Question 1

Matt loaned money to Josh and received a signed security agreement from Josh.To make sure he has priority as a creditor,Matt could

Accepted Answer

A) Taking possession of the collateral would perfect the security interest and give
Matt priority in this case.
A) Taking possession of the collateral would perfect the security interest and give Matt priority in this case.
B) Taking possession of the collateral would perfect the security interest and give Matt priority in this case.
C) Taking possession of the collateral would perfect the security interest and give Matt priority in this case.

Question 2

The bankruptcy trustee is a representative of

Accepted Answer

A) The trustee is a representative of the court.
B) The trustee is a representative of the court.
C) The trustee is a representative of the court.
D) The trustee is a representative of the court.

Question 3

A creditor with an interest in real property is called

Accepted Answer

A) A creditor with an interest in real estate is known as a mortgagee.
A) A creditor with an interest in real estate is known as a mortgagee.
B) A creditor with an interest in real estate is known as a mortgagee.
C) A creditor with an interest in real estate is known as a mortgagee.

Question 4

The reorganization plan is unique to what type of bankruptcy filing?

Accepted Answer

A) The reorganization plan is used by businesses in Chapter 11 filings to be able to
continue operations while in bankruptcy.
B) The reorganization plan is used by businesses in Chapter 11 filings to be able to continue operations while in bankruptcy.
C) The reorganization plan is used by businesses in Chapter 11 filings to be able to continue operations while in bankruptcy.
D) The reorganization plan is used by businesses in Chapter 11 filings to be able to continue operations while in bankruptcy.

Question 5

Under Article 9 of the UCC,which of the following could not be used as collateral?

Accepted Answer

A) Real property is not covered under Article 9 of the UCC.
B) Real property is not covered under Article 9 of the UCC.
C) Real property is not covered under Article 9 of the UCC.
D) Real property is not covered under Article 9 of the UCC.

Question 6

A petition for bankruptcy that is filed by creditors against a debtor is known as

Accepted Answer

A) Involuntary bankruptcy actions are filed by creditors to force the debtor into
bankruptcy.
A) Involuntary bankruptcy actions are filed by creditors to force the debtor into bankruptcy.
B) Involuntary bankruptcy actions are filed by creditors to force the debtor into bankruptcy.
C) Involuntary bankruptcy actions are filed by creditors to force the debtor into bankruptcy.

Question 7

Which of the following is not a role of the bankruptcy trustee?

Accepted Answer

A) The trustee is not required to give debt counseling.
A) The trustee is not required to give debt counseling.
B) The trustee is not required to give debt counseling.
C) The trustee is not required to give debt counseling.

Question 8

The _______ is the standard an individual must meet in order to file for Chapter 7 bankruptcy.

Accepted Answer

A) Meeting the means test is the first requirement that an individual must meet to be
eligible to file for Chapter 7.
A) Meeting the means test is the first requirement that an individual must meet to be eligible to file for Chapter 7.
B) Meeting the means test is the first requirement that an individual must meet to be eligible to file for Chapter 7.
C) Meeting the means test is the first requirement that an individual must meet to be eligible to file for Chapter 7.

Question 9

Chris wanted to get a loan from the bank,but he had bad credit.In order to get the money,he convinced Eric to cosign as a surety.Now Chris has stopped making the payments.When is Eric liable for repayment of the loan?

Accepted Answer

A) Eric is always liable to pay the loan because he is primarily liable as a surety.
Y) Eric is always liable to pay the loan because he is primarily liable as a surety.
Z) Eric is always liable to pay the loan because he is primarily liable as a surety.
[) Eric is always liable to pay the loan because he is primarily liable as a surety.

Question 10

Which of the following unsecured creditors has first priority?

Accepted Answer

A) Administration expenses, including court costs and trustee and attorney fees, are
first in the order of priority for unsecured creditors.
A) Administration expenses, including court costs and trustee and attorney fees, are first in the order of priority for unsecured creditors.
B) Administration expenses, including court costs and trustee and attorney fees, are first in the order of priority for unsecured creditors.
C) Administration expenses, including court costs and trustee and attorney fees, are first in the order of priority for unsecured creditors.

Question 11

The only legal remedy for _______ is to bring a lawsuit against a borrower to try to recover the money loaned.

Accepted Answer

A) While other creditors have other legal options to recover their money, an
unsecured creditor's only option is to file suit.
A) While other creditors have other legal options to recover their money, an unsecured creditor's only option is to file suit.
B) While other creditors have other legal options to recover their money, an unsecured creditor's only option is to file suit.
C) While other creditors have other legal options to recover their money, an unsecured creditor's only option is to file suit.

Question 12

In In re Jones,Jones graduated from college and then went to law school.He graduated from law school but was unable to pass the bar exam.Over the next decade he worked various jobs before going back to school again for a master's.Jones took out student loans to pay for his education,resulting in $140,000 of debt.He filed for bankruptcy and sought to have the student loans discharged for "undue hardship." Which of the following is the most likely holding of the court?

