Deck 25: Laws of Debtor Creditor Relations and Consumer Protection

Question 1

When a mortgagor cannot make the payments for his or her mortgage, the mortgagee will seek ________.

A)a garnishment order of the court for the mortgagor's wages
B)a court-ordered sale of the mortgaged property
C)a mechanic's lien on the mortgaged property
D)a loan guarantee from the mortgagor

Answer 1

B

Question 2

In a ________ proceeding of the U.S. Bankruptcy Code, if there is a showing of fraud, dishonesty, or incompetence, a trustee is appointed.

A)Chapter 13
B)Chapter 15
C)Chapter 2
D)Chapter 1

Answer 2

A

Question 3

A contractor installed a new furnace in a house that was under construction. If he were not paid for the job, he would most likely place a(n) ________ on the property.

A)contractor's lien
B)mechanic's lien
C)artisan's lien
D)installer's lien

Answer 3

B

Question 4

In an involuntary petition, if a debtor has 12 or more creditors, the petition must be signed by a minimum of ________.

A)3
B)4
C)5
D)6

Question 5

Which of the following is a term used for specialists who hear only bankruptcy proceedings?

A)bankruptcy specialists
B)bankruptcy judges
C)bankruptcy juries
D)bankruptcy rulers

Question 6

Jane leaves her television at Sally's small appliances repair shop, but she never returns to pick it up or pay the bill. After a period of time, Sally can attach the television. Which type of lien arises on the television?

A)a contractor's lien
B)a mechanic's lien
C)an artisan's lien
D)an installer's lien

Question 7

The 2005 Act was an attempt to meet the complaints of the business community with regard to the ________.

A)increase of unemployment insurance for debtors facing bad times
B)issues related to the Bankruptcy Reform Act of 1978
C)increase in the number of filings for personal bankruptcy
D)allegation that debtors had begun evading payments to creditors

Question 8

Which of the following is true of a voluntary petition?

A)It is filed by a debtor under Chapter 15.
B)It involves a creditor placing a debtor in bankruptcy.
C)Those who sign the voluntary petition must have unsecured claims of at least $12,300 in the aggregate.
D)The petition must clearly state the debts of a debtor.

Question 9

Which of the following is true of a contract of suretyship?

A)There is no debtor in a contract of suretyship.
B)There is no creditor in a contract of suretyship.
C)The suretyship creates an express contract with a creditor, under which the surety is primarily liable.
D)The suretyship creates an express contract with a creditor, under which the surety is secondarily liable.

Question 10

Which of the following is an order of the court directed at wages owed by an employer where the debtor has an account?

A)garnishment
B)writ of execution
C)attachment
D)injunction

Question 11

Which of the following is a judicial lien?

A)foreclosure
B)injunction
C)contract
D)attachment

Question 12

Which of the following is a court-ordered judgment that allows a local officer of the court to seize a debtor's property?

A)attachment
B)injunction
C)judgment notwithstanding verdict
D)directed verdict

Question 13

Under the 2005 Act, a debtor can be granted Chapter 7 relief only after ________ years, following Chapter 7 or Chapter 11 bankruptcy.

A)two
B)four
C)six
D)eight

Question 14

The most generous homestead exemptions in bankruptcy proceedings are offered in ________.

A)New York and Massachusetts
B)Alabama and Mississippi
C)Illinois and Michigan
D)California and Texas

Question 15

Which of the following is an order issued by a clerk of the court directing the sheriff to seize any of the nonexempt real or personal property of a debtor who refuses to or cannot pay a creditor?

A)garnishment
B)judgment notwithstanding verdict
C)injunction
D)writ of execution

Question 16

Which of the following is true of an estate?

A)An estate consists of all legal and equitable interests of a debtor in exempt property.
B)An estate includes property of a debtor that a creditor acquires within 180 days of the debtor's filing of a bankruptcy petition.
C)An estate does not include proceeds, rents, and profits from the property.
D)An estate is a separate legal entity created when a bankruptcy case commences.

Question 17

Chapter 7 of the U.S. Bankruptcy Code deals with ________.

A)cross-border solvency cases
B)the management and administration of the Code
C)the reorganization and adjustment of the debtor's debts
D)straight bankruptcy

Question 18

Which of the following is a major goal of the U.S. Bankruptcy Code?

