Deck 34: Bankruptcy

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

In the majority of states,debtors may use only federal exemptions to exempt certain property from the bankruptcy.

Question 5

One goal of bankruptcy law is to ensure equitable treatment of creditors who are competing for a debtor's assets.

Question 6

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

Question 7

To supply false information on official bankruptcy schedules is a crime.

Question 8

A farmer cannot be forced into involuntary bankruptcy.

Question 9

All debts are dischargeable in bankruptcy.

Question 10

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

Question 11

Bankruptcy proceedings are held in state courts.

Question 12

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

Question 13

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

Question 14

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

Question 15

The basic duty of a trustee is to collect the debtor's property and reduce it to money for distribution.

Question 16

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

Question 17

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

Question 18

A debtor must be insolvent to file for bankruptcy relief.

Question 19

A trustee does NOT have the power to avoid preferences.

Question 20

A preference occurs when a debtor transfers property or money favoring one creditor over others.

Question 21

In a repayment plan case,the plan must provide for payment of all claims in full,whether or not they are entitled to priority.

Question 22

Lulu joins with other creditors to force Mikhail,a debtor,into bankruptcy.One of the goals of bankruptcy law with respect to creditors is to​ 

A) ensure that creditors will continue to lend to insolvent debtors. 
B) protect creditor assets from diminution in value. 
C) ​provide equitable treatment in the competition for debtor assets. 
D) ​make all debtor property available for creditor claims.

Question 23

Carlton files a petition in bankruptcy.One of the goals of bankruptcy law with respect to a debtor is to 

A) ​encourage the continued use of credit to borrow funds. 
B) ​ensure that third parties will continue to guarantee loans. 
C) ​provide a fresh start, free from creditors' claims. 
D) ​shield assets from creditors' claims.

Question 24

A repayment plan case can be initiated by the conversion of a liquidation petition.

Question 25

A court can dismiss a debtor's petition for aChapter 13 adjustment if the circumstances indicate bad faith. 

Question 26

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

Question 27

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

Question 28

Some student loans are dischargeable in aChapter 7 bankruptcy.

Question 29

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 30

In the distribution of the debtor's estate,unsecured creditors take priority over secured creditors.

Question 31

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

Question 32

Unsecured creditors do not have a vote to confirm aChapter 13 plan.

Question 33

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

Question 34

Mabel files a petition in bankruptcy.The initial proceeding on this petition will be in 

A) ​a federal bankruptcy court. 
B) ​a state bankruptcy court. 
C) ​the highest court in the state in which Mabel is located. 
D) ​the United States Supreme Court.

Question 35

Mara wishes to appeal a decision from a federal bankruptcy court.Mara may appeal to 

A) ​no court-there is no appeal from a bankruptcy court decision. 
B) ​a federal district court. 
C) ​the U.S. Supreme Court. 
D) ​a state court.

Question 36

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

Question 37

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

Question 38

Payments under aChapter 13 plan must be completed within three to five years,depending on the debtor's family income.

Question 39

Paulina operates a sole proprietorship,a corporation,and a partnership.Paulina wants to obtain relief for her individual debts and the debts of her corporation and partnership.For each of these,Paulina may 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 40

If the assets in a debtor's estate in bankruptcy are insufficient to pay fully all creditors,the debtor is liable for the difference.

Question 41

Creditors hold judgments on overdue debts against AAA Auto Repair when the debtor receives a discharge in bankruptcy.AAA's discharge will 

A) ​extend the time for payment of the overdue debts. 
B) ​have no effect on the creditors' judgments. 
C) ​require creditors to re-file their collection actions. 
D) ​void any creditor's judgment on a discharged debt.

Question 42

Daniel is a trustee for a federal bankruptcy court.Daniel's duties include 

A) ​collecting the debtor's available estate. 
B) ​establishing priority for the payment of unsecured creditors. 
C) ​operating a debtor's business to obtain maximum profit for creditors. 
D) ​submitting to an examination under oath by the creditors.

Question 43

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

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

Question 44

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 45

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 46

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

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

Question 47

Mac files a petition for a discharge in bankruptcy.Mac's failure to appear at a meeting of the creditors listed in Mac's schedules may result in Mac being 

A) ​denied a discharge of bankruptcy. 
B) ​fined. 
C) ​held in contempt. 
D) ​imprisoned.

Question 48

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 49

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

A) ​proof of each creditor's claim. 
B) ​a list of creditors and the amount of the debt owed to each. 
C) ​all of his debit and credit cards to be disposed of by the court. 
D) ​an affidavit testifying to his having read the Bankruptcy Code.

Question 50

Milos files a petition in bankruptcy.His dischargeable debts include 

A) ​domestic-support obligations. 
B) ​student loans unless the lender would suffer undue hardship. 
C) ​court costs, trustee fees, and attorney's fees associated with the bankruptcy. 
D) ​unsecured credit-card debt.

