ch. 39 Comm Law
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. a. Able is a lien creditor. b. Unsecured creditors will share proportionately with Able. c. The judgment is a preferential transfer that will be invalidated by the trustee. d. Both (a) and (b) are true.
A
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 non-statutory composition. b. a statutory assignment. c. an equity receivership. d. an automatic stay.
A
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
In bankruptcy law, an insider may include: a. a relative. b. a general or limited partner of the debtor. c. the trustee. d. Both (a) and (b).
A
Ken 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 Ken's status? He has a (n): a. secured claim for $4,500. b. unsecured claim for $8,000. c. unsecured claim for $4,500. d. secured claim for $8,000.
A
Pre-judgment attachment permits a creditor to seize the debtor's property: a. to prevent the debtor from disposing of assets before litigation would result in a judgment for the creditor. b. if the defendant has not paid his debts on time. c. when the defendant has filed for bankruptcy. d. if the defendant cannot be persuaded to come to court.
A
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 $4,500 cap for unpaid wages has not been reached. c. Subordination agreements are not enforceable. d. Both (a) and (c) are correct. e. (a), (b), and (c).
A
Under Chapter ___________, the bankruptcy estate does not include wages earned after commencement of the case. a. 7 b. 11 c. 13 d. All of the above
A
Under the Bankruptcy Act, the debtor must file which of the following? a. A list of creditors. b. Copies of tax returns for the previous five years. c. A list of family members and persons who might be considered "insiders." d. All of the above.
A
Which of the following debts would be discharged in bankruptcy? a. Consumer credit loans for a stove. b. Property taxes on a beach house. c. Student loans maturing one-year prior to bankruptcy filing. d. Alimony payments past due.
A
A private employer: a. may terminate the employment of an individual solely because he has been a debtor in bankruptcy. b. may not discriminate with regard to employment solely because an individual was insolvent before the commencement of a bankruptcy case. c. has no restrictions regarding employment practices involving individuals who are or have been debtors under the Bankruptcy Code. d. may discriminate with respect to employment against an individual who has not paid a debt that is dischargeable in a case under the Bankruptcy Code.
B
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 bring about a quick, equitable distribution of the debtor's property among creditors. d. To allow rehabilitation of debtors.
B
An involuntary petition for bankruptcy can be filed against a: a. non-profit charitable organization. b. partnership that invests in real estate. c. life insurance company. d. wheat farmer.
B
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
Margaret has $3,200 cash after selling off her television, stereo, and personal computer. She has debts of $4,800 owing to the following creditors: Anna - $900 Bob's Shop - $1500 Hyatt's - $2100 Jones - $300 If they all agree to a composition, how much will Hyatt's be able to collect? a. $2,100. b. $1,400. c. $700. d. $1,050.
B
One type of fraudulent transfer consists of the: a. distribution of the debtor's property among creditors. b. debtor's transferring 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
Under the 2005 Act: a. tax-exempt retirement accounts are included in the bankruptcy estate. b. a debtor's state exemptions are governed by the law of the state where the debtor was domiciled for 730 days immediately before filing. c. homestead exemptions are determined by state laws. d. exempt property cannot be reached for the debtor's obligations, including domestic support obligations.
B
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 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
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
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. Future wages must be controlled by the trustee. c. Assets must be liquidated. d. The rights of unsecured creditors may be modified.
C
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. Be accepted by all creditors. d. Cash payments for certain classes of creditors.
C
Abe has an allowed claim of $5,000 against the estate of Deborah and has a security interest in her art collection in the amount of $3,000 of the $5,000 claim. a. Abe will recover nothing in the bankruptcy proceeding. b. Abe will recover $5,000 in the bankruptcy proceeding. c. Abe has a secured claim in the amount of $3,000 and an unsecured claim in the amount of $2,000. d. It would be a voidable preference to pay Abe the full $5,000.
C
All of the following are dischargeable in bankruptcy EXCEPT: a. an unsecured note to a bank. b. a car loan. c. domestic support obligations arising from divorce or separation proceedings. d. a court judgment against the debtor.
C
Creditors entitled to priority are paid before: a. the debtor's attorney. b. secured creditors. c. unsecured creditors who file their claims on time. d. All of the above.
C
Edith files a Chapter 7 petition in bankruptcy. She owns the following property: (1) an automobile valued at $1,800; (2) a homestead valued at $75,000, on which First Bank holds a mortgage of $60,000; (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, 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
Monica's husband is an accountant who keeps the books for her business. When it goes bankrupt, will Monica's husband claim for services be allowed by the bankruptcy courts? a. No, since he is an insider. b. No, because it would be difficult to prove that services were actually rendered. c. Yes, but only up to the reasonable value. d. Yes, as long as he is not an officer of the corporation.
C
Under the exemptions found in the federal Bankruptcy Act, which of the following items may the debtor keep? a. A homestead of any value. b. Cash in the bank of $3,000. 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).
