Question 1

Which of the following is not a duty of the trustee in a bankruptcy case?

Accepted Answer

A)  investigate the debtor's financial affairs 
B)  employ disinterested professionals such as attorneys and accountants to assist in the administration of the estate 
C)  provide financial advice to the debtor 
D)  bring lawsuits on behalf of the bankruptcy estate 
E)  distribute the proceeds of the bankruptcy estate 
A)  investigate the debtor's financial affairs 
B)  employ disinterested professionals such as attorneys and accountants to assist in the administration of the estate 
C)  provide financial advice to the debtor 
D)  bring lawsuits on behalf of the bankruptcy estate 
E)  distribute the proceeds of the bankruptcy estate C

Question 2

"Straight bankruptcy" is another term for:

Accepted Answer

A)  discharge 
B)  liquidation 
C)  reorganization 
D)  a consumer debt adjustment 
A)  discharge 
B)  liquidation 
C)  reorganization 
D)  a consumer debt adjustment B

Question 3

Bankruptcy proceedings are commenced under:

Accepted Answer

A)  state law 
B)  federal law 
C)  local (city or county) law 
D)  state or federal law at the option of the debtor 
E)  state or federal law at the option of the creditors 
A)  state law 
B)  federal law 
C)  local (city or county) law 
D)  state or federal law at the option of the debtor 
E)  state or federal law at the option of the creditors B

Question 4

The 2005 Bankruptcy Act bars the discharge of student loans unless it would cause an "undue hardship" to the debtor on his or her dependents.

Accepted Answer

A) True 
 B)False

Question 5

An inheritance received by an individual debtor 6 months after filing a Chapter 7 bankruptcy becomes part of the bankruptcy estate.

Accepted Answer

A) True 
 B)False

Question 6

Many parties are eager to extend credit to those who have just received a discharge in bankruptcy.One view is that such persons have no other debts and thus are a relatively safe credit risk.Furthermore,such persons cannot get another discharge in bankruptcy for 6 years.Many such persons,though,run up excessive debts time and again.Should there be limits on the ability of those discharged in bankruptcy to incur new debt? What are the arguments for and against such a rule?

Accepted Answer

The argument against credit restrictions

Question 7

A reaffirmation agreement would most likely be used in which of the following situations?

Accepted Answer

A)  when a bankruptcy petition has alimony debts 
B)  when the petitioner has a debt secured by an automobile that the debtor would like to keep 
C)  when the petitioner has made a voidable preference 
D)  when the petitioner has committed a fraudulent act 
E)  B and D only 
A)  when a bankruptcy petition has alimony debts 
B)  when the petitioner has a debt secured by an automobile that the debtor would like to keep 
C)  when the petitioner has made a voidable preference 
D)  when the petitioner has committed a fraudulent act 
E)  B and D only

Question 8

The automatic stay would stop a secured creditor from repossessing any collateral.

Accepted Answer

A) True 
 B)False

Question 9

A secured creditor may also be an unsecured creditor if the value of a creditor's claim exceeds the value of a debtor's collateral for the debt owed to the creditor.

Accepted Answer

A) True 
 B)False

Question 10

A voluntary petition amounts to an order for relief.

Accepted Answer

A) True 
 B)False

Question 11

A debtor may receive a discharge in straight bankruptcy only once:

Accepted Answer

A)  in a lifetime 
B)  every 4 years 
C)  every 6 years 
D)  every 8 years 
E)  Both C and D - it depends on what type of bankruptcy they have filed before. 
A)  in a lifetime 
B)  every 4 years 
C)  every 6 years 
D)  every 8 years 
E)  Both C and D - it depends on what type of bankruptcy they have filed before.

Question 12

What is the purpose of the automatic stay in a bankruptcy case?

Accepted Answer

A)  to pay secured creditors without their having to file a proof of claim 
B)  to ensure that secured creditors are the first to receive payment 
C)  to prevent a race for the debtor's assets by assuring an orderly distribution in which each party will receive that to which the party is entitled 
D)  to enable the appointment of a trustee 
E)  to maximize the assets available for distribution to creditors 
A)  to pay secured creditors without their having to file a proof of claim 
B)  to ensure that secured creditors are the first to receive payment 
C)  to prevent a race for the debtor's assets by assuring an orderly distribution in which each party will receive that to which the party is entitled 
D)  to enable the appointment of a trustee 
E)  to maximize the assets available for distribution to creditors

Question 13

Which of the following is not true about a Chapter 13 consumer debt adjustment compared to other bankruptcy plans?

