Question 1

A Chapter 11 reorganization plan must provide for payment of tax claims over a five-year period.

Accepted Answer

A) True 
 B)False

Question 2

Maggie is a surety for Juli's debt to Bill.Bill and Juli decide to make material changes to the original contract without consulting Maggie.Maggie is

Accepted Answer

A) still bound by the contract. 
B) discharged completely. 
C) still bound by the contract,but allowed to make additional changes to the contract. 
D) still bound by the contract unless she contests it within 30 days of the changes. 
A) still bound by the contract. 
B) discharged completely. 
C) still bound by the contract,but allowed to make additional changes to the contract. 
D) still bound by the contract unless she contests it within 30 days of the changes.

Question 3

Bankruptcy law is state law.

Accepted Answer

A) True 
 B)False

Question 4

A creditor must exhaust all legal remedies against the principal debtor before holding the surety responsible for payment.

Accepted Answer

A) True 
 B)False

Question 5

Drew and Earl are brothers.They agree to act as guarantors on a loan made by their sister,Flo.Flo defaults on the payments and Drew re-fuses to pay.Earl pays the debt.Earl can recover from

Accepted Answer

A) Drew and Flo under the right of proportionate liability. 
B) Drew and Flo under the right of reimbursement. 
C) Drew under the right of contribution and Flo under the right of subrogation. 
D) no one,because the parties are brothers and sister. 
A) Drew and Flo under the right of proportionate liability. 
B) Drew and Flo under the right of reimbursement. 
C) Drew under the right of contribution and Flo under the right of subrogation. 
D) no one,because the parties are brothers and sister.

Question 6

Bess wishes to appeal a decision from a federal bankruptcy court.Bess must appeal to

Accepted Answer

A) a county court. 
B) a federal district court. 
C) the U.S.Supreme Court. 
D) a state court. 
A) a county court. 
B) a federal district court. 
C) the U.S.Supreme Court. 
D) a state court.

Question 7

One goal of bankruptcy law is to protect a debtor.

Accepted Answer

A) True 
 B)False

Question 8

Donna goes through an involuntary bankruptcy proceeding.An invol-un-tary bankruptcy occurs when

Accepted Answer

A) a debtor files forms designated for the purpose in a bankruptcy court. 
B) a debtor is unable to pay his or her debts as they come due. 
C) a debtor's creditors force the debtor into bankruptcy proceedings. 
D) a debtor's debts exceed the fair market value of his or her assets. 
A) a debtor files forms designated for the purpose in a bankruptcy court. 
B) a debtor is unable to pay his or her debts as they come due. 
C) a debtor's creditors force the debtor into bankruptcy proceedings. 
D) a debtor's debts exceed the fair market value of his or her assets.

Question 9

Once a discharge is granted,it may not be revoked,even if,for example,a debtor concealed property to defraud a creditor.

Accepted Answer

A) True 
 B)False

Question 10

Liens usually do not take priority over other claims against the same property.

Accepted Answer

A) True 
 B)False

Question 11

A pipe in Gert's house springs a leak.Gert contracts with Holly's Plumbing & Construction Company to repair the pipe and fix the dam-age to Gert's house.Gert pays 10 percent of the price in advance.Holly's does the work,but Gert refuses to pay the rest of the price.What can Holly's do,and how is it done?

Accepted Answer

Holly's can place a me-chanic's lien on

Question 12

A student loan is discharged under Chapter 13 unless the creditor can show "undue hardship."

Accepted Answer

A) True 
 B)False

Question 13

Concealing assets from a bankruptcy court is a crime.

Accepted Answer

A) True 
 B)False

Question 14

Bobby has fifteen creditors.To force Bobby into bankruptcy proceedings,at least three creditors must join the petition and their unsecured claims must add up to at least

Accepted Answer

A) $500. 
B) $10,250. 
C) $14,425. 
D) $50,000. 
A) $500. 
B) $10,250. 
C) $14,425. 
D) $50,000.

