Question 1

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

Accepted Answer

As part of their duties, a trustee in bankruptcy may have the power to avoid certain transfers and sales of the debtor's property in order to recover assets for the benefit of creditors. This power is granted under bankruptcy law.

Question 2

Friendly Credit Corporation (FCC) believes that Gary may dispose of the assets that FCC expects to receive as payment for Gary's debt before FCC can obtain a judgment. FCC may ask a court to issue a writ of

Accepted Answer

A writ of attachment allows a creditor to seize or "attach" a debtor's property before obtaining a judgment. This is a common remedy for situations where the creditor believes the debtor may dispose of their assets to avoid paying the debt. Through an attachment, the creditor can take possession of the assets and ensure they will be available to satisfy the debt in the event a judgment is obtained. The other options, contribution, execution, and redemption, do not apply in this scenario.

Question 3

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

Accepted Answer

Child-support debts cannot be discharged in bankruptcy and will still need to be paid.

Question 4

Bankruptcy proceedings are held in federal courts.

Accepted Answer

Bankruptcy proceedings fall under federal jurisdiction and are heard in federal courts.

Question 5

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

Accepted Answer

This is known as an "automatic stay" and it is designed to give the debtor a breathing space from creditors while they go through the bankruptcy process. However, there are some exceptions to the automatic stay, such as criminal cases, domestic support obligations, and certain tax proceedings.

Question 6

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

Accepted Answer

According to the United States Bankruptcy Code, a Chapter 11 reorganization plan must provide for payment of tax claims over a period of five years.

Question 7

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

Accepted Answer

This statement is true according to section 727 of the Bankruptcy Code.

Question 8

Concealing assets from a bankruptcy court is a crime.

Accepted Answer

Concealing assets from a bankruptcy court is considered fraud and is punishable by law. It can lead to the dismissal of a bankruptcy case and criminal charges being filed against the debtor. It is important to disclose all assets in the bankruptcy process to ensure a fair and honest resolution of debts.

Question 9

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

Accepted Answer

The answer of An order for relief in a bankruptcy...

Question 10

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

Accepted Answer

It is true that a husband and wife may file a joint petition for bankruptcy. This means that both spouses file for bankruptcy together instead of separately.

Question 11

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

Accepted Answer

This is true. Each state has its own set of exemption laws that determines what property a debtor can keep and what they must forfeit in bankruptcy proceedings. These laws vary widely across the country, so it is crucial to consult with a bankruptcy attorney in your state to understand how these exemptions will impact your case.

Question 12

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

Accepted Answer

The answer of Before filing for bankruptcy, a consumer-debtor must...

Question 13

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

Accepted Answer

The answer of A student loan is discharged under Chapter...

Question 14

A court awards a judgment to Alice, who is the creditor, against Ada, who is the debtor. After the judgment, Alice requests a court order to seize Ada's property to ensure that the judgment will be collectible. This is

Accepted Answer

A writ of execution is a court order to enforce a judgment, typically by seizing a debtor's property to satisfy the debt owed to the creditor. A judicial lien is a court-ordered encumbrance on a debtor's property as security for a debt. A writ of attachment is a court order to seize a defendant's property before judgment is rendered in a lawsuit. Option D is incorrect because it is not a violation of most state laws for a creditor to seek a court order to collect a judgment debt.

Question 15

Portia owes Bon $500 on their contract, but refuses to pay. To collect, Bon files a mechanic's lien, under which security for the debt is represented by

Accepted Answer

A mechanic's lien is a claim against real estate for money owed to a contractor or supplier for labor or materials provided for improvements to the property. Therefore, option B is the correct choice as Portia's real estate is the security for the debt. Options A, C, and D would not be correct as they do not involve a lien on real estate.

Question 16

Some student loans are dischargeable in a Chapter 7 bankruptcy.

Accepted Answer

Although student loans are generally not dischargeable in a bankruptcy, there are some exceptions. In order to discharge student loans in a Chapter 7 bankruptcy, the borrower must prove that repaying the loans would cause an undue hardship. This is a difficult standard to meet, but it is possible in some cases.

Question 17

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

Accepted Answer

This is the principle of the absolute priority rule that applies in corporate bankruptcy cases. Within a class of unsecured creditors, all claims must be paid before any distributions to lower priority classes can be made.

Question 18

Ronald's debt to Greg is past due. Ronald obtains a judgment against Greg to collect the debt, but Greg will not pay. Ronald requests a writ of execution. The property that is seized under the writ of execution must be

Accepted Answer

The answer of Ronald's debt to Greg is past due....

Question 19

Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with Michael, but refuses to pay when the work is done. Michael refuses to return the car until she pays. Michael's lien on Jill's car will end

Accepted Answer

The answer of Michael contracts with Jill to fix the...

Question 20

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

Accepted Answer

The answer of Once a discharge is granted, it may...

Quiz 21: Creditors Rights and Bankruptcy