tessssst 1

Barb loaned Mark $500, which Mark agreed to repay on January 15, 2011. If Mark filed a voluntary petition of bankruptcy on August 1, 2010, Barb had a claim as a creditor.

True

Commencing a voluntary case by filing a petition constitutes an automatic order for relief.

True

Donald has a $10,000 judgment against him for a debt owed to a creditor. If Donald files for bankruptcy and receives a discharge from the bankruptcy court, he will no longer be obligated to pay the judgment.

True

For bankruptcy purposes, insolvency means that debts are greater than assets.

True

Garnishment is one form of pre-judgment remedy.

True

In a Chapter 13 proceeding, only the debtor may submit a plan of reorganization.

True

In a Chapter 13 proceeding, the bankruptcy estate of an individual includes wages earned after commencement of the proceeding.

True

Most student loans cannot be discharged under Chapter 13.

True

Which of the following debts would be discharged in bankruptcy? a. A consumer credit loan for a stove b. Property taxes on a beach house c. Student loans d. Alimony payments past due

a. A consumer credit loan for a stove

Able gets a judgment against Baker in state court for $50,000 on July 1. On July 15, Baker files a bankruptcy petition under Chapter 7. Which of the following is true? a. Able is a lien creditor. b. A creditor with a security interest that was not perfected when the bankruptcy petition was filed has priority over Able. c. The judgment is a preferential transfer that will be invalidated by the trustee. d. Both (a) and (b) are true.

a. Able is a lien creditor.

When may a trustee not avoid a transfer? a. When such payment is of a debt incurred in the ordinary course of business or financial affairs of the debtor and the transferee b. When such payment is not made in the ordinary course of business or financial affairs of the debtor and transferee c. When the transfer is made according to extraordinary business terms d. All of the above

a. When such payment is of a debt incurred in the ordinary course of business or financial affairs of the debtor and the transferee

An ordinary contract between the debtor and his creditors whereby the creditors receive pro rata a part of their claims and the debtor is discharged from the balance of the claims is: a. a nonstatutory composition. b. a statutory assignment. c. an equity receivership. d. an automatic stay.

a. a nonstatutory composition.

Kent loaned Barbara $8,000 and took back a note secured by Barbara's car. If Barbara files for bankruptcy when the value of the car is $4,500, what is Kent's status? He has: a. a secured claim for $4,500. b. an unsecured claim for $8,000. c. an unsecured claim for $4,500. d. a secured claim for $8,000.

a. a secured claim for $4,500.

Pre-judgment attachment permits a creditor to seize the debtor's property when the defendant: a. cannot be served with a summons personally. b. has not paid his debts on time. c. has filed for bankruptcy. d. was found guilty of usury.

a. cannot be served with a summons personally.

A trustee under a Chapter 11 or 13 proceeding performs the same duties as a Chapter 7 trustee.

False

About half of all bankruptcy petitions are involuntary petitions.

False

After reorganization, all debts are forgiven.

False

An assignment for the benefit of creditors requires the creditors' consent

False

Any debtors may seek relief under Chapter 7 of the Bankruptcy Code.

False

Chapter 12 of the Bankruptcy Code applies to individuals or couples engaged in farming if 50 percent of their gross income is from farming and aggregate debts do not exceed $1 million.

False

Chapter 5 involves liquidation, whereas Chapters 7, 11, 12, and 13 involve reorganization and adjustment of debts.

False

Federal district courts may hear all matters collateral to the bankruptcy, even if these matters are not normally permitted to be brought in federal court.

False

Garnishment cannot be ordered prior to a judgment's being entered.

False

In a Chapter 7 proceeding, an unsecured creditor who files a claim with the court after the deadline because he is too busy planning and going on a vacation would be totally unable to collect.

False

In an assignment for the benefit of creditors, if each creditor is paid an equal share of his original obligation, the debtor is then discharged from any further obligation to the creditor.

False

One creditor of a debtor may file a bankruptcy petition as long as the debtor owes him more than $5,000 in unsecured claims.

False

The court has the sole right to accept or reject a Chapter 11 plan of reorganization.

False

The debtor alone decides upon the reorganization plan in Chapter 11 proceedings.

False

The estate of a debtor includes wages earned after commencement of a Chapter 7 liquidation proceeding.

