Question 1

When Sam and Marie got married they wanted to travel,buy nice houses and cars,and enjoy the good life.They used credit cards to finance their lifestyle,believing they would be fine as long as they could make the minimum payments.One day they discovered that because of rising interest rates,even the minimum payments were out of reach.They decided to declare Chapter 13 bankruptcy.Under this plan,they will have to pay their creditors back over 3 to 5 years.

Accepted Answer

This is true as Chapter 13 bankruptcy involves creating a repayment plan to pay back creditors over a period of 3 to 5 years.

Question 2

Though high-profile business bankruptcies such as Borders and Blockbuster dominate the news,over 90 percent of bankruptcy filings each year are by individuals.

Accepted Answer

According to the American Bankruptcy Institute, over 90 percent of bankruptcy filings each year are by individuals.

Question 3

In voluntary bankruptcy cases the creditors voluntarily start legal action against the debtor.

Accepted Answer

In voluntary bankruptcy cases, the debtor (not creditors) initiates the legal action and files for bankruptcy.

Question 4

The number of Americans filing for bankruptcy each year has increased since the late 1980s.

Accepted Answer

According to data from the United States Courts, the number of Americans filing for bankruptcy each year has increased since the late 1980s.

Question 5

The Constitution gives the judiciary the power to establish bankruptcy laws.

Accepted Answer

The Constitution grants Congress the power to establish bankruptcy laws, not the judiciary. This is outlined in Article I, Section 8, Clause 4 of the U.S. Constitution.

Question 6

Chapter 7 bankruptcy requires the sale of the nonexempt assets of debtors.

Accepted Answer

In chapter 7 bankruptcy, the bankruptcy trustee may sell the nonexempt assets of the debtor to pay off creditors.

Question 7

Chapter 11 bankruptcy is a way for sick companies to recover and is designed to help both debtors and creditors find the best solution.

Accepted Answer

Chapter 11 bankruptcy allows a company to restructure its debt and operations to become profitable again, while also protecting creditors from losing all their investments. It is a form of bankruptcy designed to benefit all parties involved.

Question 8

It appears that some regulation of business is necessary to ensure fair and honest dealings with the public.

Accepted Answer

Some regulation of business is necessary to prevent fraud, protect consumers, and ensure a level playing field for businesses. Without regulation, businesses could engage in unethical practices that harm consumers and undermine trust in the marketplace. However, the extent and scope of regulation may vary depending on the industry and the potential risks involved.

Question 9

The most popular form of bankruptcy among individuals is Chapter 11.

Accepted Answer

The most popular form of bankruptcy among individuals is Chapter 7, not Chapter 11. Chapter 11 is typically used by businesses.

Question 10

Most bankruptcies today are involuntary because creditors want to retrieve as much of their money as possible.

Accepted Answer

Most bankruptcies today are voluntary, meaning the individual or business chooses to file for bankruptcy. However, there are some cases where creditors may initiate an involuntary bankruptcy if they believe it is necessary to recover their owed debts.

Question 11

When United Airlines declared bankruptcy several years ago,it continued to operate as a business while it worked out a plan for paying off its debts.United Airlines filed a Chapter 13 bankruptcy.

Accepted Answer

United Airlines actually filed for a Chapter 11 bankruptcy, which allows a business to reorganize its debts and continue operating while developing a plan to become financially stable.

Question 12

Chapter 13 proceedings are more complicated than Chapter 7 bankruptcy proceedings.

Accepted Answer

The answer of Chapter 13 proceedings are more complicated than...

Question 13

Both the airline and telecommunications industries have been deregulated.

Accepted Answer

Both industries have been deregulated, meaning the government has removed certain regulations and restrictions on them.

Question 14

Filing for bankruptcy under the Chapter 11 provisions allows a company to reorganize and continue operations while paying only a proportion of its debts.

Accepted Answer

Filing for bankruptcy under Chapter 11 allows a company to reorganize and continue operations while paying only a portion of its debts, making the statement true.

Question 15

Deregulation has always benefited consumers.

Accepted Answer

While deregulation can lower prices in the short-term, it can also lead to decreased safety standards and less competition in the long-term, which can ultimately harm consumers.

Question 16

The number of Americans filing for bankruptcy has decreased as a result of the Bankruptcy Reform Act.

Accepted Answer

There has been a significant increase in the number of Americans filling for bankruptcy. Bankruptcy attorneys say the increase in filings is due to a lessening of the stigma of bankruptcy, the changing economy, and an increase in the understanding of bankruptcy.

Question 17

The Bankruptcy Reform Act of 2005 made it easier for individuals to eliminate most debts in a bankruptcy.

Accepted Answer

The Bankruptcy Reform Act of 2005 made it more difficult for individuals to eliminate most debts in a bankruptcy by implementing stricter eligibility requirements and mandatory credit counseling.

Question 18

Chapter 13 bankruptcy permits individuals and small-business owners to repay creditors over a period of three to five years.

Accepted Answer

Chapter 13 bankruptcy allows individuals and small-business owners to reorganize their debts and create a repayment plan that lasts three to five years. This is contrast to Chapter 7 bankruptcy which typically involves liquidation of assets to pay off creditors.

Question 19

The purpose of governmental deregulation is to eliminate laws that seem to hinder competition.

Accepted Answer

The purpose of governmental deregulation is to eliminate laws that seem to hinder competition, allowing businesses to operate more freely and potentially leading to lower prices for consumers.

Question 20

A company has to be insolvent before it can file for Chapter 11 bankruptcy.

Accepted Answer

A company does not have to be insolvent to file for Chapter 11 bankruptcy. It can file for Chapter 11 if it believes it will not be able to make its debt payments in the near future, but wants to restructure its debt and operations to continue as a going concern.

Quiz 21: Appendix A: Using Technology to Manage Information