Question 1

Nancy joins with other creditors to force Odette, a debtor, into bankruptcy. One of the goals of bankruptcy law with respect to creditors is to

Accepted Answer

A)   provide that creditors will continue to lend to insolvent debtors.
B)   protect creditor assets from diminution in value.
C)   ensure equitable treatment of creditors who are competing for a debtor's assets.
D)   make all debtor property available for creditors. C

Question 2

Fruit & Flowers Mail Order Corporation's creditors agree to a workout with the firm. This is

Accepted Answer

A)   an agreement to pay a debt dischargeable in bankruptcy.
B)   an accountant's summary of a debtor's financial situation.
C)   a private, negotiated adjustment of creditor-debtor relations.
D)   a reorganization of corporate debts and debtors. C

Question 3

To adjust debts and institute a repayment plan that is less expensive and less complicated than other options, Buffalo n' Beef Bar-B-Q Restaurant, a small business, may file a petition in bankruptcy for relief through

Accepted Answer

A)   a liquidation.
B)   a reorganization.
C)   a repayment plan.
D)   a family-farmer bankruptcy plan. C

Question 4

In the distribution of the debtor's estate, secured creditors take priority over unsecured creditors.

Accepted Answer

A) True 
 B)False

Question 5

Paulina operates a sole proprietorship, a corporation, and a partnership. Paulina wants to ob?tain relief for her individual debts and the debts of her corporation and partnership. For each of these, Paulina may file a petition in bankruptcy for relief through

Accepted Answer

A)   a liquidation.
B)   a reorganization.
C)   a repayment plan.
D)   a family-farmer bankruptcy plan.

Question 6

Norma files a petition in bankruptcy. She turns her assets over to O'Brien, who sells them and then distributes the proceeds to Norma's creditors. O'Brien is a

Accepted Answer

A)   preferred creditor.
B)   bankruptcy court judge.
C)   bankruptcy trustee.
D)   debtor.

Question 7

Eduardo is a debtor. Furniture Mart is Eduardo's employer. Guaranty Credit, Inc., and the government are Eduardo's credi?tors. For these parties, a petition in bankruptcy for relief through an individual's repayment plan could be filed by

Accepted Answer

A)   Eduardo alone, Furniture Mart alone, or Guaranty Credit and the government jointly.
B)   Eduardo only.
C)   Guaranty Credit and the government only.
D)   the government only.

Question 8

A bankruptcy court may deny a discharge based on the debtor's conduct.

Accepted Answer

A) True 
 B)False

Question 9

Thirty-one days before filing a petition in bankruptcy, Gavin transfers prop?erty and makes payments that favor one creditor over another. These are

Accepted Answer

A)   affirmation agreements.
B)   preferences.
C)   secured interests.
D)   unsecured debts.

Question 10

A debtor must be insolvent to file for bankruptcy relief.

Accepted Answer

A) True 
 B)False

Question 11

Chi-Lan files a petition in bankruptcy for relief through an individual's repayment plan. Chi-Lan's plan must provide for

Accepted Answer

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

Question 12

In a Chapter 11 case, the court cannot confirm a reorganization plan over the objections of a class of creditors.

Accepted Answer

A) True 
 B)False

Question 13

All debts are dischargeable in bankruptcy.

Accepted Answer

A) True 
 B)False

Question 14

The right to petition for bankruptcy relief under federal law is an essential aspect of our capitalistic society.

Accepted Answer

A) True 
 B)False

Question 15

Federal Bank is a secured party on a $50,000 loan to Gigi, who owns Home HealthCare, an assisted living facility. When Gigi experiences financial difficulty, creditors other than Federal Bank petition her into involuntary bankruptcy. The value of the secured collateral has substantially decreased in value. On its sale, the debt to Federal Bank is reduced to $25,000. Gigi's estate consists of $100,000 in exempt assets and $20,000 in nonexempt assets. After the bankruptcy costs and back wages to Gigi's employees are paid, nothing is left for unsecured creditors. Gigi receives a discharge in bankruptcy. Later she decides to go back into business. By selling a few exempt assets and getting a small loan, she is able to buy Indulgence, a small, profitable nightclub. Gigi goes to Federal Bank for the loan. The bank claims that the balance of its secured debt was not discharged in Gigi's bankruptcy. She signs an agreement to pay Federal Bank the $25,000, and the bank makes a new unsecured loan to her. Is Federal Bank correct that the balance of its secured debt was not discharged in bankruptcy? What is the legal effect of Gigi's agreement to pay the bank $25,000 after the discharge in bankruptcy?

