntary petition for bankruptcy filed by some of Mona's creditors?

A) Involuntary petitions are not allowed under Chapter 7.
B) At least 5 creditors must file in order for an involuntary petition to be accepted; therefore, the involuntary petition will be dismissed in Mona's case.
C) Only 3 creditors may file an involuntary petition, but their aggregate claims must be $20,100; therefore, the petition will be dismissed in Mona's case.
D) The petition was properly filed because 3 or more creditors with unsecured claims totaling $14,425 or more signed the petition for involuntary bankruptcy.
E) The petition was properly filed because only 2 or more creditors with secured or unsecured claims totaling at least $10,500 must sign a petition for involuntary bankruptcy.

Question 51

"Consumer Debt." Mona had not been keeping up with her spending and bought several expensive items. She had numerous credit cards and some unsecured loans. She had a total of 14 creditors. All her debt was consumer debt, and Mona really wished that she had not put all those new clothes on her credit card. Although Mona was struggling, she did not want to file for bankruptcy because she did not want a bad credit score. Three of her credit card companies, however, who had unsecured claims against her totaling $14,500, signed and filed an involuntary bankruptcy petition against her under Chapter 7. Mona is unsure about how to proceed. While she is several months behind on a number of payments, including alimony payments she believes were unfairly awarded to her ex-husband, she does not particularly want to go bankrupt. She believe that the creditors have been unfair in not allowing her additional time in which to pay. On the other hand, she would really like to be rid of her excessive debt and stop collection efforts on the part of her ex-husband.

-Assuming that Mona does not object to the bankruptcy proceeding, what is the next step that should occur?

A) The court should appoint a temporary trustee.
B) The court should appoint a trustee.
C) The court should enter an order of relief.
D) The court should hold a creditor's meeting.
E) The court should determine if any claims have priority.

Question 52

Which of the following is false regarding Chapter 12 of the bankruptcy code?

A) A family farmer under Chapter 12 must have regular annual income.
B) The family farmer's gross income must be at least 50 percent farm-dependent.
C) At least 50 percent of the family farmer's debt must be farm-related.
D) The debt must be under a certain debt cap.
E) Congress modeled Chapter 12 after Chapter 7 relief.

Question 53

Which of the following is false regarding Chapter 13 of the bankruptcy code?

A) Chapter 13 permits individuals with regular income to pay their debts to creditors in installment plans under the supervision of the court.
B) Any debtor who files under Chapter 13 could also have filed under Chapter 11.
C) Chapter 13 repayment plans are usually simpler and less expensive than Chapter 11 plans.
D) By statute Chapter 13 plans last between 36 and 60 months.
E) Individuals, partnerships, and corporations may file for a Chapter 13 repayment plan.

Question 54

"Exemptions." Sidney is injured in an automobile accident and cannot work. She cannot pay her bills and files for bankruptcy relief under Chapter 7. Federal exemptions apply, and she lists as exempt $25,000 in equity in her residence; interest in a vehicle of $2,000; interest in jewelry of $400; and retirement funds in her individual retirement account. Her creditors filed an objection to all claimed exemptions except for the home equity claim.

-Once the petition is filed, which of the following forms Sidney's bankruptcy estate?

A) All her prepetition assets.
B) The exempt assets only.
C) The nonexempt assets only.
D) The personal goods only.
E) The real estate only.

Question 55

Which of the following is an agreement by which the debtor agrees to pay a debt even though it could be discharged?

A) A settlement
B) A reaffirmation agreement
C) An acknowledgement agreement
D) An accord and compromise
E) An affirmance

Question 56

Which of the following is true regarding the number of creditors who must vote to accept a reorganization plan under a Chapter 11 proceeding?

A) For the plan to be accepted, one-third of the class of unsecured creditors must vote to approve it.
B) For the plan to be accepted, one-half of the class of secured creditors must vote to approve it.
C) For the plan to be accepted, two-thirds of the creditors of each class of creditors must vote to approve it.
D) For the plan to be accepted, three-fourth of the creditors of each class of creditors must vote to approve it.
E) For the plan to be accepted, one-fourth of the class of unsecured creditors must vote to approve it.

Question 57

"Exemptions." Sidney is injured in an automobile accident and cannot work. She cannot pay her bills and files for bankruptcy relief under Chapter 7. Federal exemptions apply, and she lists as exempt $25,000 in equity in her residence; interest in a vehicle of $2,000; interest in jewelry of $400; and retirement funds in her individual retirement account. Her creditors filed an objection to all claimed exemptions except for the home equity claim.

-What is the status of the exemption she claimed on the residence?

