Deck 15: Creditor-Debtor Relations and Bankruptcy

Question 1

A homestead exemption allows a debtor to subtract the value of the fam?ily home from the amount of a debt.

Answer 1

False

Question 2

A bankruptcy estate consists of all the debtor's interests in property cur?rently held,wherever located.

Answer 2

True

Question 3

The same principles that govern the filing of a liquidation petition apply to reorganization proceedings.

Answer 3

True

Question 4

The basic duty of a trustee is to collect and reduce to cash the property in the bankruptcy estate that is not exempt.

Question 5

If a creditor obtains a judgment against a debtor and the debtor cannot or will not pay the judgment,the dispute is at an end.

Question 6

Creditors may contract with a debtor for discharge of the debtor's liqui?dated debts.

Question 7

On the entry of an order for relief in a reorganization case,the creditors generally take over the operation of the debtor's business.

Question 8

One of the primary effects of a discharge is to relieve the liability of a co-debtor.

Question 9

Payment of the principal obligation will not discharge the surety from the obligation.

Question 10

Certain liquidation cases may be converted to repayment plan cases with the consent of the debtor.

Question 11

In a repayment plan case,the plan must provide for payment of all obli?gations in full.

Question 12

If a debtor's income is below the median income,there is a presumption of bankruptcy abuse.

Question 13

Any "person" may be a debtor in a liquidation proceeding.

Question 14

A surety is primarily liable for the debt of a principal.

Question 15

A debtor's vehicle is never exempt from satisfaction of a judgment debt.

Question 16

Federal law governs garnishment actions.

Question 17

If a debtor does not pay a mechanic's lien,the debtor's property can be sold to sat?isfy the debt.

Question 18

Certain debtors may not qualify to have all debts discharged in bankruptcy.

Question 19

A guarantor can be required to pay an obligation only after the principal debtor defaults.

Question 20

An artisan's lien is possessory.

Question 21

Diego performs a contract with Elwood to add a swimming pool to Elwood's property,but Elwood does not pay.Diego can file a lien on Elwood's property if,from the last date labor or materials were provided,he acts

A)immediately.
B)within 60 to 120 days.
C)within two years.
D)within a reasonable time.

Question 22

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

A)a plan to turn over his future income to the trustee.
B)a certificate proving attendance at a credit-counseling briefing.
C)a provision of adequate means for the petition's execution. d a statement of preference for one creditor over another.

Question 23

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

A)domestic-support obligations.
B)money to be paid for goods not delivered.
C)contributions to employee benefit plans.
D)long overdue credit-card debt.

Question 24

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

A)contributions to employee benefit plans.
B)money to be paid for services not rendered.
C)fraudulently incurred debt.
D)long overdue credit-card debt.

Question 25

Doral,Eduard,and Francesca are co-sureties of Glenda's debt to Hi-Credit Company.Doral pays Glenda's entire debt.Doral's right to seek proportionate pay?ments from Eduard and Francesca is the right of

A)contribution.
B)redemption.
C)reimbursement.
D)subrogation.

Question 26

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 bank?ruptcy.Reconstruction's dis?charge will

A)absolve the liability of any co-debtors.
B)permit the debtor to enter into reaffirmation agreements.
C)allow the debtor to file a petition for a reorganization.
D)prohibit actions and void judgments regarding overdue debts.

Question 27

Ping's debt to Oak Furniture Warehouse is past due.Oak obtains a judgment against Ping,but Ping refuses to pay it.Oak asks the court for an order that directs the sheriff to seize and sell any of Ping's nonexempt real or personal property that is within the court's geographic jurisdic?tion.This is a request for

A)a writ of execution.
B)a composition agreement.
C)an order that would violate most state laws.
D)an order of garnishment.

