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Law
Q:
Forbearance is a process that allows a lender to legally repossess and auction off the property securing a loan.
Q:
Federal law encourages private lenders to modify mortgages so as to lower the monthly payments of borrowers who are in default.
Q:
Foreclosure is the postponement, for a limited time, of part or all of the payments on a loan in jeopardy of repossession and sale.
Q:
If a homeowner defaults, the lender has the right to foreclose on the mortgaged property.
Q:
Prepayment penalties are severely restricted for a higher-priced mortgage loan.
Q:
A lender can make a higher-priced mortgage loan based on the value of the consumer's home without verifying the consumer's other credit obligations.
Q:
The average prime offer rate is the rate offered to the least qualified borrowers as established by a survey of potential borrowers.
Q:
A lender can make a higher-priced mortgage loan based on the value of the consumer's home without verifying the consumer's ability to repay the loan.
Q:
There are additional disclosure requirements for a loan that carries a high rate of interest or entails high fees for the borrower.
Q:
Negative amortization occurs when the monthly payments are insufficient to cover the interest due on a loan.
Q:
Lenders can require balloon payments for loans with terms of five years or less.
Q:
A borrower has a right to rescind a mortgage within three business days.
Q:
A lender's failure to comply with federal mortgage disclosure requirements extends the borrower's right to rescind the loan to no more than seven days.
Q:
Federal mortgage disclosure requirements apply to the written materials that a lender provides and to any oral representations.
Q:
If a lender fails to provide certain material disclosures, a borrower has up to seven years to rescind the mortgage.
Q:
Steering and targeting occur when a lender manipulates a borrower into accepting a loan product that benefits the lender but is not the best loan for the borrower.
Q:
The annual percentage rate is the actual cost of a loan on a yearly basis.
Q:
Loan flipping occurs when a lender convinces a homeowner to refinance soon after obtaining a mortgage.
Q:
Borrowers can avoid the clear meaning of terms in financing documents.
Q:
A prepayment penalty clause requires a borrower to pay a penalty if a mortgage is repaid in full within a certain period.
Q:
Recording a mortgage protects the creditor's security interest in the property.
Q:
Home equity is the portion of a home's value that is "paid off."
Q:
A home equity loan starts as a fixed-rate mortgage and then converts into an adjustable-rate mortgage.
Q:
A subprime mortgage is a loan made to a borrower who does not qualify for a standard mortgage.
Q:
With an interest-only mortgage, the borrower can choose to pay only the interest portion of the monthly payment for a specified period of time.
Q:
An adjustable-rate mortgage is a standard mortgage with an unchanging rate of interest.
Q:
A fixed-rate mortgage is a standard mortgage with a rate of interest that changes periodically.
Q:
The initial interest rate is the part of a purchase price that is paid up front in cash.
Q:
The loan that a lender provides to enable a borrower to purchase real property is a mortgage.
Q:
Shippers Dispatch Corporation orders office equipment from Office Outfitters, Inc., which has an unperfected security interest in the equipment until it is paid for. Meanwhile, Shippers Dispatch takes out a loan from Capital Credit, Inc., subject to a security interest in Shippers Dispatch's building and equipment, which Capital perfects. Shippers Dispatch files a bankruptcy petition under Chapter 7. If the petition is granted, in what order will Shippers Dispatch's creditors be paid?
Q:
Sunn Energy, Inc., needs funds to meet its payroll, to make other current operating expenses, and to pay its creditors. Terence, Sunn's only shareholder, loans the company $100,000 and accepts a promissory note signed on behalf of Sunn by Ulrich, the firm's accountant. Sunn's financial problems continue, however, and the firm's creditors file an involuntary petition to force it into bankruptcy. Is Terence entitled to repayment of the loan to Sunn? If so, what is the priority of the claim?
Q:
Philo files a petition in bankruptcy for relief through an individual's repayment plan. He is granted a discharge. Debts that will not be discharged include claims for
a. all debts provided for by the plan.
b. money owed for services rendered.
c. claims not provided for by the plan.
d. credit-card debt.
Q:
Dorothy files a petition for bankruptcy under Chapter 13. If she is granted a discharge, debts that will most likely be discharged include
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.
Q:
Zeke files a petition for bankruptcy under Chapter 13. Zeke's Chapter 13 plan must provide for
a. the turnover of his future income to the trustee.
b. his attendance at a credit-counseling briefing.
c. adequate means for the petition's execution.
d a preference for one creditor over another.
Q:
To adjust debt and institute a repayment plan, Biancawho is not a corporation, a partnership, or a family farmer or fishermanmay file a petition in bankruptcy for relief through
a. a liquidation.
b. a reorganization.
c. a repayment plan.
d. a family-farmer bankruptcy plan.
Q:
A petition for a discharge in bankruptcy under Chapter 13 may be filed by
a. Gracie, the sole proprietor of Home Net Services.
b. Internet Portals & Pages, a partnership.
c. World Web Services, Inc., a corporation.
d. Internet Portals & Pages or World Web Services, Inc..
