Business Law - Chapter 20
A(n) bankruptcy petition is one filed against a debtor by a group of three or more creditors with an unsecured aggregate claim of at least $15,775 who claim the debtor is failing to pay the debt as it comes due.
Blank 1: involuntary
The out of existence option available to ownership when a business becomes insolvent, also known as the - option, is a non-statutory option in which the venture simply ceases operations without paying creditors.
Blank 1: lights or light Blank 2: out
The most important change in bankruptcy law resulting from the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was increased statutory requirements for Chapter 7 eligibility by adding a(n) test.
Blank 1: means
The means test set forth in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 is determined by comparing the applicant's current monthly income to the income for the applicant's state.
Blank 1: median
Bankruptcy proceedings are initiated by the filing of a bankruptcy
Blank 1: petition
Which of the following is not a major provision of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005?
Greater protection for debtors who incur substantial medical expenses
When a borrower fails to pay back a loan or make payments toward the loan as agreed, the unsecured creditor's exclusive legal remedy is to bring a lawsuit against the borrower and obtain a judgment from the court. Essentially, the basis of such a debt collection lawsuit is
Blank 1: breach Blank 2: contract or agreement
Before filing for bankruptcy, the debtor must complete a short - seminar.
Blank 1: credit Blank 2: counseling
The trustee is responsible for collecting the debtor's available assets, known as the bankruptcy
Blank 1: estate
The exception to the Bankruptcy Code prevents the discharge of any money obtained through debt to the extent obtained by false pretenses.
Blank 1: fraud
Business owners and managers often encounter suretyship concepts in the personal of a business loan.
Blank 1: guaranty
The exemption allows a debtor to keep some or all of the equity in their home even if participating in bankruptcy.
Blank 1: homestead
In order to qualify for protection under Chapter 7 bankruptcy, the debtor's income must be less than the average income in his or her home state. This requirement is known as the test.
Blank 1: means
Although the stigma of Chapter 11 may cause difficulty in raising new capital, the United States Bankruptcy Code gives the debtor in possession power to void prepetition payments and to cancel or assume prepetition .
Blank 1: preferential Blank 2: contracts, agreements, contract, or agreement
Pursuant to the of requirement of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, debtors must provide the bankruptcy trustee copies of recent tax returns and pay stubs on a timely basis.
Blank 1: proof Blank 2: income
Once the court determines the validity of the bankruptcy petition, an order for is granted, the automatic stay effectively becomes permanent, and the bankruptcy proceeds.
Blank 1: relief
When credit is by a pledge of collateral by the borrower, the creditor has more viable alternatives to collect the debt.
Blank 1: secured
Typically, the parties involved in a collateralized debt transaction will enter into a(n) agreement that specifies the parties, describes the collateral, articulates the obligations of the debtor, and states the remedies available to the secured party in the event of default.
Blank 1: security or secured
Perfection of a(n) is the act of establishing the secured party's rights ahead of the rights of other creditors.
Blank 1: security or secured Blank 2: interest
Once the order for relief is granted, the court appoints an interim bankruptcy to oversee the case.
Blank 1: trustee
In a case of bankruptcy protection, once appointed, a creates a bankruptcy .
Blank 1: trustee Blank 2: estate
Credit that is not collaterialized is known as debt.
Blank 1: unsecured or unsecure
Credit that is not ______ is known as unsecured debt.
collateralized
When a third party with sufficient creditworthiness and assets signs the loan agreement and becomes jointly liable with the debtor for his promise to repay the loan, this is known as ______.
cosigning
Once the creditor has obtained a judgment against the debtor for failing to repay his or her debt obligations, either the borrower must pay the full amount of the judgment or the creditor may pursue a(n)
court order.
Bankruptcy proceedings are primarily a matter of ______ law.
federal
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 gives alimony and support obligations ______ priority compared to certain other creditors.
higher
Filing for bankruptcy protects the debtor through a(n) ______ automatic stay.
immediate
Once the ______ is granted, the court appoints an interim bankruptcy trustee to oversee the case.
order for relief
Once the court determines the validity of the bankruptcy petition, a(n) ______ is granted, the automatic stay effectively becomes permanent, and the bankruptcy proceeds.
order for relief
Bankruptcy proceedings are initiated in court by the filing of a bankruptcy
petition.
When ______ is being used to collateralize a loan, the creditor takes an interest in the collateral through the use of a mortgage.
real property
The rights of the secured party are known as a(n) ______ interest.
security
The filing of a bankruptcy petition gives protection to the debtor immediately, meaning that creditors must suspend all debt collection activity as of the day the petition is filed. This is known as an automatic
stay.
When a borrower fails to pay back a loan or make payments toward the loan as agreed, the ______ creditor's exclusive legal remedy is to bring a lawsuit against the borrower and obtain a judgment from the court.
unsecured
An involuntary bankruptcy petition is one filed against a debtor by a group of _____ or more creditors with an unsecured aggregate claim of at least _____ who claim the debtor is failing to pay the debt as it comes due.
3; $15,775
A Chapter ______ bankruptcy petition can be either voluntary or involuntary.
7
A common form of bankruptcy is Chapter ______, which involves liquidation of the debtor's assets and discharge of debts.
7
In order to qualify for protection under Chapter ______ bankruptcy, the debtor's income must be less than the average income in his or her home state.
7
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 overhauled the United States Bankruptcy Code for the first time since 1994 and made it more difficult for debtors to seek protection under Chapter ______.
7
When filing for protection under the United States Bankruptcy Code, the debtor chooses one of three main options -- Chapter ______, Chapter 11, or Chapter 13.
7
Article ______ of the Uniform Commercial Code provides a procedure for the secured party to establish priority in the collateral over other creditors.
9
According to Article ______ of the Uniform ______ Code, there are two requirements for a creditor to obtain the full benefit of a security interest -- the security agreement and perfection.
9; Commercial
Which of the following statements is accurate regarding the alternatives available to secured and unsecured creditors to collect on a past-due debt?
Compared to an unsecured creditor, a secured creditor has more viable alternatives to collect on a past-due debt.
______ refers to a third party with sufficient creditworthiness and assets signing the loan agreement and thereby becoming jointly liable with the debtor for his promise to repay the loan.
Cosigning
A lender's extension of credit for an unsecured debt is based on the borrower's
creditworthiness.
True or false: The Bankruptcy Code does not allow a debtor to keep any assets once bankruptcy is filed.
False
Which of the following is not typically included in a security agreement?
When the debt will be unsecured
In the United States, the need for bankruptcy laws was recognized in ______ of the United States Constitution.
Article I
The law of bankruptcy is found within federal statutes known collectively as the United States
Blank 1: Bankruptcy Blank 2: Code
is property pledged by a debtor to secure a loan in the event of default.
Blank 1: Collateral
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires the debtor to complete a course called before receiving a discharge of debts.
Blank 1: Credit Blank 2: Education or education
According to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, the debtor must complete a course known as Credit ______ before receiving a discharge of debts.
Education
What type of property is an individual debtor allowed to keep in bankruptcy?
Exempt
______ of a security interest is the act of establishing the secured party's rights ahead of the rights of other creditors.
Perfection
Which of the following is not typically included in a security agreement?
Remedies available to the unsecured creditor
In terms of restoring the financial stability of a business, the process of hiring a turnaround specialist and attempting to settle past debts is known as
a workout.
Filing for bankruptcy protects the debtor through an immediate
automatic stay.
Property or land that a debtor promises to a creditor in the event of default on a loan is known as:
collateral
When credit is secured by a pledge of ______ by the borrower, the creditor has more viable alternatives to collect the debt.
collateral
When the borrower has pledged ___________ in order to obtain credit, the creditor is known as a secured creditor.
collateral or property
A lender's extension of credit for an unsecured debt is based on the borrower's creditworthiness, rather than the borrower's promise to pledge
collateral..