False

A composition of creditors is a bankruptcy form of relief under Chapter 13 of the Bankruptcy Code.

False

A composition would bind to the settlement all of debtor's creditors.

False

A debtor has the option of using either federal or state exemptions; however, the 2005 Act imposes limits on the use of a state homestead exemption to the extent that the homestead was obtained through fraudulent conversion of nonexempt assets at any time before filing the bankruptcy petition.

False

A debtor may not file a plan at any time in a Chapter 11 reorganization.

False

A statutory lien arises solely by force of statute and includes a security interest or judicial lien.

False

UCC Article 9 applies to secured transactions in which the debtor provides a security interest to secure payment of a debt, such as pledging warehoused goods to a creditor or the creditor's having a mechanic's lien against the debtor's property.

False

While certain debts of an individual are not dischargeable under Chapters 7, 11, and 12, all debts are dischargeable under Chapter 13's "hardship discharge" provisions.

False

A debtor may not receive a discharge under Chapter 7 if he or she received a Chapter 13 discharge within the past six years in most cases.

True

A debtor who files for bankruptcy can keep up to $1,450 in jewelry and all social security, veteran's, and disability benefits under the exemptions found in the Bankruptcy Code.

True

A fraudulent transfer made on or within two years prior to filing a petition for bankruptcy can be avoided by the trustee.

True

A lien must be satisfied before the property is available to satisfy the claims of unsecured creditors.

True

A receiver is a disinterested person who collects and preserves the debtor's assets and income and disposes of them at the direction of the court which appointed the receiver.

True

A trustee in bankruptcy may sell the property of the debtor's estate.

True

A writ of execution is issued after a judgment against the debtor is entered in court.

True

After secured creditors in a Chapter 7 liquidation proceeding have been satisfied and there is enough money left to pay some, but not all other creditors, the claims of the same rank share the money on a pro rata basis.

True

An automatic stay will prevent a creditor from creating a lien against the debtor's property.

True

No private employer may terminate the employment of or discriminate with respect to employment against an individual solely because he is or has been a debtor under the Bankruptcy Code.

True

Once a Chapter 13 plan of reorganization is confirmed, the provisions are binding on the debtor and all of his creditors.

True

Stephens, an employee of bankrupt ABC Company, would be able to receive her $2,000 in unpaid wages earned within 90 days before ABC's filing of the bankruptcy petition and $2,000 in contributions to her employee benefit plans, for a total of $4,000 before any money is paid to Ramsdell, a consumer, to compensate him for a deposit paid to the company for goods which were never delivered because of the company's going bankrupt.

True

The court will order the appointment of a trustee in a Chapter 11 proceeding only for cause or if the appointment is in the interests of creditors or equity security holders.

True

The doctrine of subordination of claims might result in two unsecured creditors getting unequal proportions of their debts paid.

True

Under exemptions in the Bankruptcy Code, a debtor may keep both $21,625 in equity in a residence and up to $3,450 in equity in a motor vehicle.

True

Within each federal district court is established a bankruptcy court staffed by bankruptcy judges.

True

A transfer of debtor's property includes: a. retention of title as a security interest. b. only a voluntary disposition of property. c. only a direct interest in property. d. only modes of disposing of property, or an interest therein, specified in the Bankruptcy Code.

a. retention of title as a security interest.

A court may confirm a Chapter 11 plan of reorganization that is not accepted by all classes of creditors if: a. the court determines the plan does not discriminate unfairly and the plan is fair and equitable. b. the plan does not provide for less than the amount the nonaccepting class bargained for. c. the court determines that it is the only feasible plan, even if it is not accepted by any classes of claims. d. the plan includes the creditors' rights in a logical manner.

a. the court determines the plan does not discriminate unfairly and the plan is fair and equitable.

Chapter 3 of the Bankruptcy Code deals with: a. the meetings of creditors. b. proof of claims. c. priority of claims. d. All of the above.

a. the meetings of creditors.

Confirmation of a plan for reorganization under Chapter 13 may be given only if: a. the plan complies with applicable law and is given in good faith. b. the plan provides for payments longer than three years. c. the debtor remains in possession of the estate. d. all of the creditors agree to accept it.

a. the plan complies with applicable law and is given in good faith.

The 1994 amendments to the Bankruptcy Code require that the U.S. Judicial Conference adjust for inflation the dollar amounts of certain provisions of the Code every: a. three years. b. five years. c. six years. d. eight years.

a. three years.