C
Which of the following claims will be paid first from the debtor's estate under Chapter 7? 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 $5,000 for wages earned within 90 days of the bankruptcy filing.
C
A court will not grant a discharge under Chapter 7 to a debtor who: a. has been granted a Chapter 7 or 11 discharge within eight years prior to filing. b. has made false claims to the court. c. has destroyed collateral. d. All of the above.
D
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 that Chapter's plan 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. Both (a) and (b) are alternative exceptions to the six-year rule.
D
A plan of reorganization under Chapter 13 will be confirmed when the: a. debtor has not been discharged before. b. unsecured creditors are not discharged. c. unsecured creditors receive the same amount as the secured creditors. d. unsecured creditors receive at least as much as they would have if the debtor had liquidated.
D
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
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 truck
D
An automatic stay ends: a. upon termination or dismissal of the bankruptcy case. b. upon the debtor's receipt of a discharge. c. only by court order. d. Both (a) and (b).
D
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 $5,000. c. a custodian was appointed within 120 days before the filing of the petition. d. Both (a) and (c).
D
Chapter 3 of the Bankruptcy Code deals with: a. the meetings of creditors. b. the officers who administer the case. c. the administrative powers of the officers who administer the case. d. All of the above.
D
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 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
John's brother, Phil, loaned him $10,000 to start his business. John didn't do too well and planned to file for bankruptcy. In May, he gave Phil his car worth $8,000 to satisfy the debt. John filed his petition in November. After liquidation, if the car were included in his assets, every unsecured debtor would have received 85% of the debt owing to him. Will this be a voidable preference? a. Yes, since Phil is an insider. b. No, because the transfer was made more than 90 days prior to filing. c. Yes, because the transfer was made within the prior year. d. No, because Phil did not receive preferential treatment over other creditors.
D
Non-bankruptcy compromises to give debtors relief while protecting the rights of creditors include: a. compositions. b. non-statutory assignments for the benefit of creditors. c. receiverships under the direction of a court with equity powers. d. All of the above.
D
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 request of the debtor, the trustee, or a holder of an unsecured claim.
D
The Bankruptcy Code grants to U.S. District Courts: a. original and exclusive jurisdiction over all bankruptcy cases. b. original, but not exclusive, jurisdiction over civil proceedings arising under bankruptcy cases. c. exclusive jurisdiction over all the debtor's property. d. All of the above.
D
The Packer Video Company files for Chapter 7 bankruptcy. Its only non-exempt asset is a piece of equipment valued at $15,000. The claims that have been approved by the trustee are as follows: (1) $2,500 in expenses of the trustee in the administration of the estate. (2) $4,000 in wages, salaries, and commissions earned by employees within ninety days before the filing of the bankruptcy petition and the cessation of the business. (3) $500 in employment taxes owed to the state. (4) Unsecured claims in the amount of $10,000. (5) A perfected security interest in the amount of $2,000 which is held by First Bank and which is secured by the item of equipment. How much money will be available to pay the general unsecured creditors who have no priority? a. $15,000 b. $13,000 c. $10,500 d. $6,000 e. No money will be available to pay the general unsecured creditors.
D
Under Chapter 7, the court will not grant the debtor a discharge if the debtor a. is not an individual. b. has destroyed, concealed, or failed to keep records. c. has transferred, removed, or concealed any of his property with intent to defraud his creditors within 12 months before the filing of the bankruptcy petition. d. All of the above.
D
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
Which chapter of the Bankruptcy Act 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
Which of the following debts are dischargeable in a Chapter 7 bankruptcy proceeding? a. A $10,000 judgment that has not yet been executed. b. Medical expenses of $25,000. c. Credit card debts of $15,000 from two years ago. d. All of the above are dischargeable. e. None of the above are dischargeable.
D
Which of the following would not be a voidable transfer if made within 90 days of bankruptcy? a. An exchange for new value. b. A consumer's transfer of property valued at $500. c. A payment made in the ordinary course of business. d. None of the above are voidable transfers.
D
The 2005 Act establishes a means test which determines a creditor's eligibility for a priority claim.
False
The court will not allow any claim that: a. is unenforceable against the debtor or her property. b. is for unmatured interest. c. may be offset against a debt owing the debtor. d. is for insider or attorney services in excess of the reasonable value of such services. e. All of the above.
E
United States trustees: a. are government officials appointed by the U.S. Attorney General. b. have administrative responsibilities in bankruptcy cases in almost all of the districts. c. select bankruptcy trustees. d. are the same as bankruptcy trustees. e. Choices (a), (b), and (c) are correct.
E
What are the duties of a trustee under Chapter 7? a. To use, sell, or lease property of the estate and to deposit or invest money of the estate. b. To employ attorneys, accountants, appraisers, or auctioneers and assume or reject any executory contract or unexpired lease of the debtor. c. To rehabilitate the accounts of the debtor. d. (a) and (c), but not (b). e. (a) and (b), but not (c).
