Deck 25: Bankruptcy

Question 1

Rulings from bankruptcy courts are final-they cannot be appealed.

Answer 1

False

Question 2

A husband and wife may file a joint petition for bankruptcy.

Answer 2

True

Question 3

One goal of bankruptcy law is to protect a debtor.

Answer 3

True

Question 4

An order for relief in a bankruptcy proceeding amounts to a discharge of the debts of the party petitioning for bankruptcy protection.

Question 5

Bankruptcy proceedings are held in federal courts.

Question 6

The clerk of a bankruptcy court must provide consumer-debtors with information on the types of services available from credit counseling agencies.

Question 7

The basic duty of a trustee is to collect the debtor's available estate and reduce it to cash for distribution.

Question 8

Child-support debts will be suspended by a voluntary bankruptcy filing.

Question 9

The right to petition for bankruptcy relief under federal law may be a necessary evil in our capitalistic society.

Question 10

Bankruptcy law is state law.

Question 11

Any "person"-defined as including corporations-may be a debtor in a liquidation proceeding.

Question 12

A trustee has the power to avoid a sale of the debtor's property.

Question 13

In most states, state law determines the amount of a debtor's property that is exempt from dis?tribution on bankruptcy.

Question 14

If a debtor's income is below the median income, there is no presumption of bankruptcy abuse.

Question 15

An involuntary bankruptcy occurs when a debtor's creditors are forced to accept a discharge of the debtor's debts.

Question 16

Concealing assets from a bankruptcy court is a crime.

Question 17

The means test forces more people to file for Chapter 7 bankruptcy rather than gave their debts discharged under Chapter 13.

Question 18

Before filing for bankruptcy, a consumer-debtor must receive credit counseling.

Question 19

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

Question 20

The filing of a petition for bankruptcy will automatically stay most legal actions against the debtor.

Question 21

In a repayment plan case, the plan must provide for payment of all obligations in full, not for a lesser amount.

Question 22

Deborah 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

A) encourage the continued use of credit to borrow funds.
B) ensure that co-debtors will continue to guarantee loans.
C) provide s debtor by giving him or her a fresh start without creditors' claims.
D) shield assets from creditors.

Question 23

Certain liquidation cases may be converted to Chapter 13 with the consent of the debtor.

Question 24

On the entry of an order for relief in a Chapter 11 case, the creditors generally take over the operation of the debtor's business.

Question 25

A bankruptcy court may deny a discharge based on a debtor's conduct.

Question 26

The procedure for filing a family-farmer bankruptcy plan is similar to the proce?dure for filing a repayment plan.

Question 27

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

Question 28

A student loan is discharged under Chapter 13 unless the creditor can show "undue hardship."

Question 29

Wilson wants to file an ordinary, or straight, bankruptcy. Wilson should file using

A) Chapter 7.
B) Chapter 11.
C) Chapter 13.
D) his state's bankruptcy code.

Question 30

A trustee must call a meeting of the creditors listed in the schedules filed by the debtor.

Question 31

Some student loans are dischargeable in a Chapter 7 bankruptcy.

Question 32

Once a discharge is granted, it may not be revoked, even if, for example, a debtor concealed property to defraud a creditor.

Question 33

Norma Jean files for Chapter 7 bankruptcy. She turns her assets over to Addie, who sells the assets and then distributes the proceeds to Norma Jean's creditors. Addie is a

A) creditor.
B) federal judge.
C) bankruptcy trustee.
D) debtor.

Question 34

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

Question 35

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

A) Eminent Employees Credit Union, a corporation.
B) Federal Savings & Loan Association, a corporation.
C) Guaranty Insurance Company, a corporation.
D) Hazel, an independent accountant.

Question 36

In order of priority, the claims of all unsecured creditors in a class must be satisfied before any re?maining amounts can be distributed to the next class.

Question 37

Bess wishes to appeal a decision from a federal bankruptcy court. Bess must appeal to

A) a county court.
B) a federal district court.
C) the U.S. Supreme Court.
D) a state court.

Question 38

A Chapter 11 reorganization plan must provide for payment of tax claims over a five-year period.

Question 39

A discharge will be denied to a debtor who received a discharge within eight years of filing the current petition.

Question 40

For individual debtors, the plan in a reorganization case must be completed before discharge will be granted.