Under the Bankruptcy Code's provisions for proof of claims, a court may not allow any claim that is: a. unenforceable against the debtor or his property. b. for matured interest. c. for reasonable insider fees. d. All of the above.

a. unenforceable against the debtor or his property.

Margaret has $3,200 cash after selling off her television, DVD player, and computer. She has debts of $4,800 owing to the following creditors: Anna-$900 Bob's Shop-$1,500 Hyatt's-$2,100 Jones-$300 If they all agree to a composition agreement, how much will Hyatt's be able to collect? a. $2,100 b. $1,400 c. $700 d. $1,050

b. $1,400

The bankruptcy court may dismiss a: a. Chapter 7 case, or in a case filed by an individual debtor whose debts are primarily consumer debts, may with or without the debtor's consent convert the case to a Chapter 11 or 13 case. b. Chapter 7 case for cause after notice and a hearing. c. Chapter 11 case for cause without notice and a hearing. d. Chapter 13 case under no circumstances. e. All of the above.

b. Chapter 7 case for cause after notice and a hearing.

Which of the following is both a prejudgment and a postjudgment remedy for a creditor? a. Writ of execution b. Garnishment c. Attachment d. Supplementary proceeding

b. Garnishment

Which of the following debts are dischargeable in a Chapter 7 bankruptcy proceeding? a. Alimony and child support payments amounting to $1,000 per month b. Medical expenses of $15,000 c. Student loans of $20,000 that first became due last year d. All of the above are dischargeable e. None of the above are dischargeable.

b. Medical expenses of $15,000

All but which one of the following is a purpose of bankruptcy legislation? a. To preserve existing business relations b. To punish recalcitrant debtors c. To fairly divide the assets among creditors d. To allow rehabilitation of debtors

b. To punish recalcitrant debtors

Bankruptcy under Chapter 13 differs from Chapter 11 in that: a. an individual cannot use Chapter 11. b. a corporation cannot use Chapter 13. c. Chapter 11 cannot be instituted by involuntary petition. d. Chapter 13 requires unsecured debts to be less than $100,000. e. Two of the above, (c) and (d).

b. a corporation cannot use Chapter 13.

In bankruptcy law, an insider may be defined as: a. a limited partner of the debtor. b. a relative. c. one with inside information on prospective movement of a company's position in the marketplace. d. Both (a) and (b).

b. a relative.

One type of fraudulent transfer consists of the: a. distribution of the debtor's property among creditors. b. debtor's transferring of property with actual intent to hinder her creditors. c. avoidance of statutory liens when debtor becomes insolvent. d. discharge of debts of unsecured tardy creditors.

b. debtor's transferring of property with actual intent to hinder her creditors.

An involuntary petition in bankruptcy: a. eliminates the operation of an automatic stay. b. may only be filed under Chapter 7 or 11. c. must be filed by the trustee. d. eliminates the need for the court to order a discharge.

b. may only be filed under Chapter 7 or 11.

An involuntary petition for bankruptcy can be filed with respect to a: a. nonprofit charitable organization. b. partnership that invests in real estate. c. life insurance company. d. wheat farmer.

b. partnership that invests in real estate.

Voidable preferences include all of the following EXCEPT: a. a transfer of property of the debtor to or for the benefit of a creditor. b. payment of taxes owed to a governmental unit. c. a transfer of the debtor's property while the debtor was insolvent. d. a transfer that enables a creditor to receive more than he would have received under Chapter 7.

b. payment of taxes owed to a governmental unit.

Under Chapter ____, the bankruptcy estate includes wages earned after commencement of the case. a. 7 b. 11 c. 13 d. None of the above

c. 13

A Chapter 13 plan of reorganization may include all but which one of the following? a. Priority debts must be paid in full unless the debtor waives that right. b. The trustee must control future wages. c. Assets must be liquidated. d. The rights of secured and unsecured creditors may be modified.

c. Assets must be liquidated.

An involuntary petition in bankruptcy may be filed: a. by any three or more creditors with unsecured claims totaling at least $7,500 if there are more than twelve creditors. b. by one or more creditors with an unsecured claim of $7,500 or more if there are less than twelve creditors. c. Neither (a) nor (b). d. Both (a) and (b).

c. Neither (a) nor (b).

