Question 1

Distinguish between secured and unsecured credit.

Accepted Answer

Unsecured credit does not require any security to protect the payment of the debt.Instead,the creditor relies on the debtor's promise to repay the principal (with interest,if applicable)when it is due.In deciding whether to make the loan,the unsecured creditor considers the debtor's credit history,income,and other assets.If the debtor fails to make the payments,the creditor may bring legal action and obtain a judgment against him or her.Secured credit refers to credit that requires security that secures payment of the loan.Security interests may be taken in real,personal,intangible,and other property.If the debtor fails to make the payments when due,the collateral may be repossessed to recover the outstanding amount.

Question 2

________ is a form of credit that does not require any security to protect the payment of the debt.

Accepted Answer

Unsecured credit

Question 3

Which of the following transactions occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods?

Accepted Answer

A) two-party secured 
B) three-party secured 
C) perfected 
D) attached 
A) two-party secured 
B) three-party secured 
C) perfected 
D) attached A

Question 4

A purchase money security interest is an interest a creditor automatically obtains when he or she extends credit to a consumer to purchase consumer goods.

Accepted Answer

A) True 
 B)False

Question 5

________ is a rehabilitation form of bankruptcy that permits a bankruptcy court to supervise the debtor's plan for the payment of unpaid debts in installments over the plan period.

Accepted Answer

A) Chapter 7 
B) Chapter 9 
C) Chapter 12 
D) Chapter 13 
A) Chapter 7 
B) Chapter 9 
C) Chapter 12 
D) Chapter 13

Question 6

A(n)________ is an instrument that evidences a borrower's debt to the lender for a real property.

Accepted Answer

A) note 
B) consignment 
C) accommodation 
D) deed of trust 
A) note 
B) consignment 
C) accommodation 
D) deed of trust

Question 7

Gifts that a debtor is entitled to receive within 180 days after the petition is filed are part of the bankruptcy estate.

Accepted Answer

A) True 
 B)False

Question 8

A contract or lease that has not been fully performed is termed as a(n)________ contract.

Accepted Answer

The answer of A contract or lease that has not...

Question 9

A(n)________ is an instrument that gives the creditor a security interest in the debtor's property that is pledged as collateral.

Accepted Answer

The answer of A(n)________ is an instrument that gives the...

Question 10

The term ________ refers to a security interest in property that was not in the possession of the debtor when the security agreement was executed.

Accepted Answer

The answer of The term ________ refers to a security...

Question 11

A deficiency judgment prevents a secured lender from recovering other property or income from a defaulting debtor if the collateral is insufficient to repay the unpaid loan.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is true about the surety's liability to pay in a surety arrangement?

Accepted Answer

A) The surety is secondarily liable for payment. 
B) The surety is primarily liable for payment. 
C) The principal debtor must be in default before the surety can be approached. 
D) The creditor can only approach the surety as a last resort. 
A) The surety is secondarily liable for payment. 
B) The surety is primarily liable for payment. 
C) The principal debtor must be in default before the surety can be approached. 
D) The creditor can only approach the surety as a last resort.

Question 13

The suspension of certain legal actions by creditors against a debtor or the debtor's property is known as a(n)________.

Accepted Answer

The answer of The suspension of certain legal actions by...

Question 14

Article 9 of the Uniform Commercial Code (UCC)governs secured transactions in personal property.

Accepted Answer

A) True 
 B)False

Question 15

Perfection by investment of collateral is one of the methods of perfecting a security interest under the Uniform Commercial Code (UCC).

Accepted Answer

A) True 
 B)False

Question 16

In a mortgage transaction,the creditor is known as the mortgagee.

Accepted Answer

A) True 
 B)False

Question 17

The surety is primarily liable for paying the principal debtor's debt when it is due in a surety arrangement.

Accepted Answer

A) True 
 B)False

Question 18

A(n)________ transaction occurs when a seller sells goods to a buyer who has obtained financing from a third-party lender that takes a security interest in the goods sold.

Accepted Answer

The answer of A(n)________ transaction occurs when a seller sells...

Question 19

Perfection of a security interest establishes the right of a secured creditor against other creditors who claim an interest in the collateral.

Accepted Answer

A) True 
 B)False

Question 20

A ________ is an instrument that gives a creditor a security interest in the debtor's real property that is pledged as collateral for a loan.

Accepted Answer

A) credit report 
B) letter of credit 
C) note 
D) deed of trust 
A) credit report 
B) letter of credit 
C) note 
D) deed of trust

Exam 13: Credit, Secured Transactions, and Bankruptcy

Distinguish between secured and unsecured credit.

________ is a form of credit that does not require any security to protect the payment of the debt.

Which of the following transactions occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods?

A purchase money security interest is an interest a creditor automatically obtains when he or she extends credit to a consumer to purchase consumer goods.

________ is a rehabilitation form of bankruptcy that permits a bankruptcy court to supervise the debtor's plan for the payment of unpaid debts in installments over the plan period.

A(n)________ is an instrument that evidences a borrower's debt to the lender for a real property.

Gifts that a debtor is entitled to receive within 180 days after the petition is filed are part of the bankruptcy estate.

A contract or lease that has not been fully performed is termed as a(n)________ contract.

A(n)________ is an instrument that gives the creditor a security interest in the debtor's property that is pledged as collateral.

The term ________ refers to a security interest in property that was not in the possession of the debtor when the security agreement was executed.

A deficiency judgment prevents a secured lender from recovering other property or income from a defaulting debtor if the collateral is insufficient to repay the unpaid loan.

Which of the following is true about the surety's liability to pay in a surety arrangement?

The suspension of certain legal actions by creditors against a debtor or the debtor's property is known as a(n)________.

Article 9 of the Uniform Commercial Code (UCC)governs secured transactions in personal property.

Perfection by investment of collateral is one of the methods of perfecting a security interest under the Uniform Commercial Code (UCC).

In a mortgage transaction,the creditor is known as the mortgagee.

The surety is primarily liable for paying the principal debtor's debt when it is due in a surety arrangement.

A(n)________ transaction occurs when a seller sells goods to a buyer who has obtained financing from a third-party lender that takes a security interest in the goods sold.

Perfection of a security interest establishes the right of a secured creditor against other creditors who claim an interest in the collateral.

A ________ is an instrument that gives a creditor a security interest in the debtor's real property that is pledged as collateral for a loan.

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