Question 15

Fact Pattern 20-1
Mary's home is in a state that has a $30,000 homestead exemption.Mary de-faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc-tion for $80,000.
-Refer to Fact Pattern 20-1.Nina may recover

Accepted Answer

A) $0. 
B) $30,000. 
C) $50,000. 
D) $60,000. 
A) $0. 
B) $30,000. 
C) $50,000. 
D) $60,000.

Question 16

Fact Pattern 20-1
Mary's home is in a state that has a $30,000 homestead exemption.Mary de-faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc-tion for $80,000.
-Refer to Fact Pattern 20-1.Other property Mary may own that may be ex-empt from satisfaction of judgment debts includes

Accepted Answer

A) any property that Mary wishes to exempt. 
B) investments that Mary has made in her family's businesses. 
C) recreational vehicles that Mary uses on weekends. 
D) tools that Mary uses in her trade. 
A) any property that Mary wishes to exempt. 
B) investments that Mary has made in her family's businesses. 
C) recreational vehicles that Mary uses on weekends. 
D) tools that Mary uses in her trade.

Question 17

Joe files a voluntary petition for Chapter 7 bankruptcy.His petition does not need to include

Accepted Answer

A) a list of Joe's secured creditors. 
B) a list of Joe's unsecured creditors. 
C) a list of the occupations of all Joe's creditors. 
D) the addresses of all Joe's creditors. 
A) a list of Joe's secured creditors. 
B) a list of Joe's unsecured creditors. 
C) a list of the occupations of all Joe's creditors. 
D) the addresses of all Joe's creditors.

Question 18

A mechanic's lien is possessory.

Accepted Answer

A) True 
 B)False

Question 19

A writ of execution is a writ that puts in force a court decree or judgment.

Accepted Answer

A) True 
 B)False

Question 20

Zeke files a petition for bankruptcy under Chapter 13.Zeke's Chapter 13 plan must provide for

Accepted Answer

A) the turnover of his future income to the trustee. 
B) his attendance at a credit-counseling briefing. 
C) adequate means for the petition's execution. 
D) a preference for one creditor over another. 
A) the turnover of his future income to the trustee. 
B) his attendance at a credit-counseling briefing. 
C) adequate means for the petition's execution. 
D) a preference for one creditor over another.

Exam 20: Creditors Rights and Bankruptcy

A Chapter 11 reorganization plan must provide for payment of tax claims over a five-year period.

Maggie is a surety for Juli's debt to Bill.Bill and Juli decide to make material changes to the original contract without consulting Maggie.Maggie is

Bankruptcy law is state law.

A creditor must exhaust all legal remedies against the principal debtor before holding the surety responsible for payment.

Drew and Earl are brothers.They agree to act as guarantors on a loan made by their sister,Flo.Flo defaults on the payments and Drew re-fuses to pay.Earl pays the debt.Earl can recover from

Bess wishes to appeal a decision from a federal bankruptcy court.Bess must appeal to

One goal of bankruptcy law is to protect a debtor.

Donna goes through an involuntary bankruptcy proceeding.An invol-un-tary bankruptcy occurs when

Once a discharge is granted,it may not be revoked,even if,for example,a debtor concealed property to defraud a creditor.

Liens usually do not take priority over other claims against the same property.

A student loan is discharged under Chapter 13 unless the creditor can show "undue hardship."

Concealing assets from a bankruptcy court is a crime.

Bobby has fifteen creditors.To force Bobby into bankruptcy proceedings,at least three creditors must join the petition and their unsecured claims must add up to at least

Fact Pattern 20-1 Mary's home is in a state that has a $30,000 homestead exemption.Mary de-faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc-tion for $80,000. -Refer to Fact Pattern 20-1.Nina may recover

Joe files a voluntary petition for Chapter 7 bankruptcy.His petition does not need to include

A mechanic's lien is possessory.

A writ of execution is a writ that puts in force a court decree or judgment.

Zeke files a petition for bankruptcy under Chapter 13.Zeke's Chapter 13 plan must provide for

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