The Uniform Commercial Code refers to the borrower as the
debtor
An voluntary bankruptcy is filed by the
debtor.
The Uniform Commercial Code refers to the borrower as the
debtor.
In Chapter 7, the bankruptcy court gives legal protection to the debtor by ______ any remaining debts.
discharging
With the lights-out option, the debtor company usually files an out-of-existence certificate or articles of ______ with the state corporation bureau and simply ceases doing business.
dissolution
A business is considered insolvent when it
does not have adequate assets to maintain operations and cannot pay its bills as they become due in the usual course of trade and business.
The trustee is responsible for managing the bankruptcy ______.
estate
Assets that a debtor gets to keep even if going through a bankruptcy are known as:
exempt assets
The fraud exception prevents the discharge of any money obtained through debt for money to the extent obtained by which of the following ______.
false pretenses false representation
Credit that is not collateralized is known as ______ debt.
unsecured
Although the stigma of Chapter ______ may cause difficulty in raising new capital, the United States Bankruptcy Code gives the debtor in possession power to void pre-petition preferential payments and to cancel or assume pre-petition contracts.
11
When filing for protection under the United States Bankruptcy Code, the debtor chooses one of three main options -- Chapter 7, Chapter ______, or Chapter 13.
11
A common form of bankruptcy is Chapter ______, which involves debt adjustment and repayment of consumer debt.
13
As a result of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a substantial number of bankruptcy applicants who previously would have been eligible for a discharge of substantially all debts must now repay them under a Chapter ______ filing.
13
Chapter ______ bankruptcy allows debtors with a regular source of income to catch up on mortgage, car,tax, and domestic support payments, repay an adjusted debt to certain creditors over time, and still keep all of their assets.
13
Chapter ______ bankruptcy is also known as the wage-earner plan.
13
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 gives and support obligations a higher priority than certain other creditors.
Blank 1: alimony
A(n) suspends debt collection activity temporarily, giving the court time to determine the validity of the bankruptcy petition.
Blank 1: automatic Blank 2: stay
The filing of a bankruptcy petition gives protection to the debtor immediately, meaning that creditors must suspend all debt collection activity as of the day the petition is filed. This is known as a(n)
Blank 1: automatic Blank 2: stay
When a business no longer has adequate assets to maintain its operations and can no longer pay its bills as they become due in the usual course of trade and business, it is considered
insolvent.
Cosigning refers to a third party with sufficient creditworthiness and assets signing the loan agreement and thereby becoming ______ liable with the ______ for his promise to repay the loan.
jointly; debtor
In Chapter 7 bankruptcy, the debtor agrees to have most of her property ______ and then the cash distributed to creditors.
liquidated
If the debtor is an individual, not all property is subject to bankruptcy
liquidation.
Business owners and managers often encounter suretyship and guaranty concepts in the personal guaranty of a business
loan.
When real estate is used to collateralize a loan, the creditor takes an interest in the collateral through the use of a(n)
mortgage.
Article 9 of the Uniform Commercial Code provides a framework foR ______________
secured
For the purposes of Article 9 of the Uniform Commercial Code, the creditor is known as the ______ party.
secured
One common way that a creditor attempts to ensure full payment by the borrower is by creating a(n) ____________ -party relationship, whereby the borrower pledges certain property of value to collateralize the debt owed.
secured
The creditor is known as a(n) ______ creditor when the borrower has pledged collateral in order to obtain credit.
secured
As a representative of the court, the ______ has the responsibility of administering the bankruptcy proceedings in accordance with the law.
trustee
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires a debtor to provide the bankruptcy ______ with copies of recent tax returns and pay stubs or other income verification on a timely basis.
trustee
A(n) ______ bankruptcy petition is filed by the debtor.
voluntary
A Chapter 7 bankruptcy petition can be either ______ or ______.
voluntary; involuntary
The various steps associated with turning around a business financially are often referred to by creditors as a
workout.