Question 1

Francesca cannot serve as a trustee in a bankruptcy case because she is not a lawyer.

Accepted Answer

A) True 
 B)False

Question 2

Mark and Cynthia work for Bryson Supply Co.If the company files for Chapter 7 bankruptcy before paying their last month of wages and benefits,will they be able to recover anything from the company?

Accepted Answer

One goal of the Bankruptcy Code is to en

Question 3

Kathleen filed for voluntary bankruptcy and the automatic stay went into effect.The automatic stay:

Accepted Answer

A) acts to automatically discharge Kathleen's debts. 
B) stops any and all acts to collect,assess,or recover a claim against Kathleen that arose before she filed bankruptcy. 
C) stops only secured creditors from taking any act to collect,assess,or recover a claim against Kathleen that arose before she filed bankruptcy. 
D) stops creditors from trying to collect from Kathleen,but it does not stop them from filing lawsuits against her. 
A) acts to automatically discharge Kathleen's debts. 
B) stops any and all acts to collect,assess,or recover a claim against Kathleen that arose before she filed bankruptcy. 
C) stops only secured creditors from taking any act to collect,assess,or recover a claim against Kathleen that arose before she filed bankruptcy. 
D) stops creditors from trying to collect from Kathleen,but it does not stop them from filing lawsuits against her.

Question 4

Chapter 7 bankruptcy petitions may only be filed voluntarily..

Accepted Answer

A) True 
 B)False

Question 5

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 6

Link negligently ran his car into John,causing $50,000 in injuries.Link was intoxicated at the time of the accident.Can Link discharge this debt in bankruptcy?

Accepted Answer

A) Yes,claims based on negligence are dischargeable. 
B) Yes,as long as he didn't intend to hit John's car. 
C) No,such claims are not dischargeable in bankruptcy. 
D) No,because Link breached a fiduciary duty. 
A) Yes,claims based on negligence are dischargeable. 
B) Yes,as long as he didn't intend to hit John's car. 
C) No,such claims are not dischargeable in bankruptcy. 
D) No,because Link breached a fiduciary duty.

Question 7

Which of the following is a primary goal of bankruptcy:

Accepted Answer

A) to preserve as much of the debtor's property as possible. 
B) to divide the debtor's assets fairly between the debtor and the creditors. 
C) to divide the debtor's assets fairly among the creditors. 
D) All of the above. 
A) to preserve as much of the debtor's property as possible. 
B) to divide the debtor's assets fairly between the debtor and the creditors. 
C) to divide the debtor's assets fairly among the creditors. 
D) All of the above.

Question 8

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 9

Ramona has received a discharge in bankruptcy,but wants to reaffirm a debt to her sister.To be valid,the reaffirmation:

Accepted Answer

A) will be scrutinized by the court to make sure her sister has not unfairly pressured Ramona. 
B) will be automatically disallowed because allowing Ramona to promise to pay a discharged debt would be contrary to the goals of the bankruptcy proceedings. 
C) will be automatically allowed if Ramona voluntarily chooses to make it. 
D) must clearly disclose that Ramona has the right to rescind at any time since the debt was already discharged. 
A) will be scrutinized by the court to make sure her sister has not unfairly pressured Ramona. 
B) will be automatically disallowed because allowing Ramona to promise to pay a discharged debt would be contrary to the goals of the bankruptcy proceedings. 
C) will be automatically allowed if Ramona voluntarily chooses to make it. 
D) must clearly disclose that Ramona has the right to rescind at any time since the debt was already discharged.

Question 10

Chapters 11 and 13 are liquidation chapters.

Accepted Answer

A) True 
 B)False

Question 11

Karen has filed for bankruptcy.Who has the authority to confirm or reject a plan of payment,and what factors will be considered when deciding whether to approve a repayment plan under Chapter 13?

Accepted Answer

The court has the sole authority to conf

Question 12

Which of the following would not be considered a fraudulent conveyance or a voidable preference under the provisions of the Code? Immediately prior to filing bankruptcy:

Accepted Answer

A) debtor sells assets well below fair market price to Freddie,a friend. 
B) debtor sells his car at a public auction,thinking that it would bring a decent price,but the car brings an amount well below fair market value. 
C) debtor's corporation transfers assets to stockholders in lieu of cash dividends. 
D) debtor pays $650 to "Nation on Line" for the past ten months of Internet service. 
A) debtor sells assets well below fair market price to Freddie,a friend. 
B) debtor sells his car at a public auction,thinking that it would bring a decent price,but the car brings an amount well below fair market value. 
C) debtor's corporation transfers assets to stockholders in lieu of cash dividends. 
D) debtor pays $650 to "Nation on Line" for the past ten months of Internet service.