Question 41

Wild River Tours 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, Wild River 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 42

Donna goes through an involuntary bankruptcy proceeding. An invol?un?tary bankruptcy occurs when

A) a debtor files forms designated for the purpose in a bankruptcy court.
B) a debtor is unable to pay his or her debts as they come due.
C) a debtor's creditors force the debtor into bankruptcy proceedings.
D) a debtor's debts exceed the fair market value of his or her assets.

Question 43

Thirty-one days before filing a petition in bankruptcy, Dee transfers prop?erty and makes payments that favor one creditor over another. These are

A) affirmation agreements.
B) preferences.
C) secured interests.
D) unsecured debts.

Question 44

Roland files for Chapter 7 bankruptcy. After all his assets have been sold and the proceeds distributed among his creditors, Roland's remaining debts

A) are discharged.
B) paid by the court.
C) must be paid by Roland.
D) are put on hold until Roland has sufficient means to pay them.

Question 45

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

A) Jayme files the petition.
B) Jayme posts a bond to cover the costs of the proceedings.
C) Jayme's creditors agree to the terms.
D) the trustee collects and distributes the property of Jayme's estate.

Question 46

Fact Pattern 25-1
Damian owns a pick-up truck and a motorcycle. He sells the motorcycle to Eden for $10,000. Eden pays for the cycle with a check, knowing that she had insufficient funds in her account to cover the amount. A week later, Damian files a petition in bankruptcy for relief through a liquidation.
Refer to Fact Pattern 25-1. Regarding the sale of the cycle, the bankruptcy trustee can

A) cancel it as a fraudulent transfer.
B) cancel it as a voidable preference.
C) not cancel it or sue to recover the price because it occurred before Damian filed his petition in bankruptcy.
D) not cancel it, but can sue Eden to recover the price.

Question 47

Fact Pattern 25-1
Damian owns a pick-up truck and a motorcycle. He sells the motorcycle to Eden for $10,000. Eden pays for the cycle with a check, knowing that she had insufficient funds in her account to cover the amount. A week later, Damian files a petition in bankruptcy for relief through a liquidation.
Refer to Fact Pattern 25-1. Regarding the pick-up truck, Damian

A) can exempt an interest in it up to $3,675 from the bankruptcy.
B) must include it as part of the estate because Damian sold the cycle.
C) must include it as part of the estate because Eden's check did not cover the cost of the cycle.
D) must include it as part of the estate unless the trustee recovers the price from Eden.

Question 48

Sheri files a petition for bankruptcy. She must include with the petition

A) a plan to turn over her future income to a trustee.
B) a certificate proving credit-counseling from an approved agency.
C) a provision of adequate means to make periodic cash payments to creditors. d a statement of preference for one creditor over another.

Question 49

Joe files a voluntary petition for Chapter 7 bankruptcy. His petition does not need to include

A) a list of Joe's secured creditors.
B) a list of Joe's unsecured creditors.
C) a list of the occupations of all Joe's creditors.
D) the addresses of all Joe's creditors.

Question 50

Gerald files a bankruptcy petition. The resulting automatic stay will apply to Gerald's

A) alimony debts.
B) child-support debts.
C) spousal maintenance debts.
D) car payment debts.

Question 51

A petition for a discharge in bankruptcy under Chapter 11 may be filed by

A) Reliable Insurance Company.
B) Pacific Mountain Railroad.
C) Solid State Bank.
D) Valley Credit Union.

Question 52

Bobby has fifteen creditors. To force Bobby into bankruptcy proceedings, at least three creditors must join the petition and their unsecured claims must add up to at least

A) $500.
B) $10,250.
C) $14,425.
D) $50,000.

Question 53

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

A) Charlton will be forced to file for relief through an individual repayment plan.
B) the court will discharge Charlton's debts.
C) the court will distribute Charlton's property to Charlton's creditors.
D) the court will issue an automatic stay against any actions by Charlton's creditors.

Question 54

Paxton agrees to pay QuikChek Lenders a debt that is otherwise dis?chargeable in bankruptcy. This is

A) a reaffirmation.
B) a rescission.
C) a reorganization.
D) a revocation.

