Question 1

Kipper files a petition in bankruptcy.Kipper's dischargeable debts include

Accepted Answer

Dischargeable debts in bankruptcy include unsecured credit-card debt, while domestic-support obligations, student loans (unless the lender would suffer undue hardship), and unpaid state and federal taxes are generally not dischargeable.

Question 2

To adjust debt and institute a repayment plan,Norman,a family fisherman,may file a petition in bankruptcy for relief under the Bankruptcy Code's Chapter

Accepted Answer

Chapter 12 of the Bankruptcy Code is specifically designed for family farmers and family fishermen to adjust debts and create a repayment plan.

Question 3

Ronaldo agrees to pay Simplex Cash Store a debt that is otherwise dis?chargeable in bankruptcy.This is

Accepted Answer

A reaffirmation agreement is a voluntary agreement made by a debtor to repay a dischargeable debt that would otherwise be eliminated in bankruptcy. Ronaldo agreeing to pay Simplex Cash Store a debt that is otherwise dischargeable in bankruptcy is an example of a reaffirmation agreement.

Question 4

Reconstruction Building Services 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.Reconstruction's dis?charge will

Accepted Answer

A discharge in bankruptcy prohibits actions and voids judgments regarding overdue debts, even if some creditors hold judgments or have filed actions before the bankruptcy. It does not absolve liability of co-debtors, permit the debtor to enter into reaffirmation agreements, or allow the debtor to file a petition for reorganization.

Question 5

Verna files a petition in bankruptcy in a liquidation proceeding.If the court administers the means test and concludes that Verna is abusing the bankruptcy process by filing for a liquidation,the court will most likely

Accepted Answer

If the court determines that Verna is abusing the bankruptcy process by filing for liquidation, they may force her to file for relief through an individual repayment plan instead. This is because liquidation bankruptcy is intended for those who are unable to repay their debts, and the means test is used to determine if the filer has the ability to repay some or all of their debt through a repayment plan. If the court finds that Verna does have the ability to repay her debts through a repayment plan, it would be considered an abuse of the system to file for liquidation.

Question 6

Wilbur files a petition in bankruptcy for relief through an individual's repayment plan.Wilbur is granted a discharge.Debts that will not be discharged include claims for

Accepted Answer

Fraudulently incurred debt is not dischargeable in bankruptcy, meaning Wilbur will still be responsible for paying it back even after the discharge.

Question 7

To adjust debt and institute a repayment plan,Charlie-who is not a corpo?ration,a partnership,or a family farmer or fisherman-may file a peti?tion in bankruptcy for relief through

Accepted Answer

Since Charlie is not a corporation, partnership, family farmer, or fisherman, he may file for bankruptcy relief through a repayment plan. This option allows for the adjustment of debts and a structured plan for repayment that is manageable for the debtor. Liquidation and reorganization are not applicable in this scenario. A family-farmer bankruptcy plan is also not relevant since Charlie is not a family farmer.

Question 8

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

Accepted Answer

According to the US Bankruptcy Code, debtors must complete a credit counseling briefing within 180 days before filing for bankruptcy. Kenyon must include a certificate proving attendance at a credit-counseling briefing with the petition.

Question 9

Teona files a vol?untary petition in bankruptcy for relief through a liquidation.Debts that will not be discharged include claims for

Accepted Answer

Domestic-support obligations, such as child support or spousal support, are not dischargeable in bankruptcy.

Answer: C 
 Debts for contributions to employee benefit plans are not dischargeable in bankruptcy.

Answer: B and D 
 Money to be paid for goods not delivered and long overdue credit-card debt can be discharged in bankruptcy.

Question 10

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

Accepted Answer

The order for relief in a voluntary bankruptcy case becomes effective as soon as the debtor files the petition. The other options are not required for the order for relief to become effective.

Question 11

A petition for a discharge in bankruptcy in a liquidation proceeding may be filed by

Accepted Answer

Only individuals, such as Henry, can file for a discharge in bankruptcy in a liquidation proceeding. Corporations and other entities like credit unions, savings & loan associations, and insurance companies cannot receive a discharge in bankruptcy.