Question 51

Jay files a bankruptcy petition underChapter 7.Among his debts are unpaid taxes,fines owed to the government,student loans owed to Mega University,and support owed to his ex-wife Kris.Most likely to be discharged are 

A) ​the back taxes if they accrued within the previous three years. 
B) ​the fines if they have been outstanding less than eight years. 
C) ​the student loans if their payment would impose undue hardship. 
D) ​the support debts.

Question 52

Cassie files a voluntary petition in bankruptcy for relief through a liquidation.Among her debts that will not be discharged are included claims 

A) ​by creditors who were not notified of the bankruptcy. 
B) ​for money to be paid for goods not delivered. 
C) ​for contributions to employee benefit plans. 
D) ​for long overdue credit-card debt.

Question 53

Kofi files a petition for bankruptcy.Kofi 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 54

Donna goes through an involuntary bankruptcy proceeding.An involuntary 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 55

Roland files forChapter 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 56

Rodger's creditors try to force him into involuntary bankruptcy.The creditors will be unsuccessful if Rodger 

A) ​owns a business that employs fewer than ten people. 
B) ​is a farmer. 
C) ​has a medical condition. 
D) ​has to pay child support.

Question 57

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) ​a bankruptcy court judge. 
C) ​a bankruptcy trustee. 
D) ​a debtor.

Question 58

Harold files a bankruptcy petition.The resulting automatic stay will apply to Harold's payments for 

A) ​alimony. 
B) ​child support. 
C) ​all of the choices. 
D) ​a car.

Question 59

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

A) ​conceals records of his financial condition to defraud a creditor. 
B) ​does not have sufficient assets to pay all his secured creditors. 
C) ​filed for bankruptcy 12 years ago. 
D) ​has a criminal record.

Question 60

Roy,the owner of Standard Business Company (SBC),sells SBC to Tim for a note payable to Roy for $100,000.Tim does not pay the note and files for bankruptcy underChapter 7.The debt represented by the note is 

A) ​dischargeable if $100,000 now seems to be a high price for SBC. 
B) ​dischargeable under any circumstances. 
C) ​not dischargeable if Tim concealed assets to defraud Roy. 
D) ​not dischargeable under any circumstances.

Question 61

Jordan believes that she needs to obtain a discharge in bankruptcy through an individual's repayment plan.This proceeding can be initiated by a filing of a petition by 

A) ​a trustee. 
B) ​a debtor. 
C) ​a corporation. 
D) ​a partnership.

Question 62

Gem Jewelers files a voluntary petition for bankruptcy.In listing its assets,Gem intentionally does not include certain valuable stones.After Gem is granted a discharge,Hasty Catering,one of Gem's unsecured creditors whose claims were discharged,learns of the fraud.Hasty can 

A) ​do nothing. 
B) ​enforce its claim against Gem. 
C) ​file an involuntary petition for bankruptcy against Gem. 
D) ​take possession of the stones with or without a breach of the peace.

Question 63

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 straight bankruptcy plan.

Question 64

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 forPhilo 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) ​allowed claims not provided for by the plan. 
D) ​credit-card debt.

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 equipment,which Capital perfects.Shippers Dispatch files a bankruptcy petition underChapter 7.If the petition is granted,in what order will Shippers Dispatch's creditors be paid?

Question 66

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

A) ​Gracie, the sole proprietor of Home Net Services. 
B) ​Internet Portals & Pages, a partnership. 
C) ​World Web Services, Inc., a corporation. 
D) ​Internet Portals & Pages or World Web Services, Inc..

Question 67

Ciera buys a car from Town Motors.Less than a year later,Ciera files for bankruptcy underChapter 13.Her plan must provide that Town retains a lien on the car until the entire debt is paid  

A) ​under no circumstances. 
B) ​if Town extended credit for all or part of the purchase price of the car. 
C) ​if Ciera surrenders the car to Town. 
D) ​if Ciera's other creditors do not object.

Question 68

Current City (CC)is a retail seller of television sets.CC sells Dhani a $3,000 large-screen,high-definition,LED 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 involuntarily 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.

Question 69

Zeke files a petition for bankruptcy underChapter 13.Zeke'sChapter 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 70

Jill believes that she should file a plan for aChapter 13 discharge in bankruptcy.A court will confirm her bankruptcy plan if it provides for​ 

A) ​the completion of all payments to all creditors within six years. 
B) ​the payment of 100 percent of all obligations in full. 
C) ​the surrender of all collateral to the creditors. 
D) ​the turnover of the debtor's future income to the trustee.

Question 71

Checkerboard Pizza,Inc.(CPI),files for bankruptcy underChapter 11.CPI'sChapter 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 72

To adjust debt and institute a repayment plan,Bianca-who is not a corporation,a partnership,or a family farmer or fisherman-may file a petition in bankruptcy for relief through 

A) ​a liquidation. 
B) ​a reorganization. 
C) ​a repayment plan. 
D) ​a straight bankruptcy plan.