Question 1

The median income test uses:

Accepted Answer

A)  the national average income for a family similar to the debtor's family. 
B)  the state median income for a family similar to the debtor's family in the debtor's state of residence. 
C)  the city or township average income for a family similar to the debtor's family in the debtor's city or township of residence . 
D)  the county average income for a family similar to the debtor's family in the debtor's county of residence . 
E)  the average of the debtor's income as reported on the debtor's past three years of income tax filings. 
A)  the national average income for a family similar to the debtor's family. 
B)  the state median income for a family similar to the debtor's family in the debtor's state of residence. 
C)  the city or township average income for a family similar to the debtor's family in the debtor's city or township of residence . 
D)  the county average income for a family similar to the debtor's family in the debtor's county of residence . 
E)  the average of the debtor's income as reported on the debtor's past three years of income tax filings.

Question 2

________ of the United States Constitution provides that "The Congress shall have the power...to establish...uniform laws on the subject of bankruptcies through the United States."

Accepted Answer

A)  Article I, section 4, clause 2 
B)  Article I, section 8, clause 4 
C)  Article II, section 4, clause 2 
D)  Article II, section 8, clause 4 
E)  Article III, Section 4, clause 2 
A)  Article I, section 4, clause 2 
B)  Article I, section 8, clause 4 
C)  Article II, section 4, clause 2 
D)  Article II, section 8, clause 4 
E)  Article III, Section 4, clause 2

Question 3

ABC Company filed Chapter 11 bankruptcy,and would like relief from an existing labor agreement with a union.The company has already met with the union,and made a proposal that the union rejected.What are the options of the court?

Accepted Answer

A)  The court may order the modification or rejection of the labor agreement if: (1) such rejection or modification is necessary to the reorganization; (2) the debtor acted in good faith; and (3) the "balance of equities" favors rejection or modification of the collective bargaining agreement. 
B)  The court may order complete rejection, but not modification, of the labor agreement if: (1) such rejection is necessary to the reorganization; (2) the debtor acted in good faith; and (3) the "balance of equities" favors rejection of the collective bargaining agreement. 
C)  The court may order the modification, but not complete rejection, of the labor agreement if: (1) such modification is necessary to the reorganization; (2) the debtor acted in good faith; and (3) the "balance of equities" favors modification of the collective bargaining agreement. 
D)  The court may not modify or reject the labor agreement. 
E)  The court may order modification, but not rejection, only if union employee losses would amount to no more than $100,000. 
A)  The court may order the modification or rejection of the labor agreement if: (1) such rejection or modification is necessary to the reorganization; (2) the debtor acted in good faith; and (3) the "balance of equities" favors rejection or modification of the collective bargaining agreement. 
B)  The court may order complete rejection, but not modification, of the labor agreement if: (1) such rejection is necessary to the reorganization; (2) the debtor acted in good faith; and (3) the "balance of equities" favors rejection of the collective bargaining agreement. 
C)  The court may order the modification, but not complete rejection, of the labor agreement if: (1) such modification is necessary to the reorganization; (2) the debtor acted in good faith; and (3) the "balance of equities" favors modification of the collective bargaining agreement. 
D)  The court may not modify or reject the labor agreement. 
E)  The court may order modification, but not rejection, only if union employee losses would amount to no more than $100,000.

Question 4

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has been criticized as being too "debtor friendly."

Accepted Answer

A) True 
 B)False

Question 5

In a Chapter 11 bankruptcy,the creditors' committee is usually composed of:

Accepted Answer

A)  all unsecured creditors, and the three largest secured creditors. 
B)  the seven largest unsecured creditors. 
C)  the seven largest unsecured creditors, and all secured creditors. 
D)  the three largest secured creditors, and the three largest unsecured creditors. 
E)  the four largest unsecured creditors. 
A)  all unsecured creditors, and the three largest secured creditors. 
B)  the seven largest unsecured creditors. 
C)  the seven largest unsecured creditors, and all secured creditors. 
D)  the three largest secured creditors, and the three largest unsecured creditors. 
E)  the four largest unsecured creditors.

Question 6

The monetary amount of federal exemptions is adjusted every five years to reflect changes in the Consumer Price Index.

Accepted Answer

A) True 
 B)False

Question 7

Alimony and child support are not dischargeable under Chapter 13.

Accepted Answer

A) True 
 B)False

Question 8

The United States Constitution gives the power to enact bankruptcy laws to the federal government.

Accepted Answer

A) True 
 B)False

Question 9

The United States Bankruptcy Code permits a "small business," defined as one with total debts of less than ________,to use a simplified,fast-track form of Chapter 11 reorganization bankruptcy.

Accepted Answer

A)  $1,000,000 
B)  $1,343,300 
C)  $2,000,000 
D)  $2,343,300 
E)  $3,000,000 
A)  $1,000,000 
B)  $1,343,300 
C)  $2,000,000 
D)  $2,343,300 
E)  $3,000,000

Question 10

After a decade of lobbying by bankrupt debtors,the United States Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Accepted Answer

A) True 
 B)False

Question 11

Mary is considering filing bankruptcy because she is unable to pay her debts as they come due.Mary has a steady job,and can pay some of her obligations.Mary is especially worried about losing all of her assets,and is therefore afraid to file bankruptcy.Mary is also worried about her ongoing relationship with some of her creditors.Discuss Mary's situation.