The debtor is presumed to have been insolvent on and during what period of time immediately preceding the date on which the petition was filed? a. Thirty days b. Sixty days c. Ninety days d. Six months

c. Ninety days

A plan for reorganization under Chapter 11 does not have to meet which of the following requirements to be confirmed by the court? a. Good faith b. Feasibility c. No creditor approval d. Cash payments

c. No creditor approval

Edith files a Chapter 7 petition in bankruptcy. She owns the following property: (1) an automobile valued at $1,000; (2) a homestead valued at $75,000, on which First Bank holds a mortgage of $50,000; (3) personal jewelry valued at $1,100; and (4) monthly disability payments of $1,000. Assuming Edith elects to use the exemptions listed in the Bankruptcy Code, what property may Edith keep? a. The disability payments only. b. The disability payments and the homestead only. c. The disability payments plus the automobile, at least part of the equity in the homestead, and the jewelry. d. Nothing. She must sell all of her assets and have the proceeds distributed to the creditors, and she must turn the disability payments over to the trustee.

c. The disability payments plus the automobile, at least part of the equity in the homestead, and the jewelry.

Which of the following claims will be paid first from the debtor's estate in a Chapter 7 bankruptcy? a. A gap creditor with a claim of $2,000 b. A state claiming $5,000 in back taxes c. The trustee's expenses of $3,000 d. Employees claiming unpaid wages of $4,000 for wages earned within 120 days of the bankruptcy filing

c. The trustee's expenses of $3,000

All of the following are dischargeable in bankruptcy EXCEPT: a. an unsecured note to a bank. b. a car loan. c. alimony and child support. d. a court judgment against the debtor.

c. alimony and child support.

Classes of unsecured claims that have a priority must be paid before: a. the debtor's attorney. b. secured creditors. c. any distribution is made to claims of lesser rank. d. All of the above.

c. any distribution is made to claims of lesser rank.

Able has an allowed claim of $5,000 against the estate of Wallace and has a security interest in his art collection in the amount of $3,000 of the $5,000 claim. Able: a. will recover nothing in the bankruptcy proceeding. b. will recover $5,000 in the bankruptcy proceeding. c. has a secured claim in the amount of $3,000 and an unsecured claim in the amount of $2,000. d. has a secured claim in the amount of $5,000.

c. has a secured claim in the amount of $3,000 and an unsecured claim in the amount of $2,000.

A debtor will be denied a Chapter 7 discharge if he or she has received a Chapter 13 discharge within the past six years: a. unless payments under Chapter 13 totaled at least 100% of allowed unsecured claims. b. unless payments under Chapter 13 totaled at least 70% of allowed unsecured claims and the plan was the debtor's best effort. c. in all events. d. (a) and (b) are alternative exceptions to the 6-year rule.

d. (a) and (b) are alternative exceptions to the 6-year rule.

All but which one of the following would be exempt from bankruptcy under the federal law? a. $500 received in child support b. A $300 cocktail ring c. A $200 cashmere sweater d. A $10,000 car

d. A $10,000 car

Under the Bankruptcy Code, the debtor must file which of the following? a. A list of creditors b. A schedule of assets and liabilities c. A statement of financial affairs d. All of the above

d. All of the above

Non-bankruptcy compromises to give debtors relief while protecting the rights of creditors include: a. compositions. b. nonstatutory assignments for the benefit of creditors. c. receiverships under the direction of a court with equity powers. d. All of the above.

d. All of the above.

Under Chapter ____, certain debts of individuals are not dischargeable despite the debtor's good faith. a. 7 b. 11 c. 13 d. All of the above.

d. All of the above.

An automatic stay ends: a. upon dismissal of the bankruptcy case. b. when the debtor receives a discharge. c. only by court order. d. Both (a) and (b).

d. Both (a) and (b).

Under the Uniform Commercial Code and the Bankruptcy Code, the trustee in bankruptcy: a. assumes the rights and powers of a hypothetical lien creditor. b. has priority over a creditor with a perfected security interest. c. has priority over a creditor with a security interest that was not perfected when the bankruptcy petition was filed. d. Both (a) and (c) above.

d. Both (a) and (c) above.

