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Q:
Jill takes a loan from a bank. She signs a standard-form note prepared by the bank. The note obligates Jill to pay to the bank the amount of the loan, plus interest. Jill is the:
A. maker of the note.
B. bearer of the note.
C. drawee of the note.
D. payee of the note.
Q:
Which of the following instruments defines an order directed to a certain person, namely a bank, to pay money from a person's account to a third person?
A. Check
B. Promissory note
C. Certificate of deposit
D. Draft
Q:
Joe writes a check payable to Advanced Autos. The check is drawn on his checking account with the Progressive Bank. The drawee on this check is:
A. Joe.
B. Progressive Bank.
C. Advanced Autos.
D. the Federal Reserve.
Q:
Checks and drafts are:
A. documents required as evidence for shipment of goods.
B. documents which detail the transaction between a seller and a buyer.
C. