Question 1

If Abe has an allowed claim of $5,000 against the estate of Deborah and has a security interest in her art collection in the amount of $3,000 of the $5,000 claim:

Accepted Answer

A) Abe will recover nothing in the bankruptcy proceeding. 
B) Abe will recover $5,000 in the bankruptcy proceeding. 
C) Abe has a secured claim in the amount of $3,000 and an unsecured claim in the amount of $2,000. 
D) it would be a voidable preference to pay Abe the full $5,000. 
A) Abe will recover nothing in the bankruptcy proceeding. 
B) Abe will recover $5,000 in the bankruptcy proceeding. 
C) Abe has a secured claim in the amount of $3,000 and an unsecured claim in the amount of $2,000. 
D) it would be a voidable preference to pay Abe the full $5,000.

Question 2

Which of the following debts are dischargeable in a Chapter 7 bankruptcy proceeding?

Accepted Answer

A) A $10,000 judgment that has not yet been executed. 
B) Medical expenses of $25,000. 
C) Credit card debts of $15,000 from two years ago. 
D) All of the above are dischargeable. 
E) None of the above are dischargeable. 
A) A $10,000 judgment that has not yet been executed. 
B) Medical expenses of $25,000. 
C) Credit card debts of $15,000 from two years ago. 
D) All of the above are dischargeable. 
E) None of the above are dischargeable.

Question 3

MATCHING
Part VIII Matching
Match each statement with the correct term below.a.The right in personal property that secures payment or performance of an obligation.b.Relief from liability for all debts except those specified in the Bankruptcy Code.c.A document filed to provide notice of a security interest.d.Property subject to a security interest.e.Tangible or electronic record that evidences both a debt and a security interest in specific goods.f.Creation of a security interest that is enforceable against a debtor.g.Delivery of personal property to a creditor as security for payment of a debt.h.An agreement between the debtor and creditor creating a right in personal property that secures payment or performance.i.Movable things bought or used primarily for personal, family, or household purposes.j.Creditor's remedy involving a statutory proceeding directed at a third person who owes a debt to or has property of a debtor.k.A surety liable to a creditor immediately upon the default of a principal debtor.l.Creation of a security interest enforceable against most third parties.m.The right of a surety to be relieved of his obligation to the creditor by having the principal debtor perform the obligation.n.A surety's right to assume the creditor's rights.o.A person who promises to answer for the payment of a debt or the performance of a duty owed to the creditor by the principal debtor upon the principal debtor's failure to perform.p.A way to begin a bankruptcy case that is available to any debtor even if solvent.q.May be filed by creditors only under Chapter 7 or 11.r.The person responsible for collecting, liquidating, and distributing the debtor's estate.s.Surety liable to a creditor only after creditor has exhausted legal remedies against the principal debtor.t.Any entity that has a claim against the debtor.u.A claim with a lien on property of a debtor; a claim tied to specific property of the debtor.v.Certain preferential transfers made by the debtor to favored creditors before the date of bankruptcy and invalidated by the Bankruptcy Code.w.An agreement between the debtor and two or more of her creditors that each will take a portion of his claim as full payment.x.Prevents attempts by creditors to recover claims against the debtor.y.A voluntary transfer by the debtor of some or all of his property to a trustee, who applies the property to the payment of all of the debtor's debts.
-voidable preference

Accepted Answer

The answer of MATCHING
Part VIII Matching
Match each statement with the...

Question 4

MATCHING
Part VIII Matching
Match each statement with the correct term below.a.The right in personal property that secures payment or performance of an obligation.b.Relief from liability for all debts except those specified in the Bankruptcy Code.c.A document filed to provide notice of a security interest.d.Property subject to a security interest.e.Tangible or electronic record that evidences both a debt and a security interest in specific goods.f.Creation of a security interest that is enforceable against a debtor.g.Delivery of personal property to a creditor as security for payment of a debt.h.An agreement between the debtor and creditor creating a right in personal property that secures payment or performance.i.Movable things bought or used primarily for personal, family, or household purposes.j.Creditor's remedy involving a statutory proceeding directed at a third person who owes a debt to or has property of a debtor.k.A surety liable to a creditor immediately upon the default of a principal debtor.l.Creation of a security interest enforceable against most third parties.m.The right of a surety to be relieved of his obligation to the creditor by having the principal debtor perform the obligation.n.A surety's right to assume the creditor's rights.o.A person who promises to answer for the payment of a debt or the performance of a duty owed to the creditor by the principal debtor upon the principal debtor's failure to perform.p.A way to begin a bankruptcy case that is available to any debtor even if solvent.q.May be filed by creditors only under Chapter 7 or 11.r.The person responsible for collecting, liquidating, and distributing the debtor's estate.s.Surety liable to a creditor only after creditor has exhausted legal remedies against the principal debtor.t.Any entity that has a claim against the debtor.u.A claim with a lien on property of a debtor; a claim tied to specific property of the debtor.v.Certain preferential transfers made by the debtor to favored creditors before the date of bankruptcy and invalidated by the Bankruptcy Code.w.An agreement between the debtor and two or more of her creditors that each will take a portion of his claim as full payment.x.Prevents attempts by creditors to recover claims against the debtor.y.A voluntary transfer by the debtor of some or all of his property to a trustee, who applies the property to the payment of all of the debtor's debts.
-voluntary petition

Accepted Answer

The answer of MATCHING
Part VIII Matching
Match each statement with the...

Question 5

Regarding priority claims:

Accepted Answer

A) Each claimant in a priority class shares pro rata if the assets cannot satisfy all claims in the class. 
B) Employees have a priority for contributions to employee benefit plans but only to the extent that a $4,500 cap for unpaid wages has not been reached. 
C) Subordination agreements are enforceable. 
D) Both (a) and (c) are correct. 
E) (a), (b), and (c). 
A) Each claimant in a priority class shares pro rata if the assets cannot satisfy all claims in the class. 
B) Employees have a priority for contributions to employee benefit plans but only to the extent that a $4,500 cap for unpaid wages has not been reached. 
C) Subordination agreements are enforceable. 
D) Both (a) and (c) are correct. 
E) (a), (b), and (c).

Question 6

A composition would bind all of debtor's creditors to the settlement.

Accepted Answer

A) True 
 B)False

Question 7

An involuntary petition for bankruptcy can be filed against a:

Accepted Answer

A) non-profit charitable organization. 
B) partnership that invests in real estate. 
C) life insurance company. 
D) wheat farmer. 
A) non-profit charitable organization. 
B) partnership that invests in real estate. 
C) life insurance company. 
D) wheat farmer.

Question 8

A trustee in bankruptcy may sell the property of the debtor's estate.

Accepted Answer

A) True 
 B)False

Question 9

The 1994 amendments allow the creditors to elect a trustee in a Chapter 11 proceeding if the court orders the appointment of a trustee for cause.

Accepted Answer

A) True 
 B)False

Question 10

MATCHING
Part VIII Matching
Match each statement with the correct term below.a.The right in personal property that secures payment or performance of an obligation.b.Relief from liability for all debts except those specified in the Bankruptcy Code.c.A document filed to provide notice of a security interest.d.Property subject to a security interest.e.Tangible or electronic record that evidences both a debt and a security interest in specific goods.f.Creation of a security interest that is enforceable against a debtor.g.Delivery of personal property to a creditor as security for payment of a debt.h.An agreement between the debtor and creditor creating a right in personal property that secures payment or performance.i.Movable things bought or used primarily for personal, family, or household purposes.j.Creditor's remedy involving a statutory proceeding directed at a third person who owes a debt to or has property of a debtor.k.A surety liable to a creditor immediately upon the default of a principal debtor.l.Creation of a security interest enforceable against most third parties.m.The right of a surety to be relieved of his obligation to the creditor by having the principal debtor perform the obligation.n.A surety's right to assume the creditor's rights.o.A person who promises to answer for the payment of a debt or the performance of a duty owed to the creditor by the principal debtor upon the principal debtor's failure to perform.p.A way to begin a bankruptcy case that is available to any debtor even if solvent.q.May be filed by creditors only under Chapter 7 or 11.r.The person responsible for collecting, liquidating, and distributing the debtor's estate.s.Surety liable to a creditor only after creditor has exhausted legal remedies against the principal debtor.t.Any entity that has a claim against the debtor.u.A claim with a lien on property of a debtor; a claim tied to specific property of the debtor.v.Certain preferential transfers made by the debtor to favored creditors before the date of bankruptcy and invalidated by the Bankruptcy Code.w.An agreement between the debtor and two or more of her creditors that each will take a portion of his claim as full payment.x.Prevents attempts by creditors to recover claims against the debtor.y.A voluntary transfer by the debtor of some or all of his property to a trustee, who applies the property to the payment of all of the debtor's debts.
-surety

