Question 1

Swim & Trim Fitness 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,Swim & Trim should file a petition in bankruptcy for relief through

Accepted Answer

Filing for relief through a reorganization allows Swim & Trim to restructure its debts and continue operating while paying off a portion of the debts and being discharged of the remainder. This option is suitable for a business that wants to remain in operation while resolving its financial difficulties. The other options, such as liquidation or a family-farmer bankruptcy plan, are not applicable to Swim & Trim's situation or would not allow the company to continue operating. A repayment plan may be an option, but it does not offer the same level of protection and restructuring possibilities as a reorganization.

Question 2

Wilbur files a petition in bankruptcy for relief through an individual's repayment plan.Wilbur is granted a discharge.Debts that will not be discharged include claims for

Accepted Answer

The answer of Wilbur files a petition in bankruptcy for...

Question 3

Hasty Pastries declares bankruptcy,idling Hasty's delivery vehicles.The court can compel Hasty to make periodic cash payments to a credi?tor with a se?cured interest in the vehicles to offset the depreciation in their value.This is

Accepted Answer

This scenario describes the adequate protection doctrine, which allows a creditor with a secured interest in property that is depreciating in value to receive periodic cash payments to offset that depreciation during bankruptcy proceedings. The avoidance doctrine deals with the ability of the bankruptcy court to set aside certain transactions made by the debtor prior to filing for bankruptcy. A preferential transfer occurs when a debtor pays one creditor over another before filing for bankruptcy, and the automatic stay prevents creditors from taking action to collect debts from the debtor while the bankruptcy case is pending.

Question 4

Mikhail files a petition in bankruptcy.One of the goals of bankruptcy law with respect to a debtor who has "gotten in over his head" is to

Accepted Answer

The ultimate goal of bankruptcy law is to provide relief and protection to a debtor who has fallen into financial distress. This may involve discharging certain debts or restructuring repayment plans to make them more manageable, allowing the debtor to regain their footing and move forward without being overwhelmed by debt. The other options listed (A, B, D) do not align with this goal and may even hinder the debtor's ability to recover from their financial troubles.

Question 5

Reconstruction Building Services receives a discharge in bankruptcy,even though some creditors hold judgments on overdue debts against it and others filed ac?tions to collect on overdue debts before the bankruptcy.Reconstruction's dis?charge will

Accepted Answer

A discharge in bankruptcy prohibits actions and voids judgments regarding overdue debts, despite any previous attempts from creditors to collect on the debts. Therefore, option D is the correct answer. The other options do not apply in this case as they are not relevant to the scenario presented.

Question 6

Lorissa files a petition for bankruptcy.Lorissa's creditors must file with the court their proof of claims against Lorissa's assets within

Accepted Answer

The answer of Lorissa files a petition for bankruptcy.Lorissa's creditors...

Question 7

To adjust debt and institute a repayment plan,Norman,a family fisherman,may file a petition in bankruptcy for relief under the Bankruptcy Code's Chapter

Accepted Answer

The answer of To adjust debt and institute a repayment...

Question 8

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

Accepted Answer

Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), individuals must attend a credit counseling briefing before filing for bankruptcy. Therefore, Kenyon must include a certificate proving attendance at a credit counseling briefing with his petition. However, options A and C are not required to be included with the petition.

Question 9

Resources Exploitation,Inc.(REI),files a petition in bankruptcy for relief through a reorganization and assumes the role of a debtor in possession.In this role,REI is simi?lar to

Accepted Answer

The answer of Resources Exploitation,Inc.(REI),files a petition in bankruptcy for...

Question 10

Verna files a petition in bankruptcy in a liquidation proceeding.If the court administers the means test and concludes that Verna is abusing the bankruptcy process by filing for a liquidation,the court will most likely

Accepted Answer

If the court administers the means test and concludes that Verna is abusing the bankruptcy process, they will force her to file for relief through an individual repayment plan rather than allowing for liquidation of assets. This is because the primary goal of bankruptcy law is to provide debt relief while also ensuring that creditors receive fair treatment. If the court determines that a debtor is abusing the system by using a liquidation proceeding instead of a repayment plan, they will require the debtor to file under the appropriate chapter of the bankruptcy code.