A) It will likely be allowed because the value claimed is within the federal exemption allowed.
B) It will likely be allowed because although it is more than the federal exemption, no creditor filed an objection to it.
C) It will likely be disallowed because the federal limit for an exemption for a residence is $10,000.
D) It will likely be disallowed because the federal limit for an exemption for a residence is $5,000.
E) The status of the exemption is unclear without further information regarding the resale value of the home.

Question 58

A[n] ______ is a written federal court order signed by a bankruptcy judge stating that the debtor is immune from creditor actions to collect debts.

A) Discharge
B) Release
C) Grant of immunity
D) Relinquishment
E) Abandonment

Question 59

Which of the following are permitted to file under Chapter 11 reorganization?

A) Stockbrokers
B) Commodities brokers
C) Banks
D) Savings and loan companies
E) Corporate debtors

Question 60

"Friends and Family." Mindy was very close to her family and friends. She also liked to spend and had a large amount of consumer debt for items such as jewelry, clothing, a personal watercraft, and a new car. Mindy was having problems making her credit card payments as they became due. She, however, wanted to make every effort to pay her debts. She had borrowed money from her mother for some jewelry and repaid that loan on January 1st. She repaid a loan to her business partner on May 15th of the same year. On September 1st of that year, she also repaid a loan to Friendly Jewelry Store because she wanted to remain on good terms with the manager. Unfortunately, Mindy was simply unable to continue making payments and on November 1st of that year, she filed a voluntary petition for bankruptcy relief under Chapter 7.

-Assuming Mindy's mother received more than would have been received through bankruptcy proceedings, which of the following is the most likely result of a claim of preferential payment based upon the payment to the mother?

A) The payment was not preferential because it was made over 90 days before the filing of the bankruptcy petition.
B) The payment was not preferential because it was made over 120 days before the filing of the bankruptcy petition.
C) The payment was not preferential because it was made over 180 days before the filing of the bankruptcy petition.
D) The payment was preferential because it was made to a family member and made within two years of the filing of the bankruptcy petition unless Mindy can establish that she was not insolvent when she made the payment.
E) The payment was preferential on the basis that it was made to a family member within two years of the filing of the bankruptcy petition only if the trustee is able to demonstrate that Mindy was insolvent when she made the payment.

Question 61

Denise, who has several credit cards and lots of unsecured debt, cannot make her payments but does not want to file for bankruptcy protection. She knows that you are taking business law and asks you whether she can be forced into Chapter 7 bankruptcy and, if so, under what circumstances. What would you tell her?

Question 62

Set forth the reasons cited for the comprehensive changes to bankruptcy law included in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Question 63

Set forth the set of procedures that must be taken in every bankruptcy case.

Question 64

Set forth the first four classes of priority claims among unsecured creditors in a Chapter 7 bankruptcy case in order of priority.

Question 65

Which of the following behavior may cause a court to not discharge a debt in a Chapter 7 bankruptcy proceeding?

Question 66

"Friends and Family." Mindy was very close to her family and friends. She also liked to spend and had a large amount of consumer debt for items such as jewelry, clothing, a personal watercraft, and a new car. Mindy was having problems making her credit card payments as they became due. She, however, wanted to make every effort to pay her debts. She had borrowed money from her mother for some jewelry and repaid that loan on January 1st. She repaid a loan to her business partner on May 15th of the same year. On September 1st of that year, she also repaid a loan to Friendly Jewelry Store because she wanted to remain on good terms with the manager. Unfortunately, Mindy was simply unable to continue making payments and on November 1st of that year, she filed a voluntary petition for bankruptcy relief under Chapter 7.

-Which of the following is the most likely result of a claim of preferential payment based on the payment to the jewelry store?

A) The payment was not preferential because it was for a consumer good and was not made within 30 days of the filing of the bankruptcy petition.
B) The payment is presumed preferential on the basis that it was made within 90 days of the filing of the bankruptcy petition only if the trustee is able to establish that the jewelry store received more through the transfer than the jewelry store would have received through bankruptcy proceedings.
C) The payment is presumed preferential on the basis that it was made within 90 days of the filing of the bankruptcy petition only if the trustee is able to establish Mindy's insolvency at the time and that the jewelry store received more through the transfer than the jewelry store would have received through bankruptcy proceedings.
D) Because it was for a consumer good, the payment was not preferential unless the bankruptcy trustee can prove intent to defraud.
E) The payment was preferential because it was made within 90 days of the filing of the bankruptcy petition.

Question 67

What are the two general goals of bankruptcy laws as set forth in the text?