Question 1

[Consumer Debt] Isabel had not been keeping up with her spending and bought several expensive items. Between numerous credit cards and some unsecured loans, she had a total of 14 creditors. All her debt was consumer debt, and Isabel really wished that she had not put all those new clothes on her credit card. Although Isabel was struggling, she did not want to file for bankruptcy because she did not want a bad credit score. However, three of her credit card companies signed and filed an involuntary bankruptcy petition against her under Chapter 7. Isabel is unsure about how to proceed. While she is several months behind on a number of payments, including alimony payments she believes were unfairly awarded to her ex-husband, she does not particularly want to go bankrupt. She believes that the creditors have been unfair in not allowing her additional time in which to pay. On the other hand, she would really like to be rid of her excessive debt and stop collection efforts on the part of her ex-husband.
-If Isabel convinces the judge that the creditors have filed the involuntary bankruptcy frivolously, which of the following is true regarding what amounts, if any, the court may force the creditors to pay?

Accepted Answer

A)   The court may award attorney costs, fees of the debtor, and punitive damages.
B)   The court may award attorney costs and fees of the debtor, but not punitive damages.
C)   The court may award fees of the debtor, but not attorney costs or punitive damages.
D)   The court may award punitive damages, but not attorney costs or fees of the debtor.
E)   The judge may dismiss the involuntary bankruptcy petition, but no other relief is available.F) A) and B)
G) C) and D)

Question 2

Who most frequently uses Chapter 11 Reorganizations?

Accepted Answer

A)   family farmers
B)   governmental entities
C)   banks
D)   corporate debtors
E)   savings and loan companiesF) B) and E)
G) A) and B)

Question 3

List the set of procedures that must be taken in every bankruptcy case.

Accepted Answer

The set of procedures that must be taken...

Question 4

Which of the following is false regarding nondischargeable debts under a Chapter 7 bankruptcy filing?

Accepted Answer

A)   Nondischargeable debts include claims of willful or malicious conduct by the debtor that caused injury to another person or property.
B)   Nondischargeable debts include specific student loans, unless payment of the loans imposes undue hardship on the debtor.
C)   Nondischargeable debts include debts not discharged in previous bankruptcies.
D)   Nondischargeable debts include judgments against a debtor for claims resulting from the debtor's drinking and driving.
E)   Nondischargeable debts include claims for back taxes or government fines within four years of filing for bankruptcy.F) A) and E)
G) C) and E)

Question 5

A reaffirmation agreement is when the debtor agrees to pay a debt even though it could be ________

Accepted Answer

A)   settled
B)   discharged
C)   sold to another creditor
D)   affirmed
E)   claimed by another creditorF) A) and B)
G) B) and D)

Question 6

The creditors get to select what in a Chapter 7 bankruptcy proceeding?

Accepted Answer

A)   The judge.
B)   The bank that will liquidate the assets.
C)   The trustee.
D)   The debtor's timeframe to pay off the debts owed.
E)   The jury that will hear the case.F) D) and E)
G) A) and E)

Question 7

A debtor in a Chapter 7 bankruptcy does not have to be ________, but must be able to show the court that he owes money to someone.

Accepted Answer

A)   insolvent
B)   unable to pay
C)   employed
D)   a homeowner with assets
E)   homelessF) A) and B)
G) A) and C)

Question 8

For how many days prior to the filing of a Chapter 7 bankruptcy petition is a debtor assumed insolvent?

Accepted Answer

A)   120
B)   60
C)   90
D)   45
E)   30F) A) and C)
G) A) and B)

Question 9

An individual who takes over administration of the debtor's estate is referred to as which of the following?

Accepted Answer

A)   Administrator
B)   Aligner
C)   Organizer
D)   Reformer
E)   TrusteeF) C) and D)
G) A) and B)

Question 10

When liquidation occurs, a debtor turns over all assets to ________

Accepted Answer

A)   the court
B)   a bank appointed by the court
C)   a trustee
D)   a conservator
E)   a debtor does not turn over their assetsF) B) and D)
G) A) and B)

Question 11

In Margaret Kawaauhau v. Paul W. Geiger, the text case in which the plaintiff claimed that the defending doctor, who had no malpractice insurance, could not discharge in bankruptcy a judgment for malpractice on the basis that he deliberately chose less effective treatment to cut costs while knowing that he was providing substandard care resulted in which of the following?