Accepted Answer

The answer of MATCHING
Part VIII Matching
Match each statement with the...

Question 11

The Bankruptcy Code exempts specified property of an individual debtor from bankruptcy.What are some of these exemptions?

Accepted Answer

The 1994 Amendments to the Bankruptcy Ac

Question 12

If the debtor contests the involuntary petition for bankruptcy, the court must enter an order for relief against the debtor.

Accepted Answer

A) True 
 B)False

Question 13

The Packer Video Company files for Chapter 7 bankruptcy.Its only non-exempt asset is a piece of equipment valued at $15,000.The claims that have been approved by the trustee are as follows: (1) $2,500 in expenses of the trustee in the administration of the estate.
(2) $4,000 in wages, salaries, and commissions earned by employees within ninety days before the filing of the bankruptcy petition and the cessation of the business.
(3) $500 in employment taxes owed to the state.
(4) Unsecured claims in the amount of $10,000.
(5) A perfected security interest in the amount of $2,000 which is held by First Bank and which is secured by the item of equipment.
How much money will be available to pay the general unsecured creditors who have no priority?

Accepted Answer

A) $15,000 
B) $13,000 
C) $10,500 
D) $6,000 
E) No money will be available to pay the general unsecured creditors. 
A) $15,000 
B) $13,000 
C) $10,500 
D) $6,000 
E) No money will be available to pay the general unsecured creditors.

Question 14

An involuntary bankruptcy petition, even if contested by the debtor, may still result in an "order for relief" if:

Accepted Answer

A) the debtor generally is not paying his admitted debts as they come due. 
B) the debtor failed to pay three or more debtors whose total debts equal $5,000. 
C) a custodian was appointed within 120 days before the filing of the petition. 
D) Both (a) and (c). 
A) the debtor generally is not paying his admitted debts as they come due. 
B) the debtor failed to pay three or more debtors whose total debts equal $5,000. 
C) a custodian was appointed within 120 days before the filing of the petition. 
D) Both (a) and (c).

Question 15

In March, Margaret made a loan to Pete for $10,000.Three months later, she began to hear rumors about Pete's failing financial condition.When in late July, Pete asked her to loan him an additional $2,000 to buy inventory, Margaret required a security interest in the inventory and also demanded that Pete secure the first loan with his personal automobile.In September, Pete filed bankruptcy.Will these security interests stand up?

Accepted Answer

A) Yes, if they are properly filed. 
B) Yes, since they are for antecedent debts. 
C) No, both will be voidable preferences. 
D) No, the security interest in the automobile would be a voidable preference. 
A) Yes, if they are properly filed. 
B) Yes, since they are for antecedent debts. 
C) No, both will be voidable preferences. 
D) No, the security interest in the automobile would be a voidable preference.

Question 16

Under Chapter ___________, certain debts of individuals are not dischargeable despite the debtor's good faith.

Accepted Answer

A) 7 
B) 11 
C) 13 
D) All of the above. 
A) 7 
B) 11 
C) 13 
D) All of the above.

Question 17

According to the 1994 amendments to the Bankruptcy Act, the U.S.Judicial Conference must adjust for inflation the dollar amounts of the requirements for filing involuntary cases, priorities, and exemptions every seven years.

