Question 1

Under what circumstances might the court reject a debtor's Chapter 13 plan?

Accepted Answer

A) The plan requires future earnings to pay off debts. 
B) The plan promises to pay all secured and priority claims. 
C) The plan anticipates paying the unsecured creditors less than what they would get under Chapter 7. 
D) The plan treats all unsecured classes equally. 
A) The plan requires future earnings to pay off debts. 
B) The plan promises to pay all secured and priority claims. 
C) The plan anticipates paying the unsecured creditors less than what they would get under Chapter 7. 
D) The plan treats all unsecured classes equally.

Question 2

Under all chapters of the Bankruptcy Code,most of the debtor's assets are distributed to creditors and the debtor has no obligation to share future earnings with creditors.

Accepted Answer

A) True 
 B)False

Question 3

Agnes plans to file for bankruptcy under Chapter 7.One month prior to filing,Agnes gives Joe's Filling Station $700 to apply to her gas bill.Joe has been so kind to let her charge the gas she needed for her car over the past year.The bankruptcy trustee appointed to the case

Accepted Answer

A) can cancel the payment to Joe as a fraudulent transfer. 
B) cannot cancel the payment to Joe because it is payment for an existing debt. 
C) cannot cancel the payment to Joe because he is not an insider. 
D) can cancel the payment to Joe as a voidable preference. 
A) can cancel the payment to Joe as a fraudulent transfer. 
B) cannot cancel the payment to Joe because it is payment for an existing debt. 
C) cannot cancel the payment to Joe because he is not an insider. 
D) can cancel the payment to Joe as a voidable preference.

Question 4

Alimony and child support obligations are considered priority claims.

Accepted Answer

A) True 
 B)False

Question 5

Artistic Framing,a business with $120,000 of unsecured debt,needs to file for bankruptcy,but wants to continue in business.Discuss what chapter of the Bankruptcy Code should be used,and discuss the effect of the 2005 amendment to the Code on the proceedings.

Accepted Answer

If Artistic wants to continue in busines

Question 6

Who operates the business and develops a plan of reorganization in Chapter 11 bankruptcies?

Accepted Answer

A) The trustee 
B) The debtor in possession 
C) The state courts 
D) The creditors' committee 
A) The trustee 
B) The debtor in possession 
C) The state courts 
D) The creditors' committee

Question 7

Generally,filing bankruptcy stops the collection activity of creditors.

Accepted Answer

A) True 
 B)False

Question 8

The start of the bankruptcy process is

Accepted Answer

A) the submission of a plan of repayment. 
B) the bankruptcy court's issuance of an order for relief. 
C) a meeting of creditors. 
D) the appointment of a trustee. 
A) the submission of a plan of repayment. 
B) the bankruptcy court's issuance of an order for relief. 
C) a meeting of creditors. 
D) the appointment of a trustee.

Question 9

A trustee can void any transfer that meets all of the following requirements EXCEPT

Accepted Answer

A) if the transfer was to a creditor of the debtor. 
B) if the pre-petition payment made in the ordinary course. 
C) if the transfer was used to pay an existing debt. 
D) if the debtor's liabilities exceeded assets at the time of the transfer. 
A) if the transfer was to a creditor of the debtor. 
B) if the pre-petition payment made in the ordinary course. 
C) if the transfer was used to pay an existing debt. 
D) if the debtor's liabilities exceeded assets at the time of the transfer.

Question 10

Which of the following statements concerning a Chapter 11 reorganization plan is true?

Accepted Answer

A) A reorganization plan will be confirmed by the court only if a majority of each class of creditors votes in favor of the plan. 
B) A reorganization plan can be confirmed by the court over objections of some creditors if the court determines that the plan is feasible and fair. 
C) Only the bankruptcy court has the authority to confirm or reject the reorganization plan. Creditors do not have a right to vote on the plan. 
D) A reorganization plan binds only the debtor and not the creditors. 
A) A reorganization plan will be confirmed by the court only if a majority of each class of creditors votes in favor of the plan. 
B) A reorganization plan can be confirmed by the court over objections of some creditors if the court determines that the plan is feasible and fair. 
C) Only the bankruptcy court has the authority to confirm or reject the reorganization plan. Creditors do not have a right to vote on the plan. 
D) A reorganization plan binds only the debtor and not the creditors.

Question 11

In Chapter 11 bankruptcy only the debtor may propose plans of reorganization.

Accepted Answer

A) True 
 B)False

Question 12

Forever Yours,Inc.has a secured and perfected security interest in Sally's big-screen TV.On the filing date of Sally's Chapter 7 petition,the balance of the debt owed to Forever Yours is $2,000.The value of the TV is estimated at $1,500.This means that Forever Yours

Accepted Answer

A) is secured for the entire debt, $2,000. 
B) is unsecured for $500, the excess of the debt over the value of the TV. 
C) has a high priority claim of $500. This means that Forever Yours, Inc. will be allowed $500 worth of other unsecured property before other unsecured creditors get anything. 
D) is unsecured for the entire debt. 
A) is secured for the entire debt, $2,000. 
B) is unsecured for $500, the excess of the debt over the value of the TV. 
C) has a high priority claim of $500. This means that Forever Yours, Inc. will be allowed $500 worth of other unsecured property before other unsecured creditors get anything. 
D) is unsecured for the entire debt.

