Deck 44: Bankruptcy

Question 1

A liquidation proceeding was traditionally known as straight bankruptcy.

Answer 1

True

Question 2

An order of relief is granted automatically if the debtor does not contest the filing of an involuntary petition.

Answer 2

True

Question 3

Creditors of the debtor may not file an involuntary petition for a Chapter 13 proceeding.

Answer 3

True

Question 4

The person who files a voluntary petition must be insolvent.

Question 5

After the bankrupt person has paid all the required fees,creditors are no longer able to file objections to the discharge of the bankrupt.

Question 6

Under Chapter 12 of the Bankruptcy Code,a debtor is usually permitted to remain in possession to operate the farm or fishing operation.

Question 7

Debtors are considered insolvent if they are unable or fail to pay their debts as they become due.

Question 8

The Bankruptcy Code:

A)is a provision of the Uniform Commercial Code.
B)is a federal law.
C)is a state law.
D)comes under both the federal and the state law.

Question 9

A reorganization plan is essentially:

A)a supervised attempt by the state to solve a debtor's financial problems.
B)a contract between a debtor and its creditors.
C)a contract filed voluntarily by the creditors.
D)a contract between a debtor,its creditors and trustees.

Question 10

Chapter 11 of the Bankruptcy Code deals with ___.

A)liquidations
B)consumer debt adjustments
C)reorganizations
D)fishing operations

Question 11

A voluntary petition can only be filed by a corporation.

Question 12

Both secured and unsecured creditors are required to file proofs of claims.

Question 13

Preferential liens are treated in a manner similar to preferential payments.

Question 14

A straight bankruptcy is brought under _____ of the Bankruptcy Code.

A)Chapter 7
B)Chapter 11
C)Chapter 13
D)Chapter 15

Question 15

A major purpose of the Bankruptcy Code is:

A)to ensure that some creditors get more advantages than others.
B)to protect honest debtors against the demands for payment by creditors.
C)to ensure that a debtor can never be discharged of the debts he owes to the creditors.
D)to protect debtors from creditors who try to diminish the debtor's assets.

Question 16

Educational loans are dischargeable debts.

Question 17

If a debtor has more than a dozen creditors,an involuntary petition to declare bankruptcy must be signed by at least three.

Question 18

If a husband and wife involved in bankruptcy cannot decide whether to use the state or the federal set of exemptions,the state set is elected by default.

Question 19

Those creditors who do not take any collateral to secure the debt owed to them are unsecured creditors.

Question 20

Exemptions are available to both individual debtors as well as corporations.

Question 21

Objections to a discharge of bankruptcy can be filed by ___.

A)a creditor,the trustee,or the U.S.attorney
B)the U.S.attorney only
C)the trustee only
D)the secured creditors only

Question 22

Bankruptcy judges:

A)are considered to be units of the district court.
B)are not considered to be part of the district court.
C)are considered to be units of local circuit courts.
D)are considered to be units of the federal court.

Question 23

Voluntary petitions in bankruptcy may be filed by a(n):

A)individual.
B)insurance corporation.
C)municipal corporation.
D)loan association.

Question 24

Six months before filing for bankruptcy,Shirley sold her new car to her brother,Claude,for $100 so that her creditors could not claim it.The market value of the car was $8,000 at the time of the sale.Under these circumstances:

A)the transfer is voidable by the trustee because Shirley did not receive fair consideration for this transfer.
B)the transfer is not voidable by the trustee because the transfer occurred 6 months before Shirley filed her bankruptcy petition.
C)the transfer is not voidable because the transfer occurred between two relatives.
D)the transfer is voidable by the creditors.

Question 25

Chapter 13 of the Bankruptcy Act:

A)permits compositions of credit.
B)does not help debtors to overcome their financial difficulties.
C)does not allow time extensions to pay debts.
D)permits reductions of debts.

Question 26

Which of the following statements concerning reaffirmation agreements is correct?

A)Reaffirmation agreements are unlawful under the Bankruptcy Act.
B)Reaffirmation agreements must be made before a discharge in bankruptcy is granted.
C)A debtor cannot voluntarily pay any dischargeable obligation without entering into a reaffirmation agreement.
D)Court approval is required for the reaffirmation of loans secured by real property.

Question 27

Debts created by larceny or embezzlement by the debtor while acting in a fiduciary capacity are:

A)dischargeable.
B)secured.
C)nondischargeable.
D)unsecured.

Question 28

A bankrupt debtor:

A)can elect to use the set of exemptions provided by either the state or federal bankruptcy law.
B)can elect to keep some items exempted under the state law and other items under the federal law.
C)cannot elect which set of exemptions will be allowed; the creditors' committee or trustee makes that decision.
D)can elect the exemptions of the place where she/he was domiciled for 100 days before filing of the petition.

Question 29

Under the Bankruptcy Code,exemptions are only available to ___.

A)corporations
B)loan associations
C)individual debtors
D)non-profit organizations

Question 30

When a debtor files a bankruptcy petition,the creditor may be relieved from an automatic stay on his actions against the debtor:

A)if the creditor can show that his actions do not give adequate protection to the debtor.
B)if the debtors file a plan of reorganization that has a reasonable chance of being confirmed.
C)if his actions are aimed at obtaining possession of the debtor's property.
D)if the creditor can show that the stay jeopardizes his interest in certain property.

