Question 1

Andy's business is not able to pay its debts, and the prospects for its finances to improve are slim. Andy decides not to continue the business. In this case, Andy should file a voluntary petition for which type of bankruptcy?

Accepted Answer

A)   Chapter 7.
B)   Chapter 11.
C)   Chapter 13.
D)   Chapter 12.E) A) and B)
F) C) and D)

Question 2

Creditors of Northern Hydraulics file an involuntary bankruptcy petition against the company, and the petition is approved. What is true of Northern Hydraulics?

Accepted Answer

A)   Northern Hydraulics has at least $10,425 in debts.
B)   There are at least 12 creditors.
C)   A custodian has automatically been appointed.
D)   It must make all the filings necessary under a voluntary petition.E) B) and C)
F) A) and D)

Question 3

Peggy's credit card debts are mounting as her costs of insurance and fuel have dramatically increased and her income, from sporadic freelance jobs, has dropped. Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she keeps most of her assets.

Accepted Answer

A) True 
 B)False

Question 4

Kathleen filed for voluntary bankruptcy, and the automatic stay went into effect. The automatic stay

Accepted Answer

A)   acts to automatically discharge Kathleen's debts.
B)   prohibits creditors from collecting debts against Kathleen that arose before she filed bankruptcy.
C)   stops only secured creditors from taking any act to collect, assess, or recover a claim against Kathleen that arose before she filed bankruptcy.
D)   stops creditors from trying to collect from Kathleen, but it does not stop them from filing lawsuits against her.E) None of the above
F) All of the above

Question 5

Bankruptcy is regulated by federal law.

Accepted Answer

A) True 
 B)False

Question 6

What is the "gap period"?

Accepted Answer

A)   the period between the time a debtor files for bankruptcy and the time that he is granted discharge
B)   the period of time that creditors must wait to be paid once a plan of payment is approved
C)   the period between the time that a creditor files for an involuntary petition and the court issues the order for relief
D)   the period between the time a debtor files for bankruptcy and the time that the plan of payment is approvedE) C) and D)
F) A) and C)

Question 7

Chapters 11 and 13 are liquidation chapters.

Accepted Answer

A) True 
 B)False

Question 8

Chapter 7 bankruptcy is also known as

Accepted Answer

A)   reorganization.
B)   reaffirmation.
C)   voluntary bankruptcy.
D)   straight bankruptcy.E) B) and C)
F) A) and C)

Question 9

Agnes plans to file for bankruptcy under Chapter 7. One month prior to filing, Agnes gives Joe's Filling Station $700 to apply to her gas bill. Joe has been so kind to let her charge the gas she needed for her car over the past year. The bankruptcy trustee appointed to the case

Accepted Answer

A)   can cancel the payment to Joe as a fraudulent transfer.
B)   cannot cancel the payment to Joe because it is payment for an existing debt.
C)   cannot cancel the payment to Joe because he is not an insider.
D)   can cancel the payment to Joe as a voidable preference.E) A) and D)
F) A) and C)

Question 10

Generally, filing bankruptcy stops the collection activity of creditors.

Accepted Answer

A) True 
 B)False

Question 11

Under the federal Bankruptcy Code, the exemption amount for the debtor's personal residence is

Accepted Answer

A)   $23,675.
B)   $55,200.
C)   unlimited.
D)   $125,000.E) A) and B)
F) All of the above

Question 12

A form stating the name of an unsecured creditor and the amount of the claim against the debtor is called a(n)

Accepted Answer

A)   order for relief.
B)   automatic stay.
C)   proof of claim.
D)   reaffirmation form.E) None of the above
F) B) and C)

Question 13

Iris received a discharge under a Chapter 7 bankruptcy. She cannot receive another discharge under Chapter 7 for at least

Accepted Answer

A)   six years after the prior filing.
B)   eight years after the prior filing.
C)   ten years after the prior discharge.
D)   She cannot file another Chapter 7, but could file a Chapter 11 or 13 bankruptcy.E) None of the above
F) All of the above

Question 14

Who operates the business and develops a plan of reorganization in Chapter 11 bankruptcies?

Accepted Answer

A)   the trustee
B)   the debtor in possession
C)   the state courts
D)   the creditors' committeeE) A) and C)
F) All of the above

Question 15

Mark and Cynthia work for Bryson Supply Co. If the company files for Chapter 7 bankruptcy before paying their last month of wages and benefits, will they be able to recover anything from the company?

Accepted Answer

One goal of the Bankruptcy Code is to en...

Question 16

Individual debtors are allowed to keep some assets in a Chapter 7 bankruptcy.

Accepted Answer

A) True 
 B)False

Question 17

Creditor claims are divided into classes, and the highest class must be satisfied in full before going to the next category.

Accepted Answer

A) True 
 B)False

Question 18

The Bankruptcy Code uses the term "debtor" to refer to a person who cannot pay his debts.

Accepted Answer

A) True 
 B)False

Question 19

Shoe Sunshine, Inc. filed for bankruptcy protection under Chapter 11 and submitted a plan of reorganization within 120 days after filing for relief. Two of the classes of creditors voted against the plan. However, the bankruptcy judge considered the plan to be feasible, fair, and in the best interests of the creditors; the judge approved it in spite of these creditors' objections. This action by the judge is called a "cramdown."

Accepted Answer

A) True 
 B)False

Question 20

Link negligently ran his car into John, causing $50,000 in injuries. Link was intoxicated at the time of the accident. Can Link discharge this debt in bankruptcy?