Accepted Answer

The answer of Federal Bank is a secured party on...

Question 16

Best Yogurt Corporation orders refrigeration equipment from Cold Storage, Inc., which has an unperfected security interest in the equipment until it is paid for. Meanwhile, Best Yogurt takes out a loan from Dependable Credit, Inc., subject to a security interest in Best Yogurt's building and equip?ment, which Dependable Credit perfects. Best Yogurt files a petition in bankruptcy for relief in a liquidation proceeding. If the petition is granted, in what or?der will the creditors be paid?

Accepted Answer

The answer of Best Yogurt Corporation orders refrigeration equipment from...

Question 17

Dorothy files a petition for bankruptcy in bankruptcy for relief through an individual's repayment plan. If she is granted a discharge, debts that will most likely be discharged include

Accepted Answer

A)   claims not provided for by the plan.
B)   payments on retirement accounts.
C)   claims for domestic support obligations.
D)   credit-card debt incurred more than one year before filing.

Question 18

Generally, in a Chapter 11 case, no orders affecting the estate will be entered without the consent of the creditors' committee or after a hearing in which the judge is informed of the committee's position

Accepted Answer

A) True 
 B)False

Question 19

Daniel is a trustee for a federal bankruptcy court. Daniel's duties include

Accepted Answer

A)   collecting the debtor's available estate.
B)   establishing priority for the payment of unsecured creditors.
C)   operating a debtor's business to obtain maximum profit for creditors.
D)   submitting to an examination under oath by the creditors.

Question 20

An involuntary bankruptcy occurs when the debtor forces his or her creditors into bankruptcy proceedings.

Accepted Answer

A) True 
 B)False

Exam 31: Bankruptcy Law

Nancy joins with other creditors to force Odette, a debtor, into bankruptcy. One of the goals of bankruptcy law with respect to creditors is to

Fruit & Flowers Mail Order Corporation's creditors agree to a workout with the firm. This is

To adjust debts and institute a repayment plan that is less expensive and less complicated than other options, Buffalo n' Beef Bar-B-Q Restaurant, a small business, may file a petition in bankruptcy for relief through

In the distribution of the debtor's estate, secured creditors take priority over unsecured creditors.

Paulina operates a sole proprietorship, a corporation, and a partnership. Paulina wants to ob?tain relief for her individual debts and the debts of her corporation and partnership. For each of these, Paulina may file a petition in bankruptcy for relief through

Norma files a petition in bankruptcy. She turns her assets over to O'Brien, who sells them and then distributes the proceeds to Norma's creditors. O'Brien is a

Eduardo is a debtor. Furniture Mart is Eduardo's employer. Guaranty Credit, Inc., and the government are Eduardo's credi?tors. For these parties, a petition in bankruptcy for relief through an individual's repayment plan could be filed by

A bankruptcy court may deny a discharge based on the debtor's conduct.

Thirty-one days before filing a petition in bankruptcy, Gavin transfers prop?erty and makes payments that favor one creditor over another. These are

A debtor must be insolvent to file for bankruptcy relief.

Chi-Lan files a petition in bankruptcy for relief through an individual's repayment plan. Chi-Lan's plan must provide for

In a Chapter 11 case, the court cannot confirm a reorganization plan over the objections of a class of creditors.

All debts are dischargeable in bankruptcy.

The right to petition for bankruptcy relief under federal law is an essential aspect of our capitalistic society.

Dorothy files a petition for bankruptcy in bankruptcy for relief through an individual's repayment plan. If she is granted a discharge, debts that will most likely be discharged include

Generally, in a Chapter 11 case, no orders affecting the estate will be entered without the consent of the creditors' committee or after a hearing in which the judge is informed of the committee's position

Daniel is a trustee for a federal bankruptcy court. Daniel's duties include

An involuntary bankruptcy occurs when the debtor forces his or her creditors into bankruptcy proceedings.