Question 13

Shoe Sunshine,Inc.filed for bankruptcy protection under Chapter 11 and submitted a plan of reorganization within 120 days after filing for relief.Two of the classes of creditors voted against the plan.However,the bankruptcy judge considered the plan to be feasible,fair,and in the best interests of the creditors;it approved it in spite of these creditors' objections.This action by the judge is called a "cramdown."

Accepted Answer

A) True 
 B)False

Question 14

Andy's business is not able to pay its debts,and the prospects for its finances to improve are slim.Andy decides not to continue the business.In this case,Andy should file a voluntary petition for which type of bankruptcy?

Accepted Answer

A) Chapter 7. 
B) Chapter 11. 
C) Chapter 13. 
D) Chapter 12. 
A) Chapter 7. 
B) Chapter 11. 
C) Chapter 13. 
D) Chapter 12.

Question 15

Creditor claims are divided into classes and the highest class must be satisfied in full before going to the next category.

Accepted Answer

A) True 
 B)False

Question 16

What is the "gap period"?

Accepted Answer

A) The period of time between the time a debtor files for bankruptcy and the time that he is granted discharge 
B) The period of time that creditors must wait to be paid once a plan of payment is approved 
C) The period between the time that a creditor files for an involuntary petition and the court issues the order for relief 
D) The period between the time a debtor files for bankruptcy and the time that the plan of payment is approved 
A) The period of time between the time a debtor files for bankruptcy and the time that he is granted discharge 
B) The period of time that creditors must wait to be paid once a plan of payment is approved 
C) The period between the time that a creditor files for an involuntary petition and the court issues the order for relief 
D) The period between the time a debtor files for bankruptcy and the time that the plan of payment is approved

Question 17

Which of the following is a requirement for an involuntary Chapter 7 bankruptcy petition?

Accepted Answer

A) The debtor must owe at least $150,000 in unsecured claims to the creditors who file. 
B) The debtor must have at least three creditors sign the petition if the debtor has 12 or more creditors. 
C) The creditors must have tried to help the debtor overcome the financial difficulties. 
D) The debtor must have a majority of the creditors file the petition. 
A) The debtor must owe at least $150,000 in unsecured claims to the creditors who file. 
B) The debtor must have at least three creditors sign the petition if the debtor has 12 or more creditors. 
C) The creditors must have tried to help the debtor overcome the financial difficulties. 
D) The debtor must have a majority of the creditors file the petition.

Question 18

Chapter 7 bankruptcy petitions may only be filed voluntarily.

Accepted Answer

A) True 
 B)False

Question 19

What are the three main purposes of the federal Bankruptcy Code? How are these purposes supported and fostered in the Code?

Accepted Answer

The primary goals of the Bankruptcy Code

Question 20

Bankruptcy is regulated by federal law.

Accepted Answer

A) True 
 B)False

Exam 36: Bankruptcy

Under what circumstances might the court reject a debtor's Chapter 13 plan?

Under all chapters of the Bankruptcy Code,most of the debtor's assets are distributed to creditors and the debtor has no obligation to share future earnings with creditors.

Agnes plans to file for bankruptcy under Chapter 7.One month prior to filing,Agnes gives Joe's Filling Station $700 to apply to her gas bill.Joe has been so kind to let her charge the gas she needed for her car over the past year.The bankruptcy trustee appointed to the case

Alimony and child support obligations are considered priority claims.

Artistic Framing,a business with $120,000 of unsecured debt,needs to file for bankruptcy,but wants to continue in business.Discuss what chapter of the Bankruptcy Code should be used,and discuss the effect of the 2005 amendment to the Code on the proceedings.

Who operates the business and develops a plan of reorganization in Chapter 11 bankruptcies?

Generally,filing bankruptcy stops the collection activity of creditors.

The start of the bankruptcy process is

A trustee can void any transfer that meets all of the following requirements EXCEPT

Which of the following statements concerning a Chapter 11 reorganization plan is true?

In Chapter 11 bankruptcy only the debtor may propose plans of reorganization.

Forever Yours,Inc.has a secured and perfected security interest in Sally's big-screen TV.On the filing date of Sally's Chapter 7 petition,the balance of the debt owed to Forever Yours is $2,000.The value of the TV is estimated at $1,500.This means that Forever Yours

Andy's business is not able to pay its debts,and the prospects for its finances to improve are slim.Andy decides not to continue the business.In this case,Andy should file a voluntary petition for which type of bankruptcy?

Creditor claims are divided into classes and the highest class must be satisfied in full before going to the next category.

What is the "gap period"?

Which of the following is a requirement for an involuntary Chapter 7 bankruptcy petition?

Chapter 7 bankruptcy petitions may only be filed voluntarily.

What are the three main purposes of the federal Bankruptcy Code? How are these purposes supported and fostered in the Code?

Bankruptcy is regulated by federal law.

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