Regarding priority claims: a. each claimant in a priority class shares pro rata if the assets cannot satisfy all claims in the class. b. employees have a priority for contributions to employee benefit plans but only to the extent that the $4,925 cap for unpaid wages has not been reached. c. subordination agreements are enforceable. d. Both (a) and (c) are correct. e. Choices (a), (b), and (c) are correct.

d. Both (a) and (c) are correct.

An involuntary bankruptcy petition, even if contested by the debtor, may still result in an "order for relief" if: a. the debtor generally is not paying his admitted debts as they come due. b. the debtor failed to pay three or more debtors whose total debts equal $10,000. c. a custodian assignee was appointed within 120 days before the filing of the petition. d. Both (a) and (c).

d. Both (a) and (c).

A trustee in bankruptcy may avoid which of the following? a. Fraudulent transfers b. Voidable preferences c. Automatic stays d. Both fraudulent transfers and voidable preferences

d. Both fraudulent transfers and voidable preferences

Which chapter of the Bankruptcy Code allows for the adjustment of debts of an individual with regular income? a. Chapter 7 b. Chapter 11 c. Chapter 12 d. Chapter 13

d. Chapter 13

In March, Margaret made a loan to Pete for $10,000. Three months later, she began to hear rumors about Pete's failing financial condition. When in July, Pete asked her to loan him an additional $2,000 to buy inventory, Margaret required a security interest in the inventory and also demanded that Pete secure the first loan with his personal automobile. In September, Pete filed for bankruptcy. Will these security interests stand up? a. Yes, if they are properly filed b. Yes, since they are for antecedent debts c. No, both will be voidable preferences d. No, the security interest in the automobile would be a voidable preference

d. No, the security interest in the automobile would be a voidable preference

Baker goes into bankruptcy owing $5,000 as wages to his employees. There is enough in his estate to pay all costs of administration and enough to pay his employees, but if the employees are paid, there will be nothing left for the general creditors. Which of the following is NOT true under the above facts? a. The Bankruptcy Code provides for priority of wages owed to employees. b. Secured creditors will be paid to the extent of their security interest before the employees will be paid. c. The general creditors will not be paid. d. The general creditors can be paid before the employees if they file a claim with the court.

d. The general creditors can be paid before the employees if they file a claim with the court.

Duties of a trustee in a case under Chapter 11 include all but which of the following? a. To examine all proofs of claims b. To provide the court with financial reports of the debtor's business operations c. To investigate the financial condition of the debtor d. To file a list of creditors

d. To file a list of creditors

Once a Chapter 13 plan has been confirmed, it may: a. be modified at the debtor's request but only if the trustee agrees. b. be modified only if all unsecured creditors agree. c. not be modified. d. be modified at the debtor's request.

d. be modified at the debtor's request.

A plan of reorganization under Chapter 13 will be confirmed when: a. the debtor has not been discharged before. b. the unsecured creditors are not discharged. c. the unsecured creditors receive the same amount as the secured creditors. d. the unsecured creditors receive at least as much as they would have if the debtor had liquidated.

d. the unsecured creditors receive at least as much as they would have if the debtor had liquidated.

Chapter 13 provides a procedure to adjust debts of: a. individuals. b. sole proprietorships. c. partnerships and corporations. d. All of the above. e. (a) and (b) only.

e. (a) and (b) only.

What are the debtor's duties under the Bankruptcy Code? a. File a list of similarly situated debtors. b. File a schedule of assets and liabilities. c. File a statement of her financial affairs. d. (a) and (b). e. (b) and (c).

e. (b) and (c).

A court will not grant a discharge under Chapter 7 to a debtor who: a. has been granted a Chapter 7 discharge within eight years prior to filing. b. has made false claims to the court. c. has destroyed collateral. d. is a corporation. e. All of the above.

e. All of the above.

Which of the following would not be a voidable transfer if made within 90 days of bankruptcy? a. An exchange for new value. b. An enabling security interest perfected within 30 days after the debtor receives possession of the property. c. A payment made in the ordinary course of business. d. A consumer's transfer of property valued at $500. e. None of the above are voidable transfers.

e. None of the above are voidable transfers.

Under the exemptions found in the federal Bankruptcy Code, which of the following items may the debtor keep? a. A homestead of any value b. A piano worth $450 used by the family c. $10,000 per month in payments from a pension plan d. All of the above are exempt under the federal exemptions. e. Two of the above, (b) and (c)

e. Two of the above, (b) and (c)