Question 1

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

Accepted Answer

Seth must include a list of creditors and the amount of debt owed to each with his bankruptcy petition. This is required in order to provide an accurate accounting of his debts for the court and any creditors involved in the case. Proof of each creditor's claim may be requested later in the bankruptcy process, but it is not required to be included with the initial petition. The disposal of credit and debit cards is not a standard part of the bankruptcy filing process.

Question 2

Petulia is a debtor.Her employer Quantum Investments,Inc. ,her alma mater State University,and TimePay Credit Company are her creditors.For these parties,a petition in bankruptcy for relief through an individual's repayment plan could be filed on Petulia's behalf by Petulia and

Accepted Answer

The answer of Petulia is a debtor.Her employer Quantum Investments,Inc....

Question 3

Mac files a petition for a discharge in bankruptcy.Mac's failure to appear at a meeting of the creditors listed in Mac's schedules may result in Mac being

Accepted Answer

Under the bankruptcy code, it is mandatory for the debtor to attend a meeting of the creditors. Failure to do so may result in the denial of discharge in bankruptcy. However, fines, imprisonment, or contempt of court are not typically imposed for this type of violation.

Question 4

Mike owes $12,000 to Nora,$6,000 to Owen,and $6,000 to Pat.The three creditors enter into an agreement with Mike to discharge the debts on payment of a sum of $12,000 to them,to be divided proportionately.This is

Accepted Answer

This is a composition agreement, where the creditors agree to discharge the debts on payment of a sum that is proportionately divided among them. A guaranty agreement involves a third party agreeing to be responsible for the debtor's debts, while a judicial lien is a court-ordered claim on a debtor's property. A suretyship agreement involves a third party agreeing to be responsible for the debtor's obligations.

Question 5

Pola files a petition in bankruptcy.Pola's non-dischargeable debts include

Accepted Answer

Domestic-support obligations such as child support and alimony are considered non-dischargeable debts. Student loans may also be non-dischargeable, but only if Pola can prove that paying them would impose an undue hardship. Unpaid loans to finance home repairs and unsecured credit-card debt may be considered dischargeable debts in bankruptcy.

Question 6

Thirty-one days before filing a petition in bankruptcy,Frida transfers property and makes payments that favor one creditor over another.These are

Accepted Answer

Frida's transfer of property and preference for one creditor over another constitutes a preference under bankruptcy law. Preferences are payments or transfers made by a debtor to a creditor that give that creditor an advantage over other creditors, and they are generally prohibited by bankruptcy law. Therefore, option B is correct. Options A, C, and D do not accurately describe the situation.

Question 7

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

Accepted Answer

Zeke's plan must provide for the turnover of his future income to the trustee as part of the repayment plan under bankruptcy proceedings.

Question 8

Fact Pattern 
Mary's home is in a state that has a $30,000 homestead exemption.Mary de?faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc?tion for $80,000.
-Refer to Fact Pattern 15-2B.Mary will receive

Accepted Answer

Mary will receive the $30,000 homestead exemption, which will be applied towards her debt to Nina, leaving a remaining balance of $30,000. Since the home sold at auction for $80,000, the remaining balance will go towards paying off the remaining debt, leaving Mary with no proceeds from the sale.

Question 9

Suchin's debt to Trixie is past due.Trixie obtains a judgment against Suchin to collect the debt,but Suchin refuses to pay.Trixie asks the court to order the seizure and sale of Suchin's property.This is a request for

Accepted Answer

Trixie is requesting the court to order the seizure and sale of Suchin's property, which is a common method of collecting a debt through a writ of execution. This allows the creditor to enforce the court's judgment by seizing and selling the debtor's property to satisfy the debt. A guaranty contract is a separate agreement where a third party promises to pay the debt if the debtor defaults, while an order of receivership involves appointing a third party to manage the debtor's assets. An order that would violate most states' laws is not a valid option.

Question 10

Bill and Cody agree to guarantee Wyatt's debt.Bill's maximum liability is $60,000,and Cody's is $40,000.Wyatt owes $40,000 and is in default.Bill pays the creditor the entire amount.In the absence of an agreement to the contrary,Bill can recover from Cody

Accepted Answer

Bill's maximum liability is $60,000, but he only paid $40,000 to the creditor. Therefore, he can recover up to $20,000 from Cody. The answer is not A because Cody agreed to guarantee the debt, which means he has some liability. The answer is not C or D because Bill's maximum liability was $60,000, but he only paid $40,000, so he cannot recover the full amount from Cody.