E
A composition of creditors is a bankruptcy form of relief under Chapter 13 of the Bankruptcy Code.
False
A composition would bind all of the debtor's creditors to the settlement.
False
A debtor may not convert a Chapter 7 case to a Chapter 11 or 13 case.
False
A fraudulent transfer made more than one year prior to filing cannot be avoided by the trustee.
False
A statutory lien arises solely by force of statute and includes a security interest and a judicial lien.
False
A trustee under a Chapter 11 or 13 proceeding performs the same duties as a Chapter 7 trustee.
False
According to the 1994 amendments to the Bankruptcy Act, the U.S. Judicial Conference must adjust for inflation the dollar amounts of the requirements for filing involuntary cases, priorities, and exemptions every seven years.
False
Alimony and support payments owed to the debtor who files bankruptcy are part of the bankruptcy estate that can be distributed to the debtor's creditors for the payment of allowed claims filed with the bankruptcy court.
False
An automatic stay would not prevent a creditor from creating a lien against the debtor's property.
False
Any person eligible to be a debtor under a given bankruptcy proceeding may file a voluntary petition and must be insolvent to do so.
False
Discharge relieves the debtor in bankruptcy from liability for all of his 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 is only a post-judgment remedy.
False
If the debtor contests the involuntary petition for bankruptcy, the court must enter an order for relief against the debtor.
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 a pro rata share of his original obligation, the debtor is then discharged from any further obligation to the creditor.
False
In reorganization cases the creditors usually look to the debtor's property at the commencement of the bankruptcy proceeding.
False
The court has the sole right to accept or reject a proposed plan of reorganization under Chapter 11.
False
The estate of a debtor includes wages earned after commencement of a Chapter 7 liquidation proceeding.
False
The various chapters of the Bankruptcy Code are the only options for resolving the conflict between creditor rights and debtor relief.
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 bankruptcy petition may be filed by one creditor of a debtor as long as the debtor owes him more than $13,475 in undisputed unsecured claims.
True
A claim is a right to payment.
True
A debt is an obligation to pay money owed by a debtor to a creditor.
True
A debtor who files for bankruptcy can keep up to $1,350 in jewelry and all social security, veteran's and disability benefits under the exemptions found in the Bankruptcy Code.
True
A receiver is a disinterested person appointed at the discretion of the court to manage, liquidate, and conserve assets of a debtor.
True
A trustee in bankruptcy under Chapter 7 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
An employee of a bankrupt company could be able to receive up to $10,950 in unpaid wages and up to $10,950 in contributions to employee benefit plans, for a total of $21,900 before any money is paid to a consumer to compensate for deposits paid to the company for goods which were never delivered because of the company's going bankrupt.
True
Any person who may be a debtor under Chapter 7, except a stockbroker or a commodity broker but including railroads, may be a debtor under Chapter 11.
True
Bill has loaned Mark $500, which Mark agreed to repay on January 15, 2009. If Mark files a voluntary petition of bankruptcy on August 1, 2008, Bill has a claim as a creditor.
True
Chapter 3 of the Bankruptcy Code contains provisions dealing with the commencement of a case in bankruptcy.
True
Chapter 7 applies to all debtors, with the exception of railroads, insurance companies, banks, savings and loan associations, homestead associations, and credit unions.
True
Garnishment is one form of pre-judgment remedy.
True
If the debtor is an individual whose debts are primarily consumer debts, the trustee may not avoid any transfer, within 90 days of bankruptcy, of property valued at less than $600.
True
In a Chapter 11 or 13 proceeding, the bankruptcy estate of an individual includes wages earned after commencement of the proceeding.
True
In any case in which a trustee is serving, the debtor has a duty to surrender to the trustee all property of the estate and all records relating to such property.
True
In liquidation cases the creditors look to the debtor's property at the commencement of the bankruptcy proceeding.
True
Individual debtors must receive credit counseling before filing a bankruptcy petition under most circumstances.
True
More than 99 percent of all bankruptcy petitions are filed voluntarily.
True
Most student loans cannot be discharged under Chapter 13.
True
The 1994 amendments allow the creditors to elect a trustee in a Chapter 11 proceeding if the court orders the appointment of a trustee for cause.
True
The Bankruptcy Code grants to U.S. District Courts original and exclusive jurisdiction over all bankruptcy cases.
True
The bankruptcy definition of "insolvency" is a financial condition such that the sum of one's debts exceeds the sum of all one's property at fair valuation.
True
The court must confirm a plan of reorganization before it is binding on the parties.
True
The doctrine of subordination of claims might result in two unsecured creditors getting unequal proportions of their debts paid.
True
Under Chapter 11, a class that is not impaired under a plan is deemed to have accepted the plan.
True
Under exemptions in the Bankruptcy Code, a debtor may keep both $20,200 in equity in a residence and $3,225 in equity in a motor vehicle.
True
Within each federal district court is established a bankruptcy court staffed by bankruptcy judges.
True