Question 1

One goal of bankruptcy law is to protect a debtor.

Accepted Answer

Bankruptcy laws provide various protections for debtors, including the ability to discharge or restructure their debts and certain exemptions of property from seizure by creditors.

Question 2

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

Accepted Answer

When a petition for bankruptcy is filed, an automatic stay is initiated which stops most creditor actions, including lawsuits, wage garnishments, and collection calls. This gives the debtor a chance to work out a plan to repay their debts. However, there are some types of legal actions that are not subject to the automatic stay, such as certain criminal proceedings and tax audits.

Question 3

A court awards a judgment to Alice,who is the creditor,against Ada,who is the debtor.After the judgment,Alice requests a court order to seize Ada's property to ensure that the judgment will be collectible.This is

Accepted Answer

A writ of execution is a court order directing law enforcement to seize and sell a debtor's property to satisfy a judgment. A judicial lien is a court-ordered claim against a debtor's property that can be used to satisfy a judgment, but it does not involve seizing and selling the property. A writ of attachment is a court order allowing a creditor to seize property in advance of the judgment to ensure that assets are available to satisfy a judgment. Seizing property without a court order would be a violation of most state laws.

Question 4

Friendly Credit Corporation (FCC) believes that Gary may dispose of the assets that FCC expects to receive as payment for Gary's debt before FCC can obtain a judgment.FCC may ask a court to issue a writ of

Accepted Answer

A writ of attachment is a court order that allows a creditor to seize the assets owned by a debtor before obtaining a judgment against the debtor. In this scenario, FCC believes that Gary may dispose of the assets before they can obtain a judgment, so they can ask the court to issue a writ of attachment to prevent Gary from selling or transferring his assets. This will ensure that FCC can recover the payment for Gary's debt. Choice B, C, and D are not applicable in this situation.

Question 5

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

Accepted Answer

This statement is true. It is a basic principle of bankruptcy law that claims within a particular class must be satisfied before moving on to the next class. This ensures that all creditors within a class are treated fairly and equally. Once all claims within a class are satisfied, any remaining funds or assets can be distributed to the next class of creditors.

Question 6

An order for relief in a bankruptcy proceeding amounts to a discharge of the debts of the party petitioning for bankruptcy protection.

Accepted Answer

The answer of An order for relief in a bankruptcy...

Question 7

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

Accepted Answer

The answer of Once a discharge is granted,it may not...

Question 8

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

Accepted Answer

Trustees have the power to avoid sales of the debtor's property if it was made under certain circumstances, such as being a fraudulent transfer or occurring during the preference period.

Question 9

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

Accepted Answer

State law varies on the exact exemptions provided, but it is generally true that state law determines the amount of a debtor's property that is exempt from distribution in bankruptcy. Federal bankruptcy law also includes some exemptions.

Question 10

Concealing assets from a bankruptcy court is a crime.

Accepted Answer

Concealing assets from a bankruptcy court is illegal and can result in serious penalties, including fines and imprisonment. It is important to be truthful and transparent during the bankruptcy process.

Question 11

Ronald's debt to Greg is past due.Ronald obtains a judgment against Greg to collect the debt,but Greg will not pay.Ronald requests a writ of execution.The property that is seized under the writ of execution must be

Accepted Answer

The property seized under a writ of execution must be located within the court's geographic jurisdiction to ensure the court has the authority to enforce the seizure.

Question 12

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

Accepted Answer

The answer of Before filing for bankruptcy,a consumer-debtor must receive...

Question 13

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

Accepted Answer

The answer of A student loan is discharged under Chapter...

Question 14

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

Accepted Answer

According to the Bankruptcy Code, a Chapter 11 reorganization plan must provide for payment of tax claims over a period of five years. This requirement helps ensure that the government receives at least some portion of the taxes owed by the debtor, while also giving the debtor an opportunity to get back on more stable financial footing. Failure to comply with this requirement can result in the plan being rejected by the court, or in other penalties or sanctions for the debtor.

Question 15

Michael contracts with Jill to fix the brakes on her Honda Civic.Jill leaves her car with Michael,but refuses to pay when the work is done.Michael refuses to return the car until she pays.Michael's lien on Jill's car will end

Accepted Answer

Michael's lien on Jill's car will end when he voluntarily surrenders possession of the car, as possession is necessary to maintain a mechanic's lien.

Question 16

Bankruptcy law is state law.

Accepted Answer

Bankruptcy law is actually federal law, governed by the United States Bankruptcy Code. While state laws may apply in certain aspects of bankruptcy cases (such as property exemptions), the primary regulations and procedures are federally controlled.

Question 17

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

Accepted Answer

Child-support debts are considered priority debts and cannot be discharged through bankruptcy. Filing for bankruptcy may provide temporary relief by halting collection efforts, but the debtor is still responsible for paying off the child-support debt in full.

Question 18

Some student loans are dischargeable in a Chapter 7 bankruptcy.

Accepted Answer

While most student loans are not dischargeable in a Chapter 7 bankruptcy, there are certain circumstances in which they can be, such as if the borrower can prove undue hardship.

Question 19

Portia owes Bon $500 on their contract,but refuses to pay.To collect,Bon files a me-chanic's lien,under which security for the debt is repre-sented by

Accepted Answer

A mechanic's lien is typically placed on a property when there is an outstanding debt for services provided or materials supplied by a contractor or subcontractor. In this case, Bon can file a mechanic's lien on Portia's real estate because she owes him money under their contract. This gives Bon security for the debt because if Portia sells the property, the debt must be paid from the proceeds. Personal property (A) may not have enough value to cover the debt, and the contract (D) is not a tangible asset. The $500 owed (C) is already the subject of the lien.

Question 20

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

Accepted Answer

According to the bankruptcy code, a debtor cannot receive a discharge if they have received a discharge in a Chapter 7 case within the past eight years before the current case.

Quiz 20: Creditors Rights and Bankruptcy