Q:
Anthony believes that he needs to obtain a Chapter 13 discharge in bankruptcy. A Chapter 13 case can be initiated by a filing of a voluntary petition by
a. a creditor only.
b. a corporation only.
c. a debtor only.
d. a trustee only.
Q:
Ed is a debtor. Financial Loans, Inc., and the government are Ed's creditors. For these parties, a bankruptcy proceeding under Chapter 13 could be initiated by the filing of a petition by
a. Ed alone or by his creditors jointly.
b. Ed only.
c. Financial Loans only.
d. the government only.
Q:
To adjust debt and institute a repayment plan, Delton, a family fisherman in the Gulf of Mexico, may file a petition in bankruptcy for relief under the Bankruptcy Code's Chapter
a. 1.
b. 3.
c. 5.
d. 12.
Q:
Checkerboard Pizza, Inc. (CPI), files for bankruptcy under Chapter 11. CPI's Chapter 11 plan must contain
a. a plan to turn over its future income to the trustee.
b. a certificate proving attendance at a credit-counseling briefing.
c. a provision of adequate means for the plan's execution.
d a statement of preference for one creditor over another.
Q:
Shale Oil, Inc., files a petition in bankruptcy for relief through a reorganization and assumes the role of a debtor in possession. In this role, Shale Oil is similar to
a. a creditor at a creditors' meeting.
b. an individual debtor who is denied a discharge under the means test.
c. a secured creditor in possession of collateral.
d. a trustee in a liquidation.
Q:
A petition for a discharge in bankruptcy under Chapter 11 may be filed by
a. Reliable Insurance Company.
b. Pacific Mountain Railroad.
c. Solid State Bank.
d. Valley Credit Union.
Q:
Paxton agrees to pay QuikChek Lenders a debt that is otherwise dischargeable in bankruptcy. This is
a. a reaffirmation.
b. a rescission.
c. a reorganization.
d. a revocation.
Q:
Wild River Tours Corporation wants to formulate a plan under which it pays a portion of its debts and is discharged of the remainder while continuing in business. To accomplish this goal, Wild River should file a petition in bankruptcy for relief through
a. a liquidation.
b. a reorganization.
c. a repayment plan.
d. a family-farmer bankruptcy plan.
Q:
Sheryl files a petition in bankruptcy. Sheryl's non-dischargeable debts include
a. domestic-support obligations.
b. student loans if payment would impose undue hardship.
c. unpaid loans to finance home repairs.
d. unsecured credit-card debt.
Q:
Lionel files a voluntary petition for bankruptcy under Chapter 7. The court will likely deny a discharge of Lionel's debts if he
a. conceals records of his financial condition with the intent to defraud a creditor.
b. does not have sufficient assets to pay all his secured creditors.
c. filed for bankruptcy twelve years ago.
d. has a criminal record.
Q:
Umiko files a petition for bankruptcy. Her creditors must file with the court their proof of claims against her assets within
a. fifteen days of the order for relief.
b. thirty days of the filing of the petition.
c. sixty days of the automatic stay.
d. ninety days of the creditors' meeting.
Q:
Damian owns a pick-up truck and a motorcycle. He sells the motorcycle to Eden for $10,000. Eden pays for the cycle with a check, knowing that she had insufficient funds in her account to cover the amount. A week later, Damian files a petition in bankruptcy for relief through a liquidation.Regarding the pick-up truck, Damiana. can exempt an interest in it up to $3,675 from the bankruptcy.b. must include it as part of the estate because Damian sold the cycle.c. must include it as part of the estate because Eden's check did not cover the cost of the cycle.d. must include it as part of the estate unless the trustee recovers the price from Eden.
Q:
Damian owns a pick-up truck and a motorcycle. He sells the motorcycle to Eden for $10,000. Eden pays for the cycle with a check, knowing that she had insufficient funds in her account to cover the amount. A week later, Damian files a petition in bankruptcy for relief through a liquidation.
Regarding the sale of the cycle, the bankruptcy trustee can
a. cancel it as a fraudulent transfer.
b. cancel it as a voidable preference.
c. not cancel it or sue to recover the price because it occurred before Damian filed his petition in bankruptcy.
d. not cancel it, but can sue Eden to recover the price.
Q:
Thirty-one days before filing a petition in bankruptcy, Gavin transfers property and makes payments that favor one creditor over another. These are
a. affirmation agreements.
b. preferences.
c. secured interests.
d. unsecured debts.
Q:
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
a. preferred creditor.
b. bankruptcy court judge.
c. bankruptcy trustee.
d. debtor.
Q:
Thirty-one days before filing a petition in bankruptcy, Dee transfers property and makes payments that favor one creditor over another. These are
a. affirmation agreements.
b. preferences.
c. secured interests.
d. unsecured debts.
Q:
Gerald files a bankruptcy petition. The resulting automatic stay will apply to Gerald's
a. alimony debts.
b. child-support debts.
c. spousal maintenance debts.
d. car payment debts.