Question 55

Lionel files a voluntary petition for bankruptcy under Chapter 7. The court will likely deny a discharge of Lionel's debts if he

A) conceals records of his financial condition with the intent to defraud a creditor.
B) does not have sufficient assets to pay all his secured creditors.
C) filed for bankruptcy twelve years ago.
D) has a criminal record.

Question 56

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

A) domestic-support obligations.
B) student loans if payment would impose undue hardship.
C) unpaid loans to finance home repairs.
D) unsecured credit-card debt.

Question 57

Thirty-one days before filing a petition in bankruptcy, Gavin transfers prop?erty and makes payments that favor one creditor over another. These are

A) affirmation agreements.
B) preferences.
C) secured interests.
D) unsecured debts.

Question 58

Norma files a petition in bankruptcy. She turns her assets over to O'Brien, who sells them and then distributes the proceeds to Norma's creditors. O'Brien is a

A) preferred creditor.
B) bankruptcy court judge.
C) bankruptcy trustee.
D) debtor.

Question 59

Patsy files a petition in bankruptcy. At the moment of filing

A) an automatic stay goes into effect.
B) Patsy's debts are discharged.
C) Patsy's petition is dismissed.
D) Patsy's property is distributed to her creditors.

Question 60

Umiko files a petition for bankruptcy. Her creditors must file with the court their proof of claims against her assets within

A) fifteen days of the order for relief.
B) thirty days of the filing of the petition.
C) sixty days of the automatic stay.
D) ninety days of the creditors' meeting.

Question 61

Sunn Energy, Inc., needs funds to meet its payroll, to make other cur?rent operating expenses, and to pay its creditors. Terence, Sunn's only shareholder, loans the company $100,000 and accepts a promissory note signed on behalf of Sunn by Ulrich, the firm's accountant. Sunn's fi?nancial problems continue, however, and the firm's creditors file an in?voluntary petition to force it into bankruptcy. Is Terence entitled to repay?ment of the loan to Sunn? If so, what is the priority of the claim?

Question 62

Ed is a debtor. Financial Loans, Inc., and the government are Ed's credi?tors. For these parties, a bankruptcy proceeding under Chapter 13 could be initiated by the filing of a petition by

A) Ed alone or by his creditors jointly.
B) Ed only.
C) Financial Loans only.
D) the government only.

Question 63

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

A) all debts provided for by the plan.
B) money owed for services rendered.
C) claims not provided for by the plan.
D) credit-card debt.

Question 64

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

A) 1.
B) 3.
C) 5.
D) 12.

Question 65

Shippers Dispatch Corporation orders office equipment from Office Outfitters, Inc., which has an unperfected security interest in the equipment until it is paid for. Meanwhile, Shippers Dispatch takes out a loan from Capital Credit, Inc., subject to a security interest in Shippers Dispatch's building and equip?ment, which Capital perfects. Shippers Dispatch files a bankruptcy petition under Chapter 7. If the petition is granted, in what or?der will Shippers Dispatch's creditors be paid?

Question 66

Shale Oil, Inc., files a petition in bankruptcy for relief through a reorganization and assumes the role of a debtor in possession. In this role, Shale Oil is simi?lar to

A) a creditor at a creditors' meeting.
B) an individual debtor who is denied a discharge under the means test.
C) a secured creditor in possession of collateral.
D) a trustee in a liquidation.

Question 67

A petition for a discharge in bankruptcy under Chapter 13 may be filed by

A) Gracie, the sole proprietor of Home Net Services.
B) Internet Portals &

Question 68

Zeke files a petition for bankruptcy under Chapter 13. Zeke's Chapter 13 plan must provide for

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

Question 69

Dorothy files a petition for bankruptcy under Chapter 13. If she is granted a discharge, debts that will most likely be discharged include

A) claims not provided for by the plan.
B) payments on retirement accounts.
C) claims for domestic support obligations.
D) credit-card debt incurred more than one year before filing.

Question 70

Checkerboard Pizza, Inc. (CPI), files for bankruptcy under Chapter 11. CPI's Chapter 11 plan must contain

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

Question 71

To adjust debt and institute a repayment plan, Bianca-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 72

Anthony believes that he needs to obtain a Chapter 13 discharge in bank?ruptcy. A Chapter 13 case can be initiated by a filing of a voluntary pe?tition by

A) a creditor only.
B) a corporation only.
C) a debtor only.
D) a trustee only.