Question 1

The law of mortgages comes from:

Accepted Answer

A)  the UCC 
B)  state common law 
C)  state real estate statutes 
D)  the UCC and state common law 
E)  state common law and some state real estate statutes and the UCC

Question 2

Under Article 3 of the UCC, a check is an unconditional written order to pay that involves three parties in distinct capacities: drawer, drawee, and payee. The drawee must be a bank. Payment must be "on demand."

Accepted Answer

A) True 
 B)False

Question 3

Promissory notes are instruments that involve ____ parties.

Accepted Answer

A)  three 
B)  four 
C)  more than three 
D)  five 
E)  none of the other choices are correct

Question 4

If a negotiable instrument is ____, the transferee takes the instrument free of any of the transferor's contract obligations.

Accepted Answer

A)  transferred by assignment 
B)  delegated 
C)  transferred by court 
D)  assigned 
E)  none of the other choices are correct

Question 5

____ of the bankruptcy code means liquidation and fair distribution of the debtor's non-exempt assets to the creditors.

Accepted Answer

A)  Chapter 7 
B)  Chapter 8 
C)  Chapter 13 
D)  Chapter 12 
E)  Chapter 5

Question 6

Billy wants to borrow $10,000 to start a male belly dancing business. Creditors are not anxious to lend him the funds. Billy convinces Gary to back-up his credit. Gary is:

Accepted Answer

A)  the principal 
B)  the grantor 
C)  the testator 
D)  the surety 
E)  the detainor

Question 7

In most Chapter 11 bankruptcies, the ____ operates the "reorganized" business.

Accepted Answer

A)  county agent 
B)  creditor 
C)  court appointed official 
D)  impartial third party 
E)  none of the other choices are correct

Question 8

A commercial instrument where one party has a legal obligation to pay another party a certain sum of money and involves a maker and a payee only is called:

Accepted Answer

A)  a check 
B)  a note 
C)  a debit 
D)  a draft 
E)  a certificate of deposit

Question 9

A(n) ____ is a court-ordered seizure of goods from the customer to prevent the customer from disposing of it during the lawsuit.

Accepted Answer

A)  holding lien 
B)  merchant's lien 
C)  final lien 
D)  nonnegotiable lien 
E)  none of the other choices are correct

Question 10

The UCC prohibits the use of "floating liens" that keep carrying forward against a debtor when more supplies are added to an existing account.

Accepted Answer

A) True 
 B)False

Question 11

An advantage of a well-planned Chapter 11 bankruptcy, compared to liquidation, includes:

Accepted Answer

A)  fewer legal fees 
B)  less success restructuring the bankrupt party 
C)  many expert witness dilemmas 
D)  lesser payments to secured creditors 
E)  none of the other choices

Question 12

A person who files bankruptcy may not file again for another eight years.

Accepted Answer

A) True 
 B)False

Question 13

A form of check in which the bank is both the drawer and the drawee is called a:

Accepted Answer

A)  real check 
B)  bank check 
C)  cashier's check 
D)  credit check 
E)  cashier's note

Question 14

In a ____, creditors file a petition with the court, forcing the declaration of bankruptcy and the beginning of proceedings.

Accepted Answer

A)  voluntary bankruptcy 
B)  realized bankruptcy 
C)  real bankruptcy 
D)  corporate bankruptcy 
E)  none of the other choices are correct

Question 15

A bankruptcy is a matter of credit history record for ten years.

Accepted Answer

A) True 
 B)False

Question 16

Karen's Kitchens renovates Mark's old kitchen. Mark only pays part of his bill. To help try to collect the rest of the money owed her, Karen may obtain:

Accepted Answer

A)  a writ of certiorari 
B)  an artisan's lien 
C)  a distraint lien 
D)  a lien of circumstance 
E)  none of the other choices

Question 17

The creditors with the highest priority in bankruptcy proceedings are the secured creditors.

Accepted Answer

A) True 
 B)False

Question 18

The agreement providing security in real property is a(n):

Accepted Answer

A)  draft 
B)  guaranty 
C)  suretyship 
D)  easement 
E)  none of the other choices are correct

Question 19

Tetzlaff earned an MBA and a law degree suing student loans to finance the schooling. At the end, he could not find work, was living with his aged mother, and owed $260,000 in student loans. He filed for Chapter 7 bankruptcy and asked that the student loans be discharged as an undue hardship. The bankruptcy court and district court refused. The appeals court held that the debt would:

Accepted Answer

A)  ​not be discharged because federal law prohibits discharge. 
B)  ​not be discharged because Tetzlaff had primary care responsibility for his aged mother. 
C)  ​be discharged because after 24 months of searching for work Tetzlaff could not find suitable employment. 
D)  ​be discharged because given all his other debts it was "most unlikely" he could ever repay the loans. 
E)  ​none of the other choices are correct.

Question 20

Only individuals may purchase credit reports.

Accepted Answer

A) True 
 B)False

Exam 13: Negotiable Instruments, Credit, and Bankruptcy

The law of mortgages comes from:

Under Article 3 of the UCC, a check is an unconditional written order to pay that involves three parties in distinct capacities: drawer, drawee, and payee. The drawee must be a bank. Payment must be "on demand."

Promissory notes are instruments that involve ____ parties.

If a negotiable instrument is ____, the transferee takes the instrument free of any of the transferor's contract obligations.

____ of the bankruptcy code means liquidation and fair distribution of the debtor's non-exempt assets to the creditors.

Billy wants to borrow $10,000 to start a male belly dancing business. Creditors are not anxious to lend him the funds. Billy convinces Gary to back-up his credit. Gary is:

In most Chapter 11 bankruptcies, the ____ operates the "reorganized" business.

A commercial instrument where one party has a legal obligation to pay another party a certain sum of money and involves a maker and a payee only is called:

A(n) ____ is a court-ordered seizure of goods from the customer to prevent the customer from disposing of it during the lawsuit.

The UCC prohibits the use of "floating liens" that keep carrying forward against a debtor when more supplies are added to an existing account.

An advantage of a well-planned Chapter 11 bankruptcy, compared to liquidation, includes:

A person who files bankruptcy may not file again for another eight years.

A form of check in which the bank is both the drawer and the drawee is called a:

In a ____, creditors file a petition with the court, forcing the declaration of bankruptcy and the beginning of proceedings.

A bankruptcy is a matter of credit history record for ten years.

Karen's Kitchens renovates Mark's old kitchen. Mark only pays part of his bill. To help try to collect the rest of the money owed her, Karen may obtain:

The creditors with the highest priority in bankruptcy proceedings are the secured creditors.

The agreement providing security in real property is a(n) :

Only individuals may purchase credit reports.