Q:
Patsy files a petition in bankruptcy. At the moment of filing
a. an automatic stay goes into effect.
b. Patsy's debts are discharged.
c. Patsy's petition is dismissed.
d. Patsy's property is distributed to her creditors.
Q:
Jayme's voluntary petition for bankruptcy is found to be proper. The order for relief is effective as soon as
a. Jayme files the petition.
b. Jayme posts a bond to cover the costs of the proceedings.
c. Jayme's creditors agree to the terms.
d. the trustee collects and distributes the property of Jayme's estate.
Q:
Donna goes through an involuntary bankruptcy proceeding. An involuntary bankruptcy occurs when
a. a debtor files forms designated for the purpose in a bankruptcy court.
b. a debtor is unable to pay his or her debts as they come due.
c. a debtor's creditors force the debtor into bankruptcy proceedings.
d. a debtor's debts exceed the fair market value of his or her assets.
Q:
Bobby has fifteen creditors. To force Bobby into bankruptcy proceedings, at least three creditors must join the petition and their unsecured claims must add up to at least
a. $500.
b. $10,250.
c. $14,425.
d. $50,000.
Q:
Charlton files a petition in bankruptcy in a liquidation proceeding. If the court administers the means test and concludes that Charlton is abusing the bankruptcy process by filing for a liquidation, most likely
a. Charlton will be forced to file for relief through an individual repayment plan.
b. the court will discharge Charlton's debts.
c. the court will distribute Charlton's property to Charlton's creditors.
d. the court will issue an automatic stay against any actions by Charlton's creditors.
Q:
Sheri files a petition for bankruptcy. She must include with the petition
a. a plan to turn over her future income to a trustee.
b. a certificate proving credit-counseling from an approved agency.
c. a provision of adequate means to make periodic cash payments to creditors.
d a statement of preference for one creditor over another.
Q:
Joe files a voluntary petition for Chapter 7 bankruptcy. His petition does not need to include
a. a list of Joe's secured creditors.
b. a list of Joe's unsecured creditors.
c. a list of the occupations of all Joe's creditors.
d. the addresses of all Joe's creditors.
Q:
Roland files for Chapter 7 bankruptcy. After all his assets have been sold and the proceeds distributed among his creditors, Roland's remaining debts
a. are discharged.
b. paid by the court.
c. must be paid by Roland.
d. are put on hold until Roland has sufficient means to pay them.
Q:
Wilson wants to file an ordinary, or straight, bankruptcy. Wilson should file using
a. Chapter 7.
b. Chapter 11.
c. Chapter 13.
d. his state's bankruptcy code.
Q:
Norma Jean files for Chapter 7 bankruptcy. She turns her assets over to Addie, who sells the assets and then distributes the proceeds to Norma Jean's creditors. Addie is a
a. creditor.
b. federal judge.
c. bankruptcy trustee.
d. debtor.
Q:
A petition for a discharge in bankruptcy in a liquidation proceeding may be filed by
a. Eminent Employees Credit Union, a corporation.
b. Federal Savings & Loan Association, a corporation.
c. Guaranty Insurance Company, a corporation.
d. Hazel, an independent accountant.
Q:
Deborah files a petition in bankruptcy. One of the goals of bankruptcy law with respect to a debtor who has "gotten in over his head" is to
a. encourage the continued use of credit to borrow funds.
b. ensure that co-debtors will continue to guarantee loans.
c. provide s debtor by giving him or her a fresh start without creditors' claims.
d. shield assets from creditors.
Q:
Bess wishes to appeal a decision from a federal bankruptcy court. Bess must appeal to
a. a county court.
b. a federal district court.
c. the U.S. Supreme Court.
d. a state court.
Q:
A student loan is discharged under Chapter 13 unless the creditor can show "undue hardship."
Q:
In a repayment plan case, the plan must provide for payment of all obligations in full, not for a lesser amount.
Q:
The procedure for filing a family-farmer bankruptcy plan is similar to the procedure for filing a repayment plan.
Q:
Certain liquidation cases may be converted to Chapter 13 with the consent of the debtor.
Q:
For individual debtors, the plan in a reorganization case must be completed before discharge will be granted.
Q:
A Chapter 11 reorganization plan must provide for payment of tax claims over a five-year period.
Q:
On the entry of an order for relief in a Chapter 11 case, the creditors generally take over the operation of the debtor's business.
Q:
The same principles that govern the filing of a liquidation petition apply to reorganization proceedings.
Q:
A bankruptcy court may deny a discharge based on a debtor's conduct.
Q:
Certain debtors may not qualify to have all debts discharged in bankruptcy.
Q:
Once a discharge is granted, it may not be revoked, even if, for example, a debtor concealed property to defraud a creditor.
Q:
A discharge will be denied to a debtor who received a discharge within eight years of filing the current petition.
Q:
Some student loans are dischargeable in a Chapter 7 bankruptcy.
Q:
In order of priority, the claims of all unsecured creditors in a class must be satisfied before any remaining amounts can be distributed to the next class.