Accepted Answer

A) The court would hold that that Jones was a highly educated, healthy person with
marketable skills who could pay back his loans. Undue hardship is a high standard. One court did not find undue hardship enough to discharge student loans for a "46-year-old part-time legal secretary, raising her 14-year-old child and living with her sister, and who had psychiatric problems and had twice attempted suicide" [In re Brightful, 267 F.3d 324 (3d Cir. 2001)].
S) The court would hold that that Jones was a highly educated, healthy person with marketable skills who could pay back his loans. Undue hardship is a high standard. One court did not find undue hardship enough to discharge student loans for a "46-year-old part-time legal secretary, raising her 14-year-old child and living with her sister, and who had psychiatric problems and had twice attempted suicide" [In re Brightful, 267 F.3d 324 (3d Cir. 2001)].
T) The court would hold that that Jones was a highly educated, healthy person with marketable skills who could pay back his loans. Undue hardship is a high standard. One court did not find undue hardship enough to discharge student loans for a "46-year-old part-time legal secretary, raising her 14-year-old child and living with her sister, and who had psychiatric problems and had twice attempted suicide" [In re Brightful, 267 F.3d 324 (3d Cir. 2001)].
U) The court would hold that that Jones was a highly educated, healthy person with marketable skills who could pay back his loans. Undue hardship is a high standard. One court did not find undue hardship enough to discharge student loans for a "46-year-old part-time legal secretary, raising her 14-year-old child and living with her sister, and who had psychiatric problems and had twice attempted suicide" [In re Brightful, 267 F.3d 324 (3d Cir. 2001)].

Question 13

Which of the following is not a purpose of bankruptcy?

Accepted Answer

A) Punishment is not one of the purposes of the bankruptcy statutes.
G) Punishment is not one of the purposes of the bankruptcy statutes.
H) Punishment is not one of the purposes of the bankruptcy statutes.
I) Punishment is not one of the purposes of the bankruptcy statutes.

Question 14

What is the main difference between Chapters 7 and 11?

Accepted Answer

A) The main difference between the two is that under Chapter 11 the business
continues to operate, while in a Chapter 7 the business ceases operation.
\) The main difference between the two is that under Chapter 11 the business continues to operate, while in a Chapter 7 the business ceases operation.
]) The main difference between the two is that under Chapter 11 the business continues to operate, while in a Chapter 7 the business ceases operation.
^) The main difference between the two is that under Chapter 11 the business continues to operate, while in a Chapter 7 the business ceases operation.

Question 15

In Ransom v.FIA Card Services,Ransom filed for Chapter 13 bankruptcy protection and listed among his living expenses the standard amount allowed in the Bankruptcy Code for car ownership costs.Ransom owned his car outright and had no car payment.FIA challenged the car deduction.The court held that Ransom could

Accepted Answer

A) Ransom could not take the car ownership deduction because it was limited to debtors who have loan or lease payments to make.
D) Ransom could not take the car ownership deduction because it was limited to debtors who have loan or lease payments to make.
E) Ransom could not take the car ownership deduction because it was limited to debtors who have loan or lease payments to make.
F) Ransom could not take the car ownership deduction because it was limited to debtors who have loan or lease payments to make.

Question 16

What effect does the process of accord and satisfaction have on creditors?

Accepted Answer

A) Accord and satisfaction is an attempt by a debtor to renegotiate the terms of his or
her loans with the creditors to get the creditors to agree to an amount that is less than they are owed.
M) Accord and satisfaction is an attempt by a debtor to renegotiate the terms of his or her loans with the creditors to get the creditors to agree to an amount that is less than they are owed.
N) Accord and satisfaction is an attempt by a debtor to renegotiate the terms of his or her loans with the creditors to get the creditors to agree to an amount that is less than they are owed.
O) Accord and satisfaction is an attempt by a debtor to renegotiate the terms of his or her loans with the creditors to get the creditors to agree to an amount that is less than they are owed.

Question 17

When does an automatic stay become permanent?

Accepted Answer

A) An automatic stay effectively becomes permanent once the court determines the
validity of the petition.
J) An automatic stay effectively becomes permanent once the court determines the validity of the petition.
K) An automatic stay effectively becomes permanent once the court determines the validity of the petition.
L) An automatic stay effectively becomes permanent once the court determines the validity of the petition.

Question 18

Claudia makes $30,000 a year.The median income for her state is $28,000.She owes over $50,000 in various debts and is considering ways to address her situation.Which of the following is not one of her options to fix her debt issues?

Accepted Answer

A) Claudia does not meet the means test requirement and is therefore not eligible to
file for Chapter 7. If an applicant's income is more than the median, the applicant is not eligible for Chapter 7.
P) Claudia does not meet the means test requirement and is therefore not eligible to file for Chapter 7. If an applicant's income is more than the median, the applicant is not eligible for Chapter 7.
Q) Claudia does not meet the means test requirement and is therefore not eligible to file for Chapter 7. If an applicant's income is more than the median, the applicant is not eligible for Chapter 7.
R) Claudia does not meet the means test requirement and is therefore not eligible to file for Chapter 7. If an applicant's income is more than the median, the applicant is not eligible for Chapter 7.

Question 19

Chapter 13 bankruptcy filings are limited to

Accepted Answer

A) Only individuals who don't have any business debt may use Chapter 13.
A) Only individuals who don't have any business debt may use Chapter 13.
B) Only individuals who don't have any business debt may use Chapter 13.
C) Only individuals who don't have any business debt may use Chapter 13.

Question 20

Which of the following is a debt that is nondischargeable unless the debtor can prove undue hardship?

Accepted Answer

A) The lack of marketable skills is not one of the three requirements for undue
hardship. Student loan debts are nondischargeable unless the debtor can prove "undue hardship."
V) The lack of marketable skills is not one of the three requirements for undue hardship. Student loan debts are nondischargeable unless the debtor can prove "undue hardship."
W) The lack of marketable skills is not one of the three requirements for undue hardship. Student loan debts are nondischargeable unless the debtor can prove "undue hardship."
X) The lack of marketable skills is not one of the three requirements for undue hardship. Student loan debts are nondischargeable unless the debtor can prove "undue hardship."

Quiz 20: Creditors Rights and Bankruptcy