Accepted Answer

A)   That the defendant could not discharge the judgment because he was negligent.
B)   That the defendant could not discharge the judgment because he was reckless.
C)   That as a matter of public policy, the defendant could not discharge the judgment because he failed to carry malpractice insurance.
D)   That the defendant could discharge the judgment because as a matter of public policy, all malpractice judgments may be discharged.
E)   That the defendant could discharge the judgment because he did not intend to cause injury.F) A) and E)
G) A) and D)

Question 12

[Exemptions] Liane is injured in an automobile accident and cannot work. She cannot pay her bills and files for bankruptcy relief under Chapter 7. Federal exemptions apply, and Liane lists as exempt $25,000 in equity in her residence; interest in a vehicle of $2,000; interest in jewelry of $400; and retirement funds in her individual retirement account. Her creditors filed an objection to all claimed exemptions except for the home equity claim.
-What is the status of the exemption Liane claimed on the residence?

Accepted Answer

A)   It will likely be allowed because the value claimed is within the federal exemption allowed.
B)   It will likely be allowed because although it is more than the federal exemption, no creditor filed an objection to it.
C)   It will likely be disallowed because the federal limit for an exemption for a residence is $10,000.
D)   It will likely be disallowed because the federal limit for an exemption for a residence is $5,000.
E)   The status of the exemption is unclear without further information regarding the resale value of the home.F) All of the above
G) A) and D)

Question 13

If a debtor fails to appear at the Chapter 7 creditors' meeting, the court may refuse to grant the bankruptcy.

Accepted Answer

A) True 
 B)False

Question 14

An individual must complete credit counseling from a nonprofit budget and credit counseling agency to avoid having his bankruptcy petition dismissed.

Accepted Answer

A) True 
 B)False

Question 15

The two general roles of bankruptcy include:

Accepted Answer

A)   protections of banks and protection of those who supply credit.
B)   to relieve debtors of all debt and to give financial institutions an opportunity to recoup losses.
C)   allowing the IRS to receive outstanding tax liabilities and for debtors to clear the slate with the IRS.
D)   providing protection to creditors and provide opportunities to debtors to gain a fresh financial start.
E)   to clear state dockets of creditor claims and to help debtors receive a fresh start financially.F) C) and E)
G) A) and B)

Question 16

[Friends and Family] Jasleen was very close to her family and friends. She also liked to spend money, and had a large amount of consumer debt for items such as jewelry, clothing, a personal watercraft, and a new car. Jasleen was having problems making her credit card payments as they became due, but she wanted to make every effort to pay her debts. She had borrowed money from her mother for some jewelry and repaid that loan on January 1st. She repaid a loan to her business partner on May 15th of the same year. On September 1st of that year, she also repaid a loan to Friendly Jewelry Store because she wanted to remain on good terms with the manager. Unfortunately, Jasleen was simply unable to continue making payments and on November 1st of that year, she filed a voluntary petition for bankruptcy relief under Chapter 7.
-Assuming Jasleen's mother received more than would have been received through bankruptcy proceedings, which of the following is the most likely result of a claim of preferential payment based upon the payment to the mother?

Accepted Answer

A)   The payment was not preferential because it was made over 90 days before the filing of the bankruptcy petition.
B)   The payment was not preferential because it was made over 120 days before the filing of the bankruptcy petition.
C)   The payment was not preferential because it was made over 180 days before the filing of the bankruptcy petition.
D)   The payment was preferential because it was made to a family member and made within two years of the filing of the bankruptcy petition unless Jasleen can establish that she was not insolvent when she made the payment.
E)   The payment was preferential on the basis that it was made to a family member within two years of the filing of the bankruptcy petition only if the trustee is able to demonstrate that Jasleen was insolvent when she made the payment.F) A) and E)
G) A) and D)

Question 17

If a party files a Chapter 7 bankruptcy, the trustee may use all of the parties IRA or SEP to satisfy debts.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is false regarding bankruptcy proceedings?

Accepted Answer

A)   Some type of payment plan is created and approved, usually by the creditors and the court.
B)   Debts remaining after the plan is carried out are usually discharged.
C)   Bankruptcy proceedings start with a finding of insolvency.
D)   All bankruptcy cases begin with a filing of petition for bankruptcy.
E)   The court determines whether an order of relief should be granted.F) A) and B)
G) A) and C)

Question 19

What is the last of the basic steps of a bankruptcy proceeding?

Accepted Answer

A)   The petition for the prompt repayment of secured creditor claims
B)   The granting of an automatic stay
C)   A determination on whether an order of relief should be granted
D)   The creditors meet with the debtor
E)   Discharging debtsF) A) and B)
G) B) and C)

Question 20

[Consumer Debt] Isabel had not been keeping up with her spending and bought several expensive items. Between numerous credit cards and some unsecured loans, she had a total of 14 creditors. All her debt was consumer debt, and Isabel really wished that she had not put all those new clothes on her credit card. Although Isabel was struggling, she did not want to file for bankruptcy because she did not want a bad credit score. However, three of her credit card companies signed and filed an involuntary bankruptcy petition against her under Chapter 7. Isabel is unsure about how to proceed. While she is several months behind on a number of payments, including alimony payments she believes were unfairly awarded to her ex-husband, she does not particularly want to go bankrupt. She believes that the creditors have been unfair in not allowing her additional time in which to pay. On the other hand, she would really like to be rid of her excessive debt and stop collection efforts on the part of her ex-husband.
-Which of the following is true regarding the claims of Isabel's ex-husband for alimony?