Accepted Answer

Bankruptcy exemptions will allow Mary to

Question 12

As changed in the 2005 Act,which of the following are the first unsecured claims to be paid?

Accepted Answer

A)  claims of "gap" creditors 
B)  claims for wages and salary 
C)  claims for contributions to employee benefit plans 
D)  unsecured claims for domestic support owed to the spouse, former spouse, or child of the debtor 
E)  fees and expenses of administering the estate 
A)  claims of "gap" creditors 
B)  claims for wages and salary 
C)  claims for contributions to employee benefit plans 
D)  unsecured claims for domestic support owed to the spouse, former spouse, or child of the debtor 
E)  fees and expenses of administering the estate

Question 13

A debtor and creditor can enter into a reclamation agreement,whereby the debtor agrees to pay the creditor for a debt that is dischargeable in bankruptcy.

Accepted Answer

A) True 
 B)False

Question 14

In Chapter 11 bankruptcy,the court will appoint a special union trustee to represent union members and preserve union member rights during the bankruptcy.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not generally an advantage of a Chapter 13 bankruptcy?

Accepted Answer

A)  It eliminates all debts, so the debtor "starts fresh," with no remaining debt. 
B)  A Chapter 13 petition is generally less expensive to file than a Chapter 7 petition. 
C)  With a Chapter 13 filing, the debtor avoids the stigma of a Chapter 7 filing. 
D)  More property is exempt in Chapter 13 bankruptcy than in Chapter 7 bankruptcy. 
E)  With Chapter 13 bankruptcy, creditors generally receive a greater percentage of debts paid. 
A)  It eliminates all debts, so the debtor "starts fresh," with no remaining debt. 
B)  A Chapter 13 petition is generally less expensive to file than a Chapter 7 petition. 
C)  With a Chapter 13 filing, the debtor avoids the stigma of a Chapter 7 filing. 
D)  More property is exempt in Chapter 13 bankruptcy than in Chapter 7 bankruptcy. 
E)  With Chapter 13 bankruptcy, creditors generally receive a greater percentage of debts paid.

Question 16

The "median income test" under the 2005 Act uses national median income statistics as a qualifying measure for Chapter 7 eligibility.

Accepted Answer

A) True 
 B)False

Question 17

A trustee is named in a Chapter 13 by the creditors at the meeting of creditors.

Accepted Answer

A) True 
 B)False

Question 18

When the order for relief is granted,all dischargeable debts are erased.

Accepted Answer

A) True 
 B)False

Question 19

The goal of Chapter ________ bankruptcy is to reorganize the debtor with a new capital structure so that the debtor emerges from bankruptcy as a viable concern.

Accepted Answer

A)  7 
B)  11 
C)  13 
D)  15 
E)  17 
A)  7 
B)  11 
C)  13 
D)  15 
E)  17

Question 20

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 makes it much more difficult for debtors to escape their debts under federal bankruptcy law.

Accepted Answer

A) True 
 B)False

Exam 24: Bankruptcy and Reorganization

The median income test uses:

________ of the United States Constitution provides that "The Congress shall have the power...to establish...uniform laws on the subject of bankruptcies through the United States."

ABC Company filed Chapter 11 bankruptcy,and would like relief from an existing labor agreement with a union.The company has already met with the union,and made a proposal that the union rejected.What are the options of the court?

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has been criticized as being too "debtor friendly."

In a Chapter 11 bankruptcy,the creditors' committee is usually composed of:

The monetary amount of federal exemptions is adjusted every five years to reflect changes in the Consumer Price Index.

Alimony and child support are not dischargeable under Chapter 13.

The United States Constitution gives the power to enact bankruptcy laws to the federal government.

The United States Bankruptcy Code permits a "small business," defined as one with total debts of less than ________,to use a simplified,fast-track form of Chapter 11 reorganization bankruptcy.

After a decade of lobbying by bankrupt debtors,the United States Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

As changed in the 2005 Act,which of the following are the first unsecured claims to be paid?

A debtor and creditor can enter into a reclamation agreement,whereby the debtor agrees to pay the creditor for a debt that is dischargeable in bankruptcy.

In Chapter 11 bankruptcy,the court will appoint a special union trustee to represent union members and preserve union member rights during the bankruptcy.

Which of the following is not generally an advantage of a Chapter 13 bankruptcy?

The "median income test" under the 2005 Act uses national median income statistics as a qualifying measure for Chapter 7 eligibility.

A trustee is named in a Chapter 13 by the creditors at the meeting of creditors.

When the order for relief is granted,all dischargeable debts are erased.

The goal of Chapter ________ bankruptcy is to reorganize the debtor with a new capital structure so that the debtor emerges from bankruptcy as a viable concern.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 makes it much more difficult for debtors to escape their debts under federal bankruptcy law.

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