A)to give creditors access to debtors' wages
B)to discharge debtors from their debts
C)to subsidize banks for unpaid loans
D)to increase unemployment insurance for debtors facing bad times

Question 19

The most significant changes ever to be made to the Federal Bankruptcy Code took place with the enactment of ________.

A)the 2005 Act
B)the 1978 Act
C)the 2002 Act
D)the 1980 Act

Question 20

Which of the following is true of Chapter 7 of the U.S. Bankruptcy Code?

A)The 2005 Act gives debtors better means to obtain a Chapter 7 bankruptcy.
B)Under Chapter 7, a debtor is denied the right to a trustee.
C)It features a dollar-based means test and a median income test based on a debtor's state of residence.
D)The 2005 Act in effect pushed many debtors out of Chapter 7 and into Chapter 15 debt-adjustment bankruptcy.

Question 21

The refusal of courts during the 19th Century to interfere with the freedom of parties to enter into contracts can be traced, in part, to the writings of ________.

A)Karl Marx
B)Milton Friedman
C)Adam Smith
D)Thomas Paine

Question 22

The ________ states that parties who are legally competent are allowed to enter into whatever contracts they wish.

A)freedom-to-compete doctrine
B)freedom-to-enter doctrine
C)freedom-to-sign doctrine
D)freedom-to-contract doctrine

Question 23

Which of the following statements is true with regard to the Federal Trade Commission (FTC) staff proving deceptive advertising under Section 5 of the FTC Act?

A)They need not prove that the consumers are acting reasonably under the circumstances.
B)They need to show that the misrepresentation or omission is material.
C)They need not show that there is a misrepresentation or omission likely to mislead consumers.
D)They need to show the intent of an advertiser to deceive a consumer.

Question 24

________ are defined as corporations or partnerships owned by a family or relatives with more than 80 percent of its assets related to farming operation and a total business debt not exceeding $3,273,000.

A)Family farmers
B)Family partners
C)Family debtors
D)Family creditors

Question 25

Which of the following is the leading federal consumer protection agency?

A)Interstate Commerce Commission
B)Federal Trade Commission
C)Occupational Safety and Health Administration
D)Federal Accountability Act

Question 26

A company can sue a competitor under the ________, which forbids "false description or representation."

A)Wheeler-Lea Act of 1938
B)Lanham Act of 1947
C)Nutrition Labeling and Education Act of 1990
D)Franchising Rule of 1979

Question 27

Which of the following occurs under Chapter 13 of the U.S. Bankruptcy Code?

A)A portion of the consumer-debtor's earnings is paid into court for distribution to creditors over a period of three years.
B)Only involuntary petitions for bankruptcy may be filed under Chapter 13.
C)Creditors can force petitioners into Chapter 13 bankruptcy.
D)A creditor is paid in full for amounts owed by a debtor.

Question 28

Which of the following is true of Chapter 12 of the U.S. Bankruptcy Code?

A)Under Chapter 12, family farmers and fishermen have a right to file for bankruptcy reorganization.
B)A plan for a Chapter 12 reorganization should provide for payments to creditors over no longer than a one-year period.
C)Chapter 12 grants a personal exemption for all farm or fishing equipment.
D)A debtor cannot convert a Chapter 12 reorganization to a Chapter 7.

Question 29

The Federal Trade Commission works with the ________ sectors to regulate fraud issues.

A)telemarketing
B)securities fraud
C)communications
D)advertising and sales practices

Question 30

The ________ seeks to make creditors disclose all terms of a credit arrangement before they enter into an agreement with a consumer-debtor.

A)Dodd-Frank Act
B)Sherman Act
C)Truth-in-Lending Act
D)Securities Exchange Act

Question 31

Chapter 11 of the U.S. Bankruptcy Code allows ________.

A)a portion of a debtor's earnings to be paid into court for distribution to creditors over a period of three years
B)a business to reorganize and continue to function while it is arranging for the discharge of its debts
C)a portion of a debtor's homestead exemption to be paid into court for distribution to creditors over a period of five years
D)a debtor to turn over all assets to a trustee who sells the nonexempt assets and distributes the proceeds to creditors

Question 32

Which of the following is an example of puffery?

