Deck 30: Bankruptcy

Question 1

An automatic stay prevents a debtor from incurring new debt during the bankruptcy pendency.

Answer 1

False

Question 2

In 2005, Congress adopted the Bankruptcy Reform Act which is the current bankruptcy law.

Answer 2

False

Question 3

Bankruptcy deals with the seizure of the debtor's assets and their distribution to the debtor's various creditors.

Answer 3

True

Question 4

In part, the bankruptcy act adopted in 2005 was predicated on the belief that the prior bankruptcy law allowed debtors too- relief from their obligations.

Question 5

If there has been a dismissal of a bankruptcy case, the debtors and creditors have same rights and remedies as they had prior to the case being commenced.

Question 6

The court's order determining that the debtor's property be under the control of the bankruptcy court is known as an order of relief.

Question 7

All persons eligible for discharge under Chapter 7 proceedings are eligible for Chapter 11 proceedings.

Question 8

Chapter 12 of the current bankruptcy act deals with the adjustment of debts of a family farmer or fisherman with regular annual income.

Question 9

In bankruptcy, the act of changing the chapter number filed from one to another is known as conversion.

Question 10

If it's a "no asset" bankruptcy, creditors are in effect told by the court to file proof of claim as soon as possible.

Question 11

If a debtor's Chapter 7 bankruptcy is dismissed, he or she is ineligible to file for bankruptcy under any other chapter.

Question 12

Railroads and insurance companies are allowed to voluntarily file a petition of liquidation.

Question 13

It is not possible to avoid future lawsuits and consequential liabilities by a "pre-emptive" bankruptcy filing.

Question 14

Under Chapter 5, the individual debtor must show evidence that he or she attended an approved nonprofit budget and counseling agency within 180 days before the filing of bankruptcy.

Question 15

Liquidation is a means by which a financially troubled company can continue to operate while its financial affairs are put on a sounder basis.

Question 16

A composition is an agreement by creditors to accept less than the full amount of the debt and to discharge the debtor from further liability.

Question 17

The bankruptcy trustee represents the interests of the debtor.

Question 18

Under the Bankruptcy Act, secured creditors get their security interests before anyone else is satisfied.

Question 19

The judges of the US Bankruptcy Courts are appointed by the US Courts of Appeal.

Question 20

Nobody can be forced into bankruptcy.

Question 21

All debtors may seek relief under Chapter 7.

Question 22

A disadvantage to non-bankruptcy debtor relief regimes is that they must have the agreement of all creditors.

Question 23

Which of the following chapters applies only to municipalities that are insolvent and want to adjust their debts?

A) Chapter 1
B) Chapter 3
C) Chapter 9
D) Chapter 15
E) Chapter 13

Question 24

The court's order determining that the debtor's property is under the control of the bankruptcy court is known as an order of _____.

A) relief
B) stay
C) reaffirmation
D) exoneration
E) subrogation

Question 25

A reorganization plan does not have to be approved by the bankruptcy court to be effective.

Question 26

It is not possible to discharge student loans in bankruptcy.

Question 27

After reorganization, all debts are discharged.

Question 28

Most student loans cannot be discharged under Chapter 7.

Question 29

A bankruptcy discharge relieves the debtor of pre-bankruptcy judgments for money owing.

Question 30

Which of the following chapters of the BAPCPA applies to all debtors except railroads, insurance companies, most banks and credit unions, and homestead associations?

A) Chapter 7
B) Chapter 9
C) Chapter 15
D) Chapter 12
E) Chapter 13

Question 31

Bankruptcy trustees are government lawyers appointed by the:

A) US Courts of Appeal.
B) US Solicitor General.
C) US House Committee on the Judiciary.
D) US Circuit Courts.
E) US Attorney General.

Question 32

All of the debtor's obligations are paid off, in part, pro-rata depending on the money available in the estate.

Question 33

Upon filing the bankruptcy, an automatic injunction that halts actions by creditors to collect debts comes into play. This is known as a(n):

A) order of relief.
B) reaffirmation.
C) deed of trust.
D) redemption.
E) stay.

Question 34

Debtors should be careful: they may by a mere promise reaffirm a debt discharged in bankruptcy.

Question 35

Secured property is not considered part of the debtor's estate.

Question 36

Bankruptcy law, including allowable exemptions, is uniform throughout the U.S.

Question 37

In an assignment for benefit of creditors, as long as each creditor is paid an equal percent of the amount he or she is owed, the debtor is discharged as to that creditor.

Question 38

Which of the following is true of Chapter 11 of the BAPCPA?

A) It applies only to voluntary bankruptcy proceedings initiated by a company.
B) It applies to anybody who can file Chapter 7, plus railroads.
C) It applies to all debtors except railroads, insurance companies, most banks and credit unions.
D) It addresses the issue of adjustment of debts of a family farmer with regular annual income.
E) It applies only to individuals with debt not exceeding about $1.3 million.

Question 39

The current bankruptcy law, which was adopted by the U.S. Congress in 2005, is the:

A) Bankruptcy Reform Act.
B) Chandler Act.
C) Bankruptcy Act.
D) Bankruptcy Abuse Prevention and Consumer Protection Act.
E) Bankruptcy and Insolvency Act.

Question 40

Which of the following chapters allows a company to reorganize while its financial affairs are put on a sounder basis?

A) Chapter 7
B) Chapter 11
C) Chapter 12
D) Chapter 13
E) Chapter 15

Question 41

When does a person become eligible to file for bankruptcy under Chapter 13?

Question 42

Which of the following statements regarding the eligibility required to file for bankruptcy under Chapter 13 is correct?

A) Anyone who has a regular income can file for bankruptcy under Chapter 13.
B) Sole proprietors cannot file for bankruptcy under Chapter 13.
C) The person must have less than $100,000 of unsecured debts.
D) The person must have more than $1,100,000 of secured debts.
E) Filing for bankruptcy under Chapter 13 can be voluntary and involuntary.

Question 43

Define the terms: (a) assignment for the benefit of creditors; (b) composition; and (c) receivership.

Question 44

Which of the following nonbankruptcy alternatives is a court action that places the debtor's property under the control of a custodian so that it can be preserved or distributed for the benefit of all creditors?

A) Composition
B) Conversion
C) Reaffirmation
D) Receivership
E) Presentment

Question 45

Creditors giving credit, or lending money to a debtor, in the period between the filing of an involuntary bankruptcy petition and the entry of the order for relief are known as _____ creditors.

A) stay
B) relief
C) hypothetical lien
D) no-asset
E) gap

Question 46

Which of the following nonbankruptcy alternatives is an agreement by creditors to accept less than the full amount of the debt and to discharge the debtor from further liability?

A) Conversion
B) Reaffirmation
C) Composition
D) Presentment
E) Receivership

Question 47

Which of the following is at the top of the order of priority when the distribution of a debtor's estate takes place during a bankruptcy proceeding?

A) Claims for amounts beyond actual loss
B) Claims for interest at legal rate
C) Secured creditors
D) Claims with priority
E) Unsecured creditors (timely filings)

Question 48

In bankruptcy, changing the chapter number filed from one to another is known as:

A) receivership.
B) reaffirmation.
C) recording.
D) conversion.
E) composition.

Question 49

Which of the following nonbankruptcy alternatives allows the debtor to transfer some or all of his assets to a trustee who sells the assets and apportions the proceeds in some agreed manner, usually pro rata, to the creditors?

A) Reaffirmation
B) Assignment for the benefit of the creditors
C) Order of relief
D) Exclusive dealing agreement
E) Hypothetical lien creditors