Question 11

Fact Pattern 
Rico signs a lease on behalf of Start-Up Games,Inc. ,with Tower Office Suites.As part of the lease,Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.
-Refer to Fact Pattern 15-1B.If Start-Up stops paying the rent,it is most likely that liability or loss for the unpaid amount will rest with

Accepted Answer

Rico signed a guaranty that made him personally liable for the lease's performance. If Start-Up Games, Inc. stops paying rent, Rico will be responsible for the unpaid amount under the terms of the guaranty he signed. Tower Office Suites is not liable since they have a contract with Start-Up Games, Inc. and Rico personally guaranteed the lease performance. The other tenants on the same property are not responsible for the unpaid rent.

Question 12

Fact Pattern 
Rico signs a lease on behalf of Start-Up Games,Inc. ,with Tower Office Suites.As part of the lease,Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.
-Refer to Fact Pattern 15-1B.The reason for the result in the previous question is that

Accepted Answer

The reason for the result in the previous question is that Rico signed a "GUARANTY," which makes him personally liable for the lease's performance. If Start-Up Games, Inc. defaults on the lease, Tower Office Suites can hold Rico responsible for the payment of rent and other lease obligations.

Question 13

To adjust debts and institute a repayment plan that is less expensive and less complicated than other options,Brunch & Lunch Café,a small business,may file a petition in bankruptcy for relief through

Accepted Answer

The answer of To adjust debts and institute a repayment...

Question 14

Checkerboard Pizza,Inc.(CPI),files a petition in bankruptcy for relief through a reorganization.CPI's reorganization plan must contain

Accepted Answer

A reorganization plan must provide adequate means for its execution. This means that the plan must offer a feasible way of paying off creditors and restructuring the business to become financially stable. The other options listed are not required in a reorganization plan.

Question 15

Fact Pattern 
Mary's home is in a state that has a $30,000 homestead exemption.Mary de?faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc?tion for $80,000.
-Refer to Fact Pattern 15-2B.Nina may recover

Accepted Answer

Since Mary's home is sold at auction for $80,000 and there is a $30,000 homestead exemption in her state, the remaining $50,000 can be used to satisfy Mary's debt to Nina. Therefore, Nina may recover up to $50,000.

Question 16

Fact Pattern 
Mary's home is in a state that has a $30,000 homestead exemption.Mary de?faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc?tion for $80,000.
-Refer to Fact Pattern 15-2B.If Nina recovers less than she is owed,she can realize the difference from

Accepted Answer

The homestead exemption protects Mary's home from being used to satisfy a debt to Nina. Therefore, if Nina recovers less than she is owed from the sale of Mary's home, she can only go after Mary's nonexempt property to make up the difference. She cannot go after Mary's exempt property or the property of any other family member.

Question 17

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

Accepted Answer

The answer of Nikita operates a sole proprietorship,a corporation,and a...

Question 18

Delilah files a petition in bankruptcy.The proceeding is governed by the Bankruptcy Code,which is part of

Accepted Answer

Bankruptcy law is governed by the Bankruptcy Code, which is part of federal law, under the jurisdiction of the United States Bankruptcy Courts. The U.S. Constitution empowers Congress to enact bankruptcy laws, and each state may have its own bankruptcy laws, but federal law is supreme in bankruptcy cases. It is not governed by international law.

Question 19

Urbana performs a contract with Virgil to add a sun porch to Virgil's house,but Virgil does not pay.In most states,Urbana can create a lien and place it on Virgil's property by filing

Accepted Answer

A written notice of lien is the appropriate choice. This is a legal document that states that a debt is owed and that the creditor has a right to claim some of the debtor's property as compensation for the debt. By filing a notice of lien, Urbana can secure a legal claim on Virgil's property, potentially forcing him to pay the debt in order to remove the lien.

Question 20

Bartleby owes $5,000 to Countryside Credit Union.As a prejudgment remedy to collect the debt,Countryside could use

Accepted Answer

Attachment is a legal process used to seize property in order to secure payment of a debt. In this case, Countryside Credit Union can use attachment to seize Bartleby's property in order to collect the debt owed to them. Contribution is a term used in joint liability, execution is the process of implementing a court decision, and subrogation is the substitution of one party for another in terms of rights and obligations. None of these options would be the best choice for collecting a debt owed by Bartleby to Countryside Credit Union.

Quiz 15: Creditor-Debtor Relations and Bankruptcy