A)an advertisement stating that a car can run 50,000 miles without an oil change
B)an advertisement stating that 13 out of 15 dentists use a particular toothpaste
C)an advertisement stating that an anti-aging cream reduces wrinkles in exactly a week
D)an advertisement stating that a fast food chain sells the world's finest chicken

Question 33

The freedom-to-contract doctrine evolved through ________.

A)case law out of the state court systems
B)case law out of the federal court systems
C)enacted law out of the state court systems
D)enacted law out of the federal court systems

Question 34

A professional basketball player states in an advertisement that a particular brand of sports gear will improve one's performance on the court. Which of the following methods of deceptive advertising does this example depict?

A)testimonial
B)puffery
C)black marketing
D)unfair advertising

Question 35

Which of the following is an example of deception?

A)an advertisement stating that 14 out of 15 dentists use a particular toothpaste
B)an advertisement stating that a fast food chain sells the world's finest chicken
C)an advertisement stating that a particular deodorant is the world's best
D)an advertisement stating that a retail chain sells the freshest vegetables

Question 36

Puffery involves ________.

A)offering a free item to a customer who buys an item at a regular price
B)advertising one product at a low price to entice customers into the store and then switching their attention to a higher-priced product
C)making an exaggerated recommendation in a sales talk to promote the product
D)using factually wrong statements to promote a product

Question 37

Under the Fair Packaging and Labeling Act, which of the following governmental units promulgates rules governing the labeling and packaging of products?

A)the Federal Trade Commission
B)the Occupational Safety and Health Administration
C)the Interstate Commerce Commission
D)the Department of Health and Human Services

Question 38

With reference to the Federal Bankruptcy Code, which of the following is a disadvantage of bankruptcy to creditors?

A)Continued operation results in less funds to distribute at liquidation.
B)The going-concern value of an insolvent business is not preserved.
C)Creditor-in-possession is held accountable due to bankruptcy reporting and notice requirements.
D)A creditor cannot file an involuntary petition for relief under Chapter 7.

Question 39

Which of the following is a purpose of the Fair Packaging and Labeling Act?

A)It forces manufacturers to package goods in the most efficient manner.
B)It gives competitors of manufacturers a private right of action in cases of deceptive advertising.
C)It allows consumers to compare prices on the basis of uniform measures of content.
D)It expands the Federal Trade Commission's jurisdiction over manufactured goods in interstate commerce.

Question 40

With reference to the Federal Bankruptcy Code, which of the following is an advantage of bankruptcy to debtors?

A)It results in a decrease in autonomy.
B)The management's ability to make and implement decisions rapidly is enhanced.
C)Debtors are not subject to legal and accounting expenses.
D)Debtors retain possession of a bankruptcy estate.

Question 41

Which of the following is the main reason for the argument that state, city, county, and private agencies are more effective at resolving consumer problems than federal agencies?

A)These agencies have more effective resources to solve the problems that the average consumer encounters than federal agencies.
B)These agencies can better understand the problems that the average consumer encounters than federal agencies.
C)These agencies are more easily available to solve the problems that the average consumer encounters than federal agencies.
D)These agencies are closer geographically to the problems that the average consumer encounters than federal agencies.

Question 42

The U.S. Bankruptcy Code (Code) is composed of seven chapters.

Question 43

The Fair Debt Collection Practices Act is designed to address ________.

A)harassment of consumer-debtors by credit reporting agencies
B)discrimination by banks and credit unions in the enforcement of consumer loan contracts
C)errors in electronic transactions related to debt collection
D)harassment of consumer-debtors by creditors or debt collectors

Question 44

The new ________ will regulate mortgage, credit cards, some payday lenders and check cashing companies, and lenders that provide private student loans.

A)Bankruptcy Protection Bureau
B)Federal Consumer Protection Bureau
C)Consumer Financial Protection Bureau
D)Consumer Credit Protection Bureau

Question 45

Under the ________, the Federal Reserve Board determines what constitutes a reasonable and proportional fee for debit card transactions.

A)Dodd-Frank Act
B)Federal Consumer Protection Act
C)Bankruptcy Reform Act
D)Consumer Credit Protection Act

Question 46

Personal properties, like a vehicle to get to work with, are not exempt from attachments.