Question 13

Kylie filed a Chapter 7 bankruptcy petition in which she exempted her home,valued at $125,000.Kylie can exempt her entire home from all creditors if:

Accepted Answer

A) she claims her exemptions under the federal Bankruptcy Code. 
B) she lives in a state that allows for an exemption amount of $125,000 or more. 
C) she lives in a state that allows an exemption amount of $125,000 or more,she has lived in that state for at least two years prior to the bankruptcy,and there are no secured creditors with perfected liens against the home. 
D) None of the above. 
A) she claims her exemptions under the federal Bankruptcy Code. 
B) she lives in a state that allows for an exemption amount of $125,000 or more. 
C) she lives in a state that allows an exemption amount of $125,000 or more,she has lived in that state for at least two years prior to the bankruptcy,and there are no secured creditors with perfected liens against the home. 
D) None of the above.

Question 14

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 15

Concerned that the Chapter 11 bankruptcy procedures were harming the creditors of small businesses,Congress added some provisions in 2005 to change the process for businesses with less than $2 million in debt.Which of these provisions was included in that revision?

Accepted Answer

A) Small businesses have only 21 days to file a reorganization plan. 
B) Small businesses do not have to declare debts of less than $5,000. 
C) The courts have only 45 days to confirm or reject the plan or reorganization. 
D) All creditors of small businesses are treated as equals and proceeds are distributed proportionately to secured and unsecured creditors. 
A) Small businesses have only 21 days to file a reorganization plan. 
B) Small businesses do not have to declare debts of less than $5,000. 
C) The courts have only 45 days to confirm or reject the plan or reorganization. 
D) All creditors of small businesses are treated as equals and proceeds are distributed proportionately to secured and unsecured creditors.

Question 16

Brad was having financial difficulties and thought bankruptcy might be in his future.He transferred his sports car to his brother with the agreement that if he didn't file for bankruptcy within the next 18 months,his brother would return the car to him.Brad did file for bankruptcy in ten months.The bankruptcy trustee can bring the car back into Brad's estate for the purpose of providing assets for Brad's creditors.

Accepted Answer

A) True 
 B)False

Question 17

Peggy's credit card debts are mounting as her costs of insurance and fuel have dramatically increased and her income,from sporadic free-lance jobs,has dropped.Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she keeps most of her assets.

Accepted Answer

A) True 
 B)False

Question 18

Debts that cannot be discharged in bankruptcy include all EXCEPT:

Accepted Answer

A) alimony. 
B) income taxes. 
C) negligence judgments. 
D) fraud judgments. 
A) alimony. 
B) income taxes. 
C) negligence judgments. 
D) fraud judgments.

Question 19

Creditors of Northern Hydraulics file an involuntary bankruptcy petition against it.Northern continues to operate its business until the court officially acknowledges that Northern is under the jurisdiction of the court.Any expenses Northern incurs in the ordinary course of business during this gap period are:

Accepted Answer

A) priority claims. 
B) administrative expenses of the bankruptcy. 
C) unsecured claims. 
D) secured claims. 
A) priority claims. 
B) administrative expenses of the bankruptcy. 
C) unsecured claims. 
D) secured claims.

Question 20

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.

Exam 24: Bankruptcy

Francesca cannot serve as a trustee in a bankruptcy case because she is not a lawyer.

Mark and Cynthia work for Bryson Supply Co.If the company files for Chapter 7 bankruptcy before paying their last month of wages and benefits,will they be able to recover anything from the company?

Kathleen filed for voluntary bankruptcy and the automatic stay went into effect.The automatic stay:

Chapter 7 bankruptcy petitions may only be filed voluntarily..

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?

Link negligently ran his car into John,causing $50,000 in injuries.Link was intoxicated at the time of the accident.Can Link discharge this debt in bankruptcy?

Which of the following is a primary goal of bankruptcy:

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

Ramona has received a discharge in bankruptcy,but wants to reaffirm a debt to her sister.To be valid,the reaffirmation:

Chapters 11 and 13 are liquidation chapters.

Karen has filed for bankruptcy.Who has the authority to confirm or reject a plan of payment,and what factors will be considered when deciding whether to approve a repayment plan under Chapter 13?

Which of the following would not be considered a fraudulent conveyance or a voidable preference under the provisions of the Code? Immediately prior to filing bankruptcy:

Kylie filed a Chapter 7 bankruptcy petition in which she exempted her home,valued at $125,000.Kylie can exempt her entire home from all creditors if:

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

Concerned that the Chapter 11 bankruptcy procedures were harming the creditors of small businesses,Congress added some provisions in 2005 to change the process for businesses with less than $2 million in debt.Which of these provisions was included in that revision?

Peggy's credit card debts are mounting as her costs of insurance and fuel have dramatically increased and her income,from sporadic free-lance jobs,has dropped.Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she keeps most of her assets.

Debts that cannot be discharged in bankruptcy include all EXCEPT:

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

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