Deck 35: Bankruptcy

Question 1

If a trustee is not elected by creditors,an interim trustee will be appointed by the court.

Answer 1

True

Question 2

All debts are discharged in bankruptcy,whether disclosed by the debtor or not.

Answer 2

False

Question 3

In a Chapter 7 bankruptcy,the debtor's nonexempt assets are liquidated to pay debts.

Answer 3

True

Question 4

An involuntary bankruptcy case is commenced by creditors filing a petition with a bankruptcy court.

Question 5

If the debtor is generally not paying debts as they become due,the debtor may be subject to an involuntary bankruptcy petition.

Question 6

Jurisdiction over bankruptcy proceedings is vested in the federal district courts.

Question 7

The filing of a voluntary,but not an involuntary,petition operates as an automatic stay.

Question 8

The trustee may void any fraudulent transfer made by the debtor within two (2)years of bankruptcy when the debtor's actual intent was to hinder,delay,or defraud creditors by engaging in the transfer.

Question 9

The holder of a claim that is the subject of a bona fide dispute may be counted as a petitioning creditor.

Question 10

The filing of an involuntary bankruptcy case petition results in an order of relief.

Question 11

To be set aside as a preference,a transfer must be fraudulent.

Question 12

Nonprofit corporations are exempt from involuntary bankruptcy proceedings.

Question 13

A debtor may recover damages against any creditor who filed a bankruptcy petition in bad faith.

Question 14

A court can dismiss an individual debtor's petition if the debtor does not satisfy the means test.

Question 15

In order to be eligible for Chapter 13 bankruptcy an individual must have less than $1,081,400 in unsecured debt.

Question 16

Bankruptcy law does not regulate the manner in which the assets of the debtor are distributed; instead,distribution of the debtor's assets is solely within the discretion of the trustee.

Question 17

A creditor must only file a proof of claim if the bankruptcy trustee does not know of the existence of the claim.

Question 18

A payment by a debtor in the ordinary course of business,such as the payment of a utility bill,will not be set aside by the bankruptcy trustee.

Question 19

By operation of law,the trustee automatically becomes the owner of all of the debtor's property in excess of the property to which the debtor is entitled under exemption laws.

Question 20

Stockbrokers are eligible to file Chapter 11 bankruptcy.

Question 21

Chapter 7 is:

A)a liquidation proceeding.
B)a reorganization proceeding.
C)an extended time payment plan.
D)always an involuntary proceeding.

Question 22

A transfer of property by the debtor to a creditor may be set aside as a __________ transfer and the property recovered by the debtor's trustee in bankruptcy if (1)the transfer was made to pay a debt incurred at some earlier time; (2)the transfer was made when the debtor was insolvent and within ninety (90)days before the filing of the bankruptcy ; and (3)the transfer resulted in the creditor receiving more than the creditor would have received in a liquidation of the debtor's estate.

A)predetermined
B)preternatural
C)preordained
D)preferential

Question 23

Under the Bankruptcy Reform Act,the allowable homestead exemption for debtors was significantly reduced.

Question 24

A reorganization plan may,in certain instances,provide for the rejection of executory contracts or collective bargaining agreements.

Question 25

Debtor's exemptions are provided under federal law and thus are the same in each state.

Question 26

If there are twelve (12)or more creditors,at least __________ of those creditors whose unsecured and undisputed claims total __________ or more must sign the involuntary petition.

A)one (1); $14,425
B)three (3); $14,425
C)one (1); $15,575
D)three (3); $15,575

Question 27

The status of a trustee in a bankruptcy proceeding is best described as the:

A)prosecutor of the debtor.
B)successor to the debtor.
C)defender of the debtor.
D)protector of the debtor.

Question 28

In a bankruptcy case,after all creditors have been paid,any balance is turned over to the debtor.

Question 29

If an involuntary bankruptcy petition is dismissed other than by consent of all petitioning creditors and the debtor,the court may award which of the following to the debtor?

A)Costs
B)Reasonable attorney fees
C)Damages
D)All of the above

Question 30

Individuals and corporations,but not partnerships,may be reorganized under the Bankruptcy Code.

Question 31

An automatic stay:

A)arises only upon the filing of a voluntary petition.
B)prevents any further interest from accruing on a debtor's outstanding debts.
C)prevents creditors from taking action outside of the bankruptcy proceeding against a debtor.
D)ends if a debtor attempts to incur additional debt after a petition has been filed.

Question 32

Where the debtor has fewer than twelve (12)creditors,how many must sign an involuntary petition?

A)one (1),assuming that the creditor's unsecured claim is at least $14,425
B)one (1),assuming that the creditor's secured claim is at least $15,575
C)three (3),assuming that the creditors' unsecured claims total at least $14,425
D)three (3),assuming that the creditors' secured claims total at least $15,575

Question 33

A voluntary petition in bankruptcy may be filed by a(n):

A)husband and wife.
B)railroad company.
C)insurance company.
D)all of the above.