Question 47

Bankruptcy judges are appointed by the U.S. court of appeals for the circuit in which the bankruptcy court is located for a period of 14 years.

Question 48

Which of the following refers to the effective annual rate of interest being charged by a creditor, which depends on the compounding period used by the creditor?

A)annual compound rate
B)annual percentage rate
C)annual interest rate
D)annual creditor rate

Question 49

________ are fees that banks charge retailers when consumers pay with debit cards.

A)Punitive fees
B)Mixed fees
C)Transfer fees
D)Interchange fees

Question 50

Attachment involves a court-ordered judgment allowing a local officer of the court (e.g., sheriff) to seize property of a debtor.

Question 51

An artisan's lien is placed on the real property of a debtor when the latter does not pay for the work done by the creditor.

Question 52

Which of the following is true of an open-end credit transaction?

A)An open-end transaction gives a debtor the option to pay in installments.
B)An open-end transaction includes a personal customer loan or a student loan.
C)An open-end transaction is for a limited time period.
D)An open-end transaction must be in writing.

Question 53

Bob's debit card was stolen on Wednesday. He notifies his bank of the theft the following morning. Meanwhile, the thief has used his card to purchase $800 worth of goods and services. Based on this scenario, which of the following is true of the Electronic Fund Transfer Act?

A)Bob is liable for $50 of the $800.
B)Bob is liable for $300 of the $800.
C)Bob is liable for $500 of the $800.
D)Bob is liable for the whole amount.

Question 54

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 added Chapter 15 to the Code for cross-border solvency cases.

Question 55

A lien is a claim on a debtor's property that must be satisfied before any creditor can make a claim.

Question 56

Chapter 7 of the Bankruptcy Code exclusively deals with transnational insolvency cases between the United States and foreign countries.

Question 57

Which of the following regulations of the Truth-in-Lending Act requires lenders to disclose certain information to borrowers?

A)Regulation W
B)Regulation X
C)Regulation Y
D)Regulation Z

Question 58

The ________ was drafted by the National Conference of Commissioners on State Laws in 1968 and regulates interest and finance rates, and prohibits fine-print clauses.

A)Dodd-Frank Act
B)Uniform Consumer Credit Code
C)Federal Consumer Protection Act
D)Federal Bankruptcy Code

Question 59

The bankruptcy court will file an order for relief unless a debtor challenges an involuntary petition.

Question 60

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was intended to overhaul, in large part, certain provisions of the Bankruptcy Code.

Question 61

Reorganization under Chapter 11 of the Federal Bankruptcy Code must be involuntary.

Question 62

The Federal Trade Commission can have no more than three commissioners from the same political party.

Question 63

Given the comprehensive nature of the federal consumer protection legislation, what purpose is served by the parallel state legislation?

Question 64

Interchange fees usually run about five percent of a given transaction.

Question 65

List the powers of a bankruptcy trustee.

Question 66

The U.S. courts throughout the nineteenth century upheld the principle of caveat emptor.

Question 67

State the violations of the Equal Credit Opportunity Act.

Question 68

A consumer has a right to cancel a home loan seven days after entering the contract.

Question 69

Describe the consumer rights and remedies provided by the Electronic Fund Transfer Act (EFTA) of 1978.

Question 70

State the prohibited practices under the Telephone Consumer Protection Act of 1991.

Question 71

Identity theft may be defined as the use of another's name to obtain some illegal gain through financial instruments held or owned by another.

Question 72

Discuss how the role of government in the area of economics has been that of an actor and a referee between consumers and the business community.

Question 73

Corporations and persons applying for more than $25,000 in credit (except for buying a home) are not covered by the Truth-in-Lending Act of 1969.

Question 74

Debts that were or could have been listed in a previous bankruptcy in which a debtor waived or was denied a discharge can be discharged under Chapter 7 of the Bankruptcy Code.

Question 75

The Magnuson-Moss Warranty Act gives an individual consumer, or a class of consumers, the right to bring a private action for a breach of an oral warranty.

Question 76

State the schedules that must be submitted by an individual debtor filing a voluntary petition.

Question 77

All written warranties of consumer products that cost less than $10 must be designated as "full" or "limited."