Chapter 13

Bankruptcy proceedings may be voluntary or involuntary.

True

A check must have ____ as its drawee.

a bank

A creditor who obtains an interest in the property of a debtor without the debtor's express agreement may obtain:

a lien

Chapter 11 bankruptcies, which are filed by businesses

allow a business to keep operating under reorganization of its activities and its debts

A creditor is a person or business who

allows goods to be purchased by someone else allows services to be purchased by someone else lends money to someone else

Negotiable instruments function as

are subject to Article 3 of the UCC substitutes for cash credit devices devices for making business deals easier

If a negotiable instrument is ____, the assignee has the same contract rights and responsibilities as the assign-or.

assigned

A ____ is a form of check in which the bank is both the drawer and the drawee.

cashier's check

A "draft drawn on a bank and payable on demand" is a:

check

The most commonly used form of draft is a

check

A ____ is one who lends money to, or allows goods or services to be purchased on credit by, another party, the debtor.

creditor

In most Chapter 11 bankruptcies, the ____ operates the "reorganized" business.

debtor

The ____ agrees to make the payment, such as the bank making a payment based on a document presented to it.

drawee

Under the UCC, ____ includes goods held for sale as well as raw materials.

inventory

Bankruptcy law

is federal statutory law, primarily the Bankruptcy Code

Which of the following is one of the UCC's requirements for an instrument to be negotiable

it must be payable on demand or at a specified time it must state a certain sum of money it must be written

Filing for bankruptcy under Chapter 7 of the bankruptcy code results in ____ of debts.

liquidation

The ____ of a note is the party who promises to pay another party

maker

Bankruptcy

may be forced upon a debtor

Under a floating lien

new inventory is used to replace collateral that is sold

A check must be paid

on demand

Filing for bankruptcy under Chapter 13 of the bankruptcy code results in ____ of debts.

reorganization

A ____ requires immediate payment by the drawee to the payee.

sight draft

In a suretyship

the credit of a third party secures a debt

Capacity refers to

the debtor's ability to pay

Capital refers to:

the debtor's financial condition

Bankruptcy discharge is

the final stage of the bankruptcy proceeding for individuals

A guarantor is generally the same as:

the surety

Billy wants to borrow $10,000 to start a male belly dancing business. Creditors are not anxious to lend him the funds. Billy convinces Gary to back-up his credit. Gary is

the surety

A creditor can obtain the property of a debtor

through operation of law and if the debtor enters into such an arrangement

A bank is the maker of a certificate of deposit.

true

A bankruptcy is a matter of credit history record for ten years.

true

A secured creditor is one is able to take a non-paying customer's property to satisfy the customer's debt.

true

Which of the following requirements is necessary to be a holder in due course

-the transferee must give value for the negotiable instrument -the transferee must take the instrument without knowledge that it is overdue or defective -the transferee must take the instrument in good faith

The UCC prohibits the use of "floating liens" that keep carrying forward against a debtor when more supplies are added to an existing account.

False

A commercial instrument where one party has a legal obligation to pay another party a certain sum of money and involves a maker and a payee only is called:

a note

If a debtor is insolvent, the unsecured creditor:

cannot collect the bill

A form of check in which the bank is both the drawer and the drawee is called a:

cashier's check

The final stage of bankruptcy is known as:

discharge in bankruptcy

The ____ issues or creates the document that requests payment, probably from a bank, but it could be from another party.

drawer

A mechanic's lien is also called an artisan's lien.

false

A mechanic's lien is the most common lien on personal property.

false

A note involves two parties, the maker and the payee. Payment must be on demand.

false

The framers of the Constitution specifically made bankruptcy a matter of

federal law

An advantage of a well-planned Chapter 11 bankruptcy, compared to liquidation, includes:

fewer legal fees

Under a Chapter 13 proceeding, debts must be repaid usually

none of the other choices

A ____ offers the right to continue to hold goods on which work has been done, or for which materials have been supplied, until the customer pays.

possessory lien