Question 11

Fact Pattern 30-1A 
Stacy sells her all-terrain vehicle (ATV)to her brother Terrill for $1,000.Twelve days later,Stacy files a petition in bankruptcy for relief through a liquidation.
-Refer to Fact Pattern 30-1A.Regarding the sale of the ATV,the trustee may

Accepted Answer

The trustee may cancel the sale of the ATV as a fraudulent transfer because it was made within 90 days (12 days) before the filing of the bankruptcy petition and for less than its reasonable value. As a result, the transfer may be considered to be made with the intent to defraud, hinder, or delay the creditors of the debtor.

Question 12

Kipper files a petition in bankruptcy.Kipper's dischargeable debts include

Accepted Answer

Dischargeable debts in bankruptcy typically include unsecured credit-card debt. Domestic-support obligations and unpaid state and federal taxes are generally not dischargeable, while the dischargeability of student loans depends on the circumstances and hardship criteria.

Question 13

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

Accepted Answer

According to the US Bankruptcy Code, the order for relief in a voluntary bankruptcy filing is effective as soon as the petition is filed, assuming the filing is proper. Posting a bond or creditor agreement are not necessary for the order for relief to take effect. The trustee's collection and distribution of the property comes after the order for relief is effective.

Question 14

Bernice files a petition in bankruptcy.The initial proceeding on this peti?tion will be in

Accepted Answer

Bankruptcy cases are filed in federal bankruptcy courts, which are specialized courts within the federal district court system. Thus, Bernice's initial proceeding on her bankruptcy petition will take place in a federal bankruptcy court.

Question 15

Teona files a vol?untary petition in bankruptcy for relief through a liquidation.Debts that will not be discharged include claims for

Accepted Answer

Domestic-support obligations, such as child support or alimony, cannot be discharged in bankruptcy.

Question 16

Ronaldo agrees to pay Simplex Cash Store a debt that is otherwise dis?chargeable in bankruptcy.This is

Accepted Answer

Ronaldo agreeing to pay Simplex Cash Store a debt that is dischargeable in bankruptcy is a reaffirmation. A reaffirmation is an agreement between a debtor and a creditor that waives the dischargeability of a debt in bankruptcy and allows the debtor to keep the collateral associated with the debt. Therefore, A) a reaffirmation is the best choice.

Question 17

A petition for a discharge in bankruptcy in a liquidation proceeding may be filed by

Accepted Answer

The answer of A petition for a discharge in bankruptcy...

Question 18

Fact Pattern 30-1A 
Stacy sells her all-terrain vehicle (ATV)to her brother Terrill for $1,000.Twelve days later,Stacy files a petition in bankruptcy for relief through a liquidation.
-Refer to Fact Pattern 30-1A.Terrill dies while riding the ATV.Stacy is Terrill's only heir.With respect to the bankruptcy estate,the inheritance is

Accepted Answer

According to the bankruptcy code, any property received by the debtor within 180 days after filing for bankruptcy, including inheritance, becomes part of the bankruptcy estate. Since Terrill died within 12 days of Stacy's filing, the inheritance is part of the bankruptcy estate.

Question 19

Tippi believes that she needs to obtain a discharge in bank?ruptcy through an individual's repayment plan.This proceeding can be initiated by a filing of a pe?tition by

Accepted Answer

Only a debtor can file for bankruptcy and initiate the process. Creditors, corporations, and partnerships cannot file on behalf of the debtor.

Question 20

To adjust debt and institute a repayment plan,Charlie-who is not a corpo?ration,a partnership,or a family farmer or fisherman-may file a peti?tion in bankruptcy for relief through

Accepted Answer

The option for Charlie to adjust his debt and institute a repayment plan is best suited through filing a petition for relief through a repayment plan in bankruptcy. This will allow him to reorganize his debts and pay back his creditors in a manageable way while keeping his assets. Option A, liquidation, would require Charlie to sell off his assets to pay back his creditors, whereas option B, reorganization, is typically used for corporations and partnerships rather than individuals. Option D, family-farmer bankruptcy plan, is only available to certain qualifications that Charlie does not meet. Therefore, option C is the best choice for Charlie to manage his debt and provide a pathway for repayment.

Quiz 30: B: Bankruptcy Law