Unit 5: Creditors, Debtors, and Bankruptcy ( 1 )

Is a farmer

Gina's creditors attempt to force her into bankruptcy proceedings. The creditors will be unsuccessful if Gina a. Refuses to comply b. Is a farmer c. Is also a creditor d. Owns a business with ten or more employees

A list of the debtor's creditors and the amount of the debt owed to each

A voluntary petition in bankruptcy must include a. Proof of each creditor's claim b. A list of the debtor's creditors and the amount of the debt owed to each c. A copy of the petitioner's state income tax return d. Statement indicating that the debtor understands basic economics

Collateral

Auto Sales & Finance wants to get paid for its goods and services, so it will not sell goods or lend funds unless payment is guaranteed. To obtain those goods or services, a customer or borrower might pledge a. Allegiance b. Collateral c. A composition agreement d. forbearance

Discharged from the agreement

Bach borrows funds from City Bank to pay his tuition. Dvorak co-signs the credit application. After the loan agreement is signed, Bach agrees to a higher rate of interest without telling Dvorak, who is thereby a. Discharged from the agreement b. Liable at the higher rate of interest c. Liable for the principal only d. Liable at the lower rate of interest

A portion of a lien on a debtor's real property

Because the homestead exemption interacts with other areas of the law that relate to creditors' rights and remedies, it can sometimes operate to cancel out a. The creditor's rights in bankruptcy b. Rights collateral possessed by the creditor c. Any right that the creditor has against the debtor d. A portion of a lien on a debtor's real property

A writ of execution

Brew Pub's debt to Credit Service is past due. Credit obtains a judgement against Brew, but the firm refuses to pay. Credit asks the court to order the seizure of Brew's property. This is a request for a. A writ of attachment b. An artisan's lien c. A mechanic's lien d. A writ of execution

Cam and Franco

Brie, Cam, and Franco are co-sureties of Samson's debt to Finance LLC. Brie pays the entire debt. Her right of contribution entitles her to recover any amount paid above the surety's obligation from a. Cam and Franco b. Finance LLC c. Samson d. None of the parties

Allows a debtor to retain possession of his or her assets

Compared to Chapter 7 and 11 plans, a Chapter 13 plan a. Is more expensive and more complicated b. Allows a debtor to retain possession of his or her assets c. Permits any interested party to file a repayment plan d. Permits creditors to force a debtor into involuntary bankruptcy

If, before the sale, notice is given to Fertile Farm

Equipment Company holds a lien on Fertile Farm's equipment. The equipment can be sold to satisfy the debt a. If, before the sale, notice is given to the general public b. If, before the sale, notice is given to Fertile Farm's other creditors c. Without notice d. If, before the sale, notice is given to Fertile Farm

Puts into place an automatic stay

If a voluntary petition in bankruptcy is found to be proper, the court's entry of an order for relief a. Discharges the debtor's obligations b. Puts into place an automatic stay c. Dismisses the petition d. Distributes the debtor's assets to his or her creditors

A certificate proving the receipt of credit counseling

In addition to financial statements, each voluntary petition in bankruptcy must include a. A certificate proving the receipt of credit counseling b. Statement of preference for one creditor over another c. A creditors' agreement allowing the debtor to continue in business d. A plan outlining how debt payments will be made

Writ of garnishment to Joe's employer to take a portion of his wages each week

Joe files his income tax return showing a refund due of $5000. The IRS audits his return and finds several unjustified deductions, a missing W-2, and several arithmetical errors. As a result, Joe has no refund coming, but instead owes $3500. When Joe fails to pay, the IRS issues a a. Writ of garnishment to Joe's employer to take a portion of his wages each week b. Mechanic's lien, to seek their unpaid compensation c. Forbearance, to temporarily delay the collection process d. Writ of execution, to force Joe to pay

The main purpose rule does not apply

Petro Refinery asks Quality Bank for a loan to increase its inventory. Quality requires Roma, Petro's president, to sign a personal guaranty to pay the debt if Petro defaults. The guaranty is required to be in writing because a. The debtor has a right of redemption b. The co-signer has a right of contribution c. The main purpose rule applies d. The main purpose rule does not apply

Any right that the creditor had against the debtor

Ran is surety for Su's loan from Tempo Credit. When Su pays the debt owed to the lender, Ran's right of subrogation entitles the surety to a. Any right that the creditor had against the debtor b. Title to and possession of the property serving as collateral for the loan c. A proportionate share of any overpayment due to the loan's prepayment d. All outlays made on behalf of the suretyship arrangement

A reorganization

Retail Stores Inc. wants to agree with its creditors on a plan under which it pays a portion of its debt and is discharged of the rest. To accomplish this goal, the corporation should file a petition in bankruptcy under Chapter 11 for relief through a. A liquidation b. A reorganization c. An adjustment plan d. A repayment plan

Chapter 7

The Chapter of bankruptcy in which the debts are discharged, and the debtor is given the opportunity of a fresh start is: a. Chapter 12 b. Chapter 7 c. Chapter 13 d. Chapter 11

A creditors' committee of unsecured creditors is appointed

Under Chapter 11, soon after the entry of the order for relief a. A creditors' committee of unsecured creditors is appointed b. The debtor's assets are liquidated to pay tax claims c. The debtor's creditors file a plan to distribute the debtor's assets d. Any business debtor can choose to avoid creditors' committees

Domestic support

Under Chapter 7, creditors are paid in a certain order of priority. The highest-priority class comprises claims for a. Student loans b. Domestic support c. Debts related to motor vehicles, household goods, and trade tools d. The debtor's equity in his or her residence

Void a judgement on a discharged debt and prohibit an action to collect it

Under Chapter 7, the primary effect of a discharge is to a. Force a creditor to obtain a new judgment on a discharged debt b. Void a judgment on a discharged debt and prohibit an action to collect it c. Extend the time for the debtor's payment of overdue debts d. Allow a creditor to collect a previous judgment on discharged debt

The dismissal of the petition

Under any chapter of the Bankruptcy Code, failing to file the necessary documents with the debtor's petition for relief can result in a. The distribution of the debtor's assets to his or her creditors b. The immediate discharge of the debtor's obligations c. The dismissal of the petition d. An automatic stay