Deck 21: Bankruptcy

Question 1

Under the provisions of Chapter 13 of the federal bankruptcy law, the debtor retains his or her property, but agrees to pay back all or a portion of his or her debts with interest over a period spanning from three to five years.

Answer 1

False

Question 2

Bankruptcy filings must not be made for the purpose of defrauding creditors.

Answer 2

True

Question 3

An individual or business that owes money is said to be a creditor.

Answer 3

False

Question 4

Because priority debts are deemed to be sufficiently important, they are not required to be paid in full.

Question 5

A contract that is entered into by the debtor that includes a preferential payment is void.

Question 6

The most common type of bankruptcy filed by individuals and businesses is Chapter 7.

Question 7

Under Chapter 7 bankruptcy the trustee collects the debtor's exempt property, sells it and dispenses the proceeds to the creditors in a fair manner.

Question 8

The means test uses a complex formula that measures an individual's income relative to the median income of the people in the state where he or she resides.

Question 9

An example of a debt that is not discharged in bankruptcy is student loans.

Question 10

Bankruptcy law is divided in clauses.

Question 11

Insolvency often leads to default.

Question 12

Two types of actions by the debtor are prohibited under bankruptcy law: preferential payment and fraudulent transfer.

Question 13

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires that a debtor who wishes to file under any chapter of the bankruptcy law must, unless exempt, receive individual or group credit counseling from an approved, not-for-profit, individual or group budget or credit counseling agency by telephone or online.

Question 14

Under Chapter 11, the debtor proposes a reorganization plan in order to pay back creditors over time, but major decisions must be approved by management.

Question 15

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 does not allow the bankruptcy court to disallow a petition for a Chapter 7 bankruptcy if the individual filing for bankruptcy earns an income that is too high to meet the standards of the means test.

Question 16

Bankruptcy is the legal state that occurs when a debtor is insolvent, is in default, and is unable to fulfill his or her obligations to pay back his or her creditors.

Question 17

The purpose of Chapter 9 is to provide a municipality with a debt repayment plan rather than to require the liquidation of municipal assets.

Question 18

A voluntary filing occurs when the debtor himself or herself files a bankruptcy petition.

Question 19

A creditor is an individual or business:

A) to which money is owed.
B) who counts money.
C) who loans money
D) who borrows money.

Question 20

Chapter 15 provides a framework for bankruptcy cases in which foreign countries are involved.

Question 21

Insolvency occurs when:

A) assets equal liabilities.
B) liabilities exceed assets.
C) assets exceed liabilities.
D) there are no liabilities.

Question 22

Under Chapter 7 of the bankruptcy law, examples of exempt property under federal law include all of the following EXCEPT:

A) one motor vehicle.
B) appliances.
C) trade tools.
D) vacation homes.

Question 23

In general a debtor may not file for Chapter 7 bankruptcy if he or she had received a bankruptcy discharge in the last_________________:

A) three years.
B) five years.
C) six years.
D) eight years.

Question 24

In addition to the means test, the Bankruptcy Abuse Prevention and Consumer Protection Act requires that a debtor who wishes to file under any chapter of the bankruptcy law must, unless exempt, receive individual or group credit counseling from an approved, not-for-profit, individual or group budget or credit counseling agency. The debtor must obtain a certificate from this agency outlining the assistance in budgeting that the debtor received. The counseling must be performed by telephone or online within _________ prior to the bankruptcy filing.

A) 30 days.
B) 90 days.
C) 180 days.
D) 360 days.

Question 25

Sufficiently important debts that need to be paid in full are called:

A) major debts.
B) priority debts.
C) flexible debts.
D) exempt debts.

Question 26

A family farmer under a Chapter 12 bankruptcy can be all of the following EXCEPT a(n):

A) individual.
B) corporation.
C) municipality.
D) partnership.

Question 27

Chapter 11 Bankruptcy is mostly used by_____________:

A) partnerships.
B) sole proprietorships.
C) individuals.
D) corporations.

Question 28

Identify and define the two types of bankruptcy filings.

Question 29

Discuss the two types of actions that are prohibited under Chapter 7 of the bankruptcy law.

Question 30

Examples of debts discharged under Chapter 7 bankruptcy include all of the following EXCEPT:

A) credit card bills
B) medical bills.
C) lawsuit judgments
D) student loans.

Question 31

Under the provisions of Chapter 13 of the federal bankruptcy law, the debtor retains his or her property but agrees to pay back all or a portion of his or her debts on an interest free basis over a period spanning from ____________ years.

A) one to three.
B) two to four.
C) three to five.
D) five to ten.

Question 32

Chapter 13 bankruptcy is sometimes referred to as a ______________________:

A) reorganization bankruptcy.
B) realignment bankruptcy.
C) recharging bankruptcy.
D) revision bankruptcy.

Question 33

A record of bankruptcy may remain on one's record for up to:

A) 3 years.
B) 5 years.
C) 7 years.
D) 10 years.

Question 34

A(n) ______________ filing occurs when creditors pressure the debtor to file:

A) involuntary.
B) voluntary.
C) advisory.
D) concurrent.

Question 35

The purpose of Chapter 15 bankruptcy is to promote _______________between U.S. courts and those of foreign countries in bankruptcy cases.

A) collaboration.
B) competition.
C) creativity.
D) cooperation.

Question 36

The Bankruptcy Abuse Prevention and Consumer Protection Act allows the bankruptcy court to disallow a petition for a Chapter 7 bankruptcy if the individual filing for bankruptcy earns an income that is __________________to meet the standards of the means test.

A) too high.
B) too low.
C) too indefinite.
D) too flexible

Question 37

Chapter 12 bankruptcy was specifically created to adjust the debts of family farmers or fishers who earn a(n) ____________ income.

A) large.
B) minimal.
C) bi-annual.
D) annual.

Question 38

Under Chapter 13 examples of priority debts include all of the following EXCEPT:

A) certain tax obligations.
B) alimony and child support.
C) wages owed to employees.
D) automobile loans.

Question 39

Define and give examples of secured debts.

Question 40

Under Chapter 9 bankruptcy, a municipality is defined as all of the following types of entity EXCEPT:

A) a political subdivision
B) a public agency
C) an instrumentality of a state
D) a private agency