Accepted Answer

A)   Any efforts to collect on the past due alimony are stayed by the bankruptcy proceeding, and the claim for alimony is subject to discharge.
B)   Any effort to collect on the past due alimony are stayed by the bankruptcy proceeding, but alimony payments are nondischargeable.
C)   Efforts to collect on past due alimony payments accrued prior to the filing of the bankruptcy petition are stayed, but efforts to collect on alimony payments accruing after the filing of the bankruptcy petition are not stayed; and alimony payments are nondischargeable.
D)   Efforts to collect on past due alimony payments accrued only after the filing of the bankruptcy petition are stayed, but efforts to collect on alimony payments accrued before the filing of the bankruptcy petition are not stayed; and alimony payments are nondischargeable.
E)   Legal action to collect alimony is not subject to an automatic stay, and alimony payments are nondischargeable.F) B) and C)
G) A) and E)

Exam 32: Bankruptcy and Reorganization

Correct Answer
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When liquidation occurs, a debtor turns over all assets to ________

Correct Answer
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A reaffirmation agreement is when the debtor agrees to pay a debt even though it could be ________

Correct Answer
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Correct Answer
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Correct Answer
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The two general roles of bankruptcy include:

Correct Answer
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Which of the following is false regarding bankruptcy proceedings?

Correct Answer
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Which of the following is false regarding nondischargeable debts under a Chapter 7 bankruptcy filing?

Correct Answer
verified

For how many days prior to the filing of a Chapter 7 bankruptcy petition is a debtor assumed insolvent?

Correct Answer
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Correct Answer
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A debtor in a Chapter 7 bankruptcy does not have to be ________, but must be able to show the court that he owes money to someone.

Correct Answer
verified

An individual who takes over administration of the debtor's estate is referred to as which of the following?

Correct Answer
verified

Who most frequently uses Chapter 11 Reorganizations?

Correct Answer
verified

The creditors get to select what in a Chapter 7 bankruptcy proceeding?

Correct Answer
verified

What is the last of the basic steps of a bankruptcy proceeding?

Correct Answer
verified

An individual must complete credit counseling from a nonprofit budget and credit counseling agency to avoid having his bankruptcy petition dismissed.

Correct Answer
verified

If a debtor fails to appear at the Chapter 7 creditors' meeting, the court may refuse to grant the bankruptcy.

Correct Answer
verified

If a party files a Chapter 7 bankruptcy, the trustee may use all of the parties IRA or SEP to satisfy debts.

Correct Answer
verified

Correct Answer
verified

List the set of procedures that must be taken in every bankruptcy case.

Correct Answer
verified
The set of procedures that must be taken...
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Exam 32: Bankruptcy and Reorganization

Correct AnswerverifiedShow Answer

When liquidation occurs, a debtor turns over all assets to ________

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A reaffirmation agreement is when the debtor agrees to pay a debt even though it could be ________

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The two general roles of bankruptcy include:

Correct AnswerverifiedShow Answer

Which of the following is false regarding bankruptcy proceedings?

Correct AnswerverifiedShow Answer

Which of the following is false regarding nondischargeable debts under a Chapter 7 bankruptcy filing?

Correct AnswerverifiedShow Answer

For how many days prior to the filing of a Chapter 7 bankruptcy petition is a debtor assumed insolvent?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A debtor in a Chapter 7 bankruptcy does not have to be ________, but must be able to show the court that he owes money to someone.

Correct AnswerverifiedShow Answer

An individual who takes over administration of the debtor's estate is referred to as which of the following?

Correct AnswerverifiedShow Answer

Who most frequently uses Chapter 11 Reorganizations?

Correct AnswerverifiedShow Answer

The creditors get to select what in a Chapter 7 bankruptcy proceeding?

Correct AnswerverifiedShow Answer

What is the last of the basic steps of a bankruptcy proceeding?

Correct AnswerverifiedShow Answer

An individual must complete credit counseling from a nonprofit budget and credit counseling agency to avoid having his bankruptcy petition dismissed.

Correct AnswerverifiedShow Answer

If a debtor fails to appear at the Chapter 7 creditors' meeting, the court may refuse to grant the bankruptcy.

Correct AnswerverifiedShow Answer

If a party files a Chapter 7 bankruptcy, the trustee may use all of the parties IRA or SEP to satisfy debts.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

List the set of procedures that must be taken in every bankruptcy case.

Correct AnswerverifiedThe set of procedures that must be taken...View AnswerShow Answer

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Correct Answer
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The set of procedures that must be taken...
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