Accepted Answer

A)   Yes, claims based on negligence are dischargeable.
B)   Yes, as long as he didn't intend to hit John's car.
C)   No, such claims are not dischargeable in bankruptcy.
D)   No, because Link breached a fiduciary duty.E) None of the above
F) All of the above

Exam 36: Bankruptcy

Chapter 7 bankruptcy is also known as

Correct Answer
verified

Individual debtors are allowed to keep some assets in a Chapter 7 bankruptcy.

Correct Answer
verified

Creditor claims are divided into classes, and the highest class must be satisfied in full before going to the next category.

Correct Answer
verified

Mark and Cynthia work for Bryson Supply Co. If the company files for Chapter 7 bankruptcy before paying their last month of wages and benefits, will they be able to recover anything from the company?

Correct Answer
verified
One goal of the Bankruptcy Code is to en...
View Answer

Who operates the business and develops a plan of reorganization in Chapter 11 bankruptcies?

Correct Answer
verified

The Bankruptcy Code uses the term "debtor" to refer to a person who cannot pay his debts.

Correct Answer
verified

Peggy's credit card debts are mounting as her costs of insurance and fuel have dramatically increased and her income, from sporadic freelance jobs, has dropped. Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she keeps most of her assets.

Correct Answer
verified

Agnes plans to file for bankruptcy under Chapter 7. One month prior to filing, Agnes gives Joe's Filling Station $700 to apply to her gas bill. Joe has been so kind to let her charge the gas she needed for her car over the past year. The bankruptcy trustee appointed to the case

Correct Answer
verified

Bankruptcy is regulated by federal law.

Correct Answer
verified

What is the "gap period"?

Correct Answer
verified

A form stating the name of an unsecured creditor and the amount of the claim against the debtor is called a(n)

Correct Answer
verified

Andy's business is not able to pay its debts, and the prospects for its finances to improve are slim. Andy decides not to continue the business. In this case, Andy should file a voluntary petition for which type of bankruptcy?

Correct Answer
verified

Kathleen filed for voluntary bankruptcy, and the automatic stay went into effect. The automatic stay

Correct Answer
verified

Iris received a discharge under a Chapter 7 bankruptcy. She cannot receive another discharge under Chapter 7 for at least

Correct Answer
verified

Link negligently ran his car into John, causing $50,000 in injuries. Link was intoxicated at the time of the accident. Can Link discharge this debt in bankruptcy?

Correct Answer
verified

Generally, filing bankruptcy stops the collection activity of creditors.

Correct Answer
verified

Under the federal Bankruptcy Code, the exemption amount for the debtor's personal residence is

Correct Answer
verified

Chapters 11 and 13 are liquidation chapters.

Correct Answer
verified

Creditors of Northern Hydraulics file an involuntary bankruptcy petition against the company, and the petition is approved. What is true of Northern Hydraulics?

Correct Answer
verified

Correct Answer
verified

Exam 36: Bankruptcy

Chapter 7 bankruptcy is also known as

Correct AnswerverifiedShow Answer

Individual debtors are allowed to keep some assets in a Chapter 7 bankruptcy.

Correct AnswerverifiedShow Answer

Creditor claims are divided into classes, and the highest class must be satisfied in full before going to the next category.

Correct AnswerverifiedShow Answer

Mark and Cynthia work for Bryson Supply Co. If the company files for Chapter 7 bankruptcy before paying their last month of wages and benefits, will they be able to recover anything from the company?

Correct AnswerverifiedOne goal of the Bankruptcy Code is to en...View AnswerShow Answer

Who operates the business and develops a plan of reorganization in Chapter 11 bankruptcies?

Correct AnswerverifiedShow Answer

The Bankruptcy Code uses the term "debtor" to refer to a person who cannot pay his debts.

Correct AnswerverifiedShow Answer

Peggy's credit card debts are mounting as her costs of insurance and fuel have dramatically increased and her income, from sporadic freelance jobs, has dropped. Chapter 13 of the Bankruptcy Code will allow her to reorganize her debt while she keeps most of her assets.

Correct AnswerverifiedShow Answer

Agnes plans to file for bankruptcy under Chapter 7. One month prior to filing, Agnes gives Joe's Filling Station $700 to apply to her gas bill. Joe has been so kind to let her charge the gas she needed for her car over the past year. The bankruptcy trustee appointed to the case

Correct AnswerverifiedShow Answer

Bankruptcy is regulated by federal law.

Correct AnswerverifiedShow Answer

What is the "gap period"?

Correct AnswerverifiedShow Answer

A form stating the name of an unsecured creditor and the amount of the claim against the debtor is called a(n)

Correct AnswerverifiedShow Answer

Andy's business is not able to pay its debts, and the prospects for its finances to improve are slim. Andy decides not to continue the business. In this case, Andy should file a voluntary petition for which type of bankruptcy?

Correct AnswerverifiedShow Answer

Kathleen filed for voluntary bankruptcy, and the automatic stay went into effect. The automatic stay

Correct AnswerverifiedShow Answer

Iris received a discharge under a Chapter 7 bankruptcy. She cannot receive another discharge under Chapter 7 for at least

Correct AnswerverifiedShow Answer

Link negligently ran his car into John, causing $50,000 in injuries. Link was intoxicated at the time of the accident. Can Link discharge this debt in bankruptcy?

Correct AnswerverifiedShow Answer

Generally, filing bankruptcy stops the collection activity of creditors.

Correct AnswerverifiedShow Answer

Under the federal Bankruptcy Code, the exemption amount for the debtor's personal residence is

Correct AnswerverifiedShow Answer

Chapters 11 and 13 are liquidation chapters.

Correct AnswerverifiedShow Answer

Creditors of Northern Hydraulics file an involuntary bankruptcy petition against the company, and the petition is approved. What is true of Northern Hydraulics?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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One goal of the Bankruptcy Code is to en...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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