Question 31

A bankrupt person's estate is administered by ___.

A)the creditors
B)the creditors' committee
C)the trustee
D)the bankruptcy judge

Question 32

Which of the following is true about a trustee's duties?

A)He represents the debtor in bankruptcy proceedings.
B)He represents the creditors in bankruptcy proceedings.
C)He cannot have the debtor's property appraised.
D)He cannot sell the debtor's nonexempt property.

Question 33

A bankrupt person who has not been guilty of certain dishonest acts and who has fulfilled his duties as a bankrupt is entitled to a _____ in bankruptcy.

A)reaffirmation
B)claim
C)reorganization
D)discharge

Question 34

If a creditor is owed a debt that is provable and nondischargeable,he/she may:

A)participate in the distribution of the debtor's estate.
B)not pursue the debtor for payment even after the completion of the bankruptcy proceedings.
C)not enter into any voluntary agreement with the debtor for discharge of the debt.
D)need court approval for reaffirmation of loans.

Question 35

Bill filed a petition for bankruptcy under Chapter 7 of the Bankruptcy Act.Bill listed,among others,the following debts: a debt to the National Bank for $10,000 secured by his 1980 truck,which is valued at $3,500; an unsecured debt to his friend,Frances; a $500 debt to the IRS for 1989 federal income taxes; and a $500 student loan to the university which was due one year ago.Under these circumstances:

A)the $500 debt to the IRS is a nondischargeable debt.
B)Frances can claim the debt even without filing a proof of claim.
C)the $500 student loan to the university is a dischargeable debt.
D)the bank can receive preferential payment because the debt owed to it is highest.

Question 36

Which of the following statements is true for claims?

A)A trustee doesn't receive the defenses that a bankrupt person enjoys against claims.
B)If the debtor's property is subject to a secured claim of a creditor,that creditor has the first claim to it.
C)If a claim is provable,a creditor can participate in the distribution of the assets of the bankruptcy estate.
D)Both secured and unsecured creditors are required to file proofs of claims.

Question 37

People who file a voluntary petition:

A)must be insolvent.
B)must be able to allege that they have debts.
C)seek to have the debtors' assets distributed among the trustees.
D)must have 12 or more creditors.

Question 38

The court orders relief only if:

A)the debtor is generally not paying his/her debts as they become due.
B)a custodian takes possession of the debtor's property within six months of the filing of the petition.
C)the debtor is involved in a case to establish paternity.
D)the creditor wants to enforce a lien against the debtor's property.

Question 39

Which of the following payments is considered preferential?

A)Payments made in the ordinary course of business.
B)Payment of monthly utility bills.
C)Payment made by an insolvent debtor within 50 days of the filing of the bankruptcy petition.
D)Payment to a creditor giving him a greater percentage of a preexisting debt than other creditors.

Question 40

Involuntary petitions in straight bankruptcy can be filed against:

A)banking corporations and credit unions.
B)savings and loan associations.
C)a debtor engaged in business.
D)a nonprofit organization.

Question 41

Under Chapter 11 of the Bankruptcy Act,a reorganization plan:

A)must divide the creditors into classes and set forth how each creditor will be satisfied.
B)need not state which claims are impaired or adversely affected by the plan.
C)need not necessarily treat all creditors in a given class the same.
D)must give creditors and trustees shares in the corporation in exchange for the debt owed to them.

Question 42

Which of the following statements is true for Chapter 11 of the Bankruptcy Code?

A)Chapter 11 cases are liquidated rather than reorganized.
B)Unlike Chapter 13,in Chapter 11 cases,the debt is predominately nonconsumer debt.
C)Petitions for Chapter 11 cases cannot be filed voluntarily by the debtor.
D)The reorganization plan is essentially a contract between a debtor and its trustees.

Question 43

What are the primary purposes of the Bankruptcy Code?

Question 44

Describe the creditor actions that are automatically stayed when the debtor files a bankruptcy petition.

Question 45

A petition for Chapter 13 proceedings:

A)can be initiated by the voluntary petition of a debtor.
B)can be initiated by the involuntary petition of creditors.
C)can be initiated by the trustee.
D)can be initiated by the secured creditors.

Question 46

When is a debtor allowed to void liens on his properties? What type of liens can be voided on this basis?

Question 47

Under Chapter 13 of the Bankruptcy Act,debtors:

A)can be free of all debts that are not dischargeable under Chapter 7.
B)cannot retain more property than is exempt from bankruptcy under state law.
C)are free from garnishment of their property by creditors.
D)can pay a lesser percentage of debts owed to the creditors than in straight bankruptcy proceedings.

Question 48

In 1986,____ of the Bankruptcy Code was added to target the financial problems of the family farm.

A)Chapter 7
B)Chapter 11
C)Chapter 13
D)Chapter 12

Question 49

What types of debts are not affected by the discharge of a bankrupt debtor?

Question 50

Who are the different unsecured creditors who receive distributions of a debtor's estate?