Question 28

Francie's debt to Gage is past due.Gage brings a legal action against Francie to collect the debt.To ensure that a judgment in Gage's favor will be collectible,Gage asks the court to order the seizure of Francie's property.This is a request for

A)a guaranty (or suretyship)contract.
B)an order that would violate most state laws.
C)a writ of attachment.
D)an order of receivership.

Question 29

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

A)the adequate protection doctrine.
B)the avoidance doctrine.
C)a preferential transfer.
D)the automatic stay.

Question 30

Flip's debt to George is past due.George brings a legal action against Flip to collect the debt.George asks the court to order Home Bank,in which Flip has an account,to pay a portion of the funds to George.This is a request for

A)a writ of execution.
B)an order of garnishment.
C)an order that would violate most state laws.
D)an artisan's lien.

Question 31

Speedy Delivery Company buys a white van from Tom's Terrific Vehicles,on credit under a guaranty signed by Ulysses,Speedy's presi?dent,making him personally liable if Speedy does not pay.Ulysses is

A)a surety.
B)a lienor.
C)a guarantor.
D)a creditor.

Question 32

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

A)a creditor.
B)a debtor.
C)a corporation.
D)a partnership.

Question 33

Liu and Midge-Nero's creditors-contract with Nero for the discharge of Nero's liquidated debts on payment of a lesser sum.This is

A)a composition agreement.
B)a subrogation.
C)a suretyship agreement.
D)in violation of most states' laws.

Question 34

Delia refuses to pay Ewing $500 in cash on their contract to repair cer?tain theater sets,which Ewing still possesses.Ewing's lien on the sets will terminate

A)if Ewing continues to maintain possession.
B)if Ewing does not file a written notice of lien within thirty days.
C)if Ewing voluntarily surrenders possession.
D)within thirty days.

Question 35

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

A)a liquidation.
B)a reorganization.
C)a repayment plan.
D)a family-farmer bankruptcy plan.

Question 36

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

A)a liquidation.
B)a reorganization.
C)a repayment plan.
D)a family-farmer bankruptcy plan.

Question 37

Laurel defaults on a loan owed to Maverick Bank.As a creditor,Maverick may attempt to place liens on all of Laurel's property except

A)motor vehicles used to commute to work.
B)stock in various corporations.
C)items that Laurel selects.
D)vacant commercial property.

Question 38

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

A)force Verna to file for relief through an individual repayment plan.
B)discharge Verna's debts.
C)distribute Verna's property to Verna's creditors.
D)issue an automatic stay against any actions by Verna's creditors.

Question 39

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

A)a reaffirmation.
B)a liquidation.
C)a reorganization.
D)a petition.

Question 40

Residence Painting Company has a claim against Stuart's property to satisfy a debt that takes priority over other claims against the same property.This is

A)a lien.
B)a violation of most state laws.
C)a writ of attachment.
D)a garnishment.

Question 41

Current City (CC)is a retail seller of television sets.CC sells Dhani a $5,000 large-screen,high-definition,plasma set on a retail installment security agreement in which he pays $100 down and agrees to pay the balance in equal installments.CC retains a security interest in the set,and perfects that interest by filing a financing statement centrally.Two months later,Dhani is in default on the payments to CC and is involun?tarily petitioned into bankruptcy by other creditors.Discuss CC's right to repossess the TV set and whether CC has priority over the trustee in bankruptcy to any proceeds from the disposal of the set.

Question 42

Smartt Software Company borrows $10,000 from Term 'N All Loans,Inc. ,but cannot repay the loan when it comes due.Term 'N All refuses to ex?tend the time for repayment unless Smartt can provide an acceptable surety.Uno Venture Corporation agrees to act as a surety for the loan af?ter Smartt offers the firm a discount on software and shows Uno fi?nancial statements,compiled with Term 'N All's assistance,that mis?represent Smartt's financial situation.Later,after Uno uses the dis?count to buy software,Smartt again defaults on repayment of the loan,and Term 'N All files a suit against Uno to collect the amount of the debt.Is Uno liable? Why or why not?