Question 12

Hasty Pastries declares bankruptcy,idling Hasty's delivery vehicles.The court can compel Hasty to make periodic cash payments to a credi?tor with a se?cured interest in the vehicles to offset the depreciation in their value.This is

Accepted Answer

The scenario reflects the adequate protection doctrine, wherein the court can order the debtor to make cash payments to a creditor with a secured interest in the assets to compensate for the depreciation in the value of the collateral they hold. The purpose is to ensure that the creditor's interest remains adequately protected during the bankruptcy process. The avoidance doctrine pertains to the court's power to undo certain transactions that occurred before the bankruptcy filing. Preferential transfer refers to the debtor's favoring one creditor over others before filing for bankruptcy, while the automatic stay is a broad injunction that halts all collection activities against a debtor's assets once bankruptcy is filed.

Question 13

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

Accepted Answer

Bankruptcy cases are handled by federal bankruptcy courts under the jurisdiction of the United States District Courts. Therefore, the initial proceeding on Bernice's petition will be in a federal bankruptcy court.

Question 14

Fact Pattern 30-1A (Questions A8-A9 apply)
Stacy sells her all-terrain vehicle (ATV)to her brother Terrill for $1,000.Twelve days later,Stacy files a petition in bankruptcy for relief through a liquidation.
-Refer to Fact Pattern 30-1A.Terrill dies while riding the ATV.Stacy is Terrill's only heir.With respect to the bankruptcy estate,the inheritance is

Accepted Answer

Under bankruptcy law, any property that the debtor acquires within 180 days after filing for bankruptcy becomes part of the bankruptcy estate. Since Terrill died within 12 days of the sale, the inheritance from him would be part of Stacy's bankruptcy estate if he died within 180 days of her filing.

Question 15

Resources Exploitation,Inc.(REI),files a petition in bankruptcy for relief through a reorganization and assumes the role of a debtor in possession.In this role,REI is simi?lar to

Accepted Answer

In a reorganization bankruptcy, a debtor in possession (DIP) like REI continues to operate the business and has similar powers and responsibilities to a trustee in a liquidation, managing the assets and business operations while undergoing reorganization.

Question 16

Tippi believes that she needs to obtain a discharge in bank?ruptcy through an individual's repayment plan.This proceeding can be initiated by a filing of a pe?tition by

Accepted Answer

Only an individual debtor can file a petition for bankruptcy and seek a discharge through a repayment plan. Creditors, corporations, and partnerships are not eligible to file for bankruptcy in this way.

Question 17

Fact Pattern 30-1A (Questions A8-A9 apply)
Stacy sells her all-terrain vehicle (ATV)to her brother Terrill for $1,000.Twelve days later,Stacy files a petition in bankruptcy for relief through a liquidation.
-Refer to Fact Pattern 30-1A.Regarding the sale of the ATV,the trustee may

Accepted Answer

The trustee may cancel the sale of the ATV as a fraudulent transfer if it can be proven that Stacy sold the ATV to her brother with the intention of hindering, delaying, or defrauding her creditors. This is because the sale can be considered a transfer of assets that should have been available for the payment of debts in the bankruptcy proceedings.

Question 18

Mikhail files a petition in bankruptcy.One of the goals of bankruptcy law with respect to a debtor who has "gotten in over his head" is to

Accepted Answer

Bankruptcy law aims to provide relief and protection to debtors who are unable to pay their debts. Through bankruptcy, a debtor can seek a fresh start and have some or all of their debts discharged. This can help alleviate the financial burden and stress of being in debt.

Question 19

Swim & Trim Fitness Corporation wants to formulate a plan under which it pays a portion of its debts and is discharged of the remainder while continuing in business.To accomplish this goal,Swim & Trim should file a petition in bankruptcy for relief through

Accepted Answer

The best choice for Swim & Trim Fitness Corporation is to file for relief through a reorganization. A reorganization bankruptcy, also known as Chapter 11, allows businesses to continue operating while developing a plan to pay off debts over time. This would enable the company to pay a portion of its debts and be discharged of the remainder while still staying in business. Liquidation bankruptcy (Chapter 7) involves selling off assets to pay off creditors and would require Swim & Trim to cease operations. A repayment plan (Chapter 13) is only available to individuals, not corporations. A family-farmer bankruptcy plan (Chapter 12) is only applicable to family farmers and fishers with specific requirements that do not apply to Swim & Trim Fitness Corporation.

Question 20

Lorissa files a petition for bankruptcy.Lorissa's creditors must file with the court their proof of claims against Lorissa's assets within

Accepted Answer

Creditors must file their proof of claims within 90 days after the first date set for the meeting of creditors, also known as the 341 meeting, in a bankruptcy case.

Quiz 30: Bankruptcy Law