Accepted Answer

A) True 
 B)False

Question 18

MATCHING
Part VIII Matching
Match each statement with the correct term below.a.The right in personal property that secures payment or performance of an obligation.b.Relief from liability for all debts except those specified in the Bankruptcy Code.c.A document filed to provide notice of a security interest.d.Property subject to a security interest.e.Tangible or electronic record that evidences both a debt and a security interest in specific goods.f.Creation of a security interest that is enforceable against a debtor.g.Delivery of personal property to a creditor as security for payment of a debt.h.An agreement between the debtor and creditor creating a right in personal property that secures payment or performance.i.Movable things bought or used primarily for personal, family, or household purposes.j.Creditor's remedy involving a statutory proceeding directed at a third person who owes a debt to or has property of a debtor.k.A surety liable to a creditor immediately upon the default of a principal debtor.l.Creation of a security interest enforceable against most third parties.m.The right of a surety to be relieved of his obligation to the creditor by having the principal debtor perform the obligation.n.A surety's right to assume the creditor's rights.o.A person who promises to answer for the payment of a debt or the performance of a duty owed to the creditor by the principal debtor upon the principal debtor's failure to perform.p.A way to begin a bankruptcy case that is available to any debtor even if solvent.q.May be filed by creditors only under Chapter 7 or 11.r.The person responsible for collecting, liquidating, and distributing the debtor's estate.s.Surety liable to a creditor only after creditor has exhausted legal remedies against the principal debtor.t.Any entity that has a claim against the debtor.u.A claim with a lien on property of a debtor; a claim tied to specific property of the debtor.v.Certain preferential transfers made by the debtor to favored creditors before the date of bankruptcy and invalidated by the Bankruptcy Code.w.An agreement between the debtor and two or more of her creditors that each will take a portion of his claim as full payment.x.Prevents attempts by creditors to recover claims against the debtor.y.A voluntary transfer by the debtor of some or all of his property to a trustee, who applies the property to the payment of all of the debtor's debts.
-perfection

Accepted Answer

The answer of MATCHING
Part VIII Matching
Match each statement with the...

Question 19

What Chapter of the Bankruptcy Code deals with adjustment of debts of an individual with regular income?

Accepted Answer

A) 5 
B) 7 
C) 13 
D) 15 
A) 5 
B) 7 
C) 13 
D) 15

Question 20

A private employer:

Accepted Answer

A) may terminate the employment of an individual solely because he has been a debtor in bankruptcy. 
B) may not discriminate with regard to employment solely because an individual was insolvent before the commencement of a bankruptcy case. 
C) has no restrictions regarding employment practices involving individuals who are or have been debtors under the Bankruptcy Code. 
D) may discriminate with respect to employment against an individual who has not paid a debt that is dischargeable in a case under the Bankruptcy Code. 
A) may terminate the employment of an individual solely because he has been a debtor in bankruptcy. 
B) may not discriminate with regard to employment solely because an individual was insolvent before the commencement of a bankruptcy case. 
C) has no restrictions regarding employment practices involving individuals who are or have been debtors under the Bankruptcy Code. 
D) may discriminate with respect to employment against an individual who has not paid a debt that is dischargeable in a case under the Bankruptcy Code.

Exam 39: Bankruptcy

If Abe has an allowed claim of $5,000 against the estate of Deborah and has a security interest in her art collection in the amount of $3,000 of the $5,000 claim:

Which of the following debts are dischargeable in a Chapter 7 bankruptcy proceeding?

Regarding priority claims:

A composition would bind all of debtor's creditors to the settlement.

An involuntary petition for bankruptcy can be filed against a:

A trustee in bankruptcy may sell the property of the debtor's estate.

The 1994 amendments allow the creditors to elect a trustee in a Chapter 11 proceeding if the court orders the appointment of a trustee for cause.

The Bankruptcy Code exempts specified property of an individual debtor from bankruptcy.What are some of these exemptions?

If the debtor contests the involuntary petition for bankruptcy, the court must enter an order for relief against the debtor.

An involuntary bankruptcy petition, even if contested by the debtor, may still result in an "order for relief" if:

Under Chapter ___________, certain debts of individuals are not dischargeable despite the debtor's good faith.

According to the 1994 amendments to the Bankruptcy Act, the U.S.Judicial Conference must adjust for inflation the dollar amounts of the requirements for filing involuntary cases, priorities, and exemptions every seven years.

What Chapter of the Bankruptcy Code deals with adjustment of debts of an individual with regular income?

A private employer:

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