Question 34

Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,a discharge is available only once every ten (10)years.

Question 35

An involuntary petition in bankruptcy may not be commenced against:

A)a nonprofit corporation.
B)an individual.
C)a for-profit corporation.
D)any of the above.

Question 36

Costs and expenses of administration of the bankruptcy case,including trustee fees are paid before any money is disbursed to secured or unsecured creditors.

Question 37

A discharge releases the debtor from the unpaid balance of most debts including taxes and tax penalties.

Question 38

Creditors who hold security for payment,such as a lien or a mortgage on the debtor's property,are less affected by the debtor's bankruptcy.

Question 39

In approximately 50% of all bankruptcies no unsecured creditors receive any payments.

Question 40

A debtor is presumed to be insolvent on and during what number of days immediately preceding the date of the filing of a bankruptcy petition?

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

Question 41

Peter is employed as a shop electrician for ABC,Inc.Peter has a car being repaired and a home on which he is paying mortgage payments.Peter is contemplating filing for bankruptcy,but he is not sure which type of petition to file.Peter also wonders whether the auto repair costs and the mortgage payments are dischargeable.Which bankruptcy filing is most appropriate for Peter? Are Peter's debts dischargeable?

Question 42

Arthur was involuntarily petitioned into bankruptcy by three of his creditors.When the trustee reviewed Arthur's books and records,the trustee discovered the following transactions: (a)Three weeks before the filing of the petition,Arthur paid cash for $17,000 worth of inventory for his store; and (b)Twelve days before the filing of the petition,Arthur paid $300 in full satisfaction of his store's most recent electric bill.
The trustee is considering attempting to set aside both of these transfers as preferential transfers.Discuss the advisability of the trustee's attempt to set aside these transfers.

Question 43

Which of the following debts is not dischargeable in bankruptcy?

A)judgments based on negligence
B)judgments based on breach of contract
C)judgments for willful and malicious injuries
D)judgments in which the creditors would receive no distribution

Question 44

The debtor will be denied a discharge if:

A)the debtor had been extravagant.
B)the debtor incurred debts because of negligence.
C)the debtor received a discharge ten (10)years previously.
D)the debtor refused to obey a lawful order of the court.

Question 45

Which of the following is a correct legal conclusion regarding reorganization bankruptcy?

A)Individuals,partnerships,and corporations in business may be reorganized.
B)A plan for reorganization may be filed only by a committee of creditors.
C)When a reorganization plan is confirmed by the court,the creditors can revert back to their original position if they are not satisfied with the plan.
D)Individuals within a particular class of creditors can be treated differently if they object to the reorganization plan.

Question 46

An extended time payment plan:

A)does not provide for a discharge of the debtor.
B)provides for a discharge of the debtor.
C)does not require creditors holding the same type or class of claim to be treated the same way.
D)will not allow the debtor to pay the debts in installments if the debtor's creditors had not originally agreed to such installments.

Question 47

In a Chapter 11 rehabilitation plan,the debtor:

A)keeps all of the assets (both exempt and nonexempt).
B)remains in business.
C)makes a settlement that is acceptable to the majority of the creditors.
D)all of the above.

Question 48

The creditors of Sara Delano have petitioned for involuntary bankruptcy proceedings against her.Delano has been consistently late in paying her obligations for the past year.Two months before the petition was filed,a custodian was appointed to protect Delano's property.In her statement contesting the bankruptcy petition,Delano pointed out that she had dealt in good faith and could not be shown to be guilty of any act of misconduct.In addition,she cited her willingness to allow a custodian to be appointed as an indication of her intention to avoid bankruptcy and honor her obligations.Can she prevail?

Question 49

Under the 2005 reforms:

A)it is easier for creditors to show they did not receive a voidable preference.
B)nonconsumer debt payments of less than $7,500 are not subject to the voidable preference standards .
C)both a.and b.
D)none of the above.

Question 50

With regard to priority of claims in the payment of unsecured debts,which of the following has priority over alimony and child support obligations?

A)costs and expenses of the administration of the bankruptcy case.
B)claims arising in the ordinary course of the debtor's business after commencement of the case
C)claims for wages,salaries or commissions earned within 180 days before the filing of the petition
D)none of the above

Question 51

Which of the following is a preferential transfer?

A)a transaction for present consideration
B)a payment in the ordinary course of business
C)both a.and b.are preferential transfers
D)neither a.nor b.are preferential transfers

Question 52

A discharge does not release a person from a consumer debt to a single creditor totaling more than $5,775 for luxury goods or services if the debt was incurred within how many days of the order for relief?

A)90
B)120
C)180
D)365

Question 53

Claims for wages,salaries,or commissions have priority in the payment of unsecured debts over:

A)costs and expenses of the administration of the bankruptcy case.
B)claims arising in the ordinary course of business after commencement of the case.
C)claims arising for contributions to employee benefit plans.
D)all of the above.