Accepted Answer

A)  Executory contracts may be disaffirmed under Chapter 13 but not under other plans. 
B)  Certain debts are dischargeable under Chapter 13 that are not dischargeable under other plans. 
C)  More property may be retained under Chapter 13 than under other plans. 
D)  Chapter 13 allows for an extension of time for payments that other plans do not. 
E)  Chapter 13 plans are less expensive than other plans. 
A)  Executory contracts may be disaffirmed under Chapter 13 but not under other plans. 
B)  Certain debts are dischargeable under Chapter 13 that are not dischargeable under other plans. 
C)  More property may be retained under Chapter 13 than under other plans. 
D)  Chapter 13 allows for an extension of time for payments that other plans do not. 
E)  Chapter 13 plans are less expensive than other plans.

Question 14

Attorneys may be fined for factual discrepancies under the new bankruptcy reform act.

Accepted Answer

A) True 
 B)False

Question 15

What are the two most common types of bankruptcy used by businesses?

Accepted Answer

A)  liquidation and termination 
B)  liquidation and reorganization 
C)  termination and reaffirmation 
D)  reaffirmation and liquidation 
E)  reaffirmation and extension 
A)  liquidation and termination 
B)  liquidation and reorganization 
C)  termination and reaffirmation 
D)  reaffirmation and liquidation 
E)  reaffirmation and extension

Question 16

In a voluntary Chapter 7 bankruptcy petition,the debtor must list all property owned,including any exempt property.

Accepted Answer

A) True 
 B)False

Question 17

If the value of the collateral is less than the debt owed to the secured party,then:

Accepted Answer

A)  the secured party is still secured for the entire debt owed him 
B)  the secured party is unsecured for the excess of debt over the value of the security 
C)  the secured party loses the excess of debt over the value of the security 
D)  the secured party gets to take some other property as collateral so his entire debt is secured 
E)  the secured party is unsecured for the entire debt 
A)  the secured party is still secured for the entire debt owed him 
B)  the secured party is unsecured for the excess of debt over the value of the security 
C)  the secured party loses the excess of debt over the value of the security 
D)  the secured party gets to take some other property as collateral so his entire debt is secured 
E)  the secured party is unsecured for the entire debt

Question 18

One way to determine whether or not a fraudulent transfer has been made is to look at the time frame in which the transfer was made.

Accepted Answer

A) True 
 B)False

Question 19

A Chapter 11 bankruptcy was designed to provide a method for reorganization of the debtor's affairs.

Accepted Answer

A) True 
 B)False

Question 20

The bankruptcy court may now void certain fraudulent transfers of the debtor's property and obligations incurred by the debtor within 2 years of the filing of the petition for bankruptcy.

Accepted Answer

A) True 
 B)False

Exam 28: Bankruptcy and Reorganization

Which of the following is not a duty of the trustee in a bankruptcy case?

"Straight bankruptcy" is another term for:

Bankruptcy proceedings are commenced under:

The 2005 Bankruptcy Act bars the discharge of student loans unless it would cause an "undue hardship" to the debtor on his or her dependents.

An inheritance received by an individual debtor 6 months after filing a Chapter 7 bankruptcy becomes part of the bankruptcy estate.

A reaffirmation agreement would most likely be used in which of the following situations?

The automatic stay would stop a secured creditor from repossessing any collateral.

A secured creditor may also be an unsecured creditor if the value of a creditor's claim exceeds the value of a debtor's collateral for the debt owed to the creditor.

A voluntary petition amounts to an order for relief.

A debtor may receive a discharge in straight bankruptcy only once:

What is the purpose of the automatic stay in a bankruptcy case?

Which of the following is not true about a Chapter 13 consumer debt adjustment compared to other bankruptcy plans?

Attorneys may be fined for factual discrepancies under the new bankruptcy reform act.

What are the two most common types of bankruptcy used by businesses?

In a voluntary Chapter 7 bankruptcy petition,the debtor must list all property owned,including any exempt property.

If the value of the collateral is less than the debt owed to the secured party,then:

One way to determine whether or not a fraudulent transfer has been made is to look at the time frame in which the transfer was made.

A Chapter 11 bankruptcy was designed to provide a method for reorganization of the debtor's affairs.

The bankruptcy court may now void certain fraudulent transfers of the debtor's property and obligations incurred by the debtor within 2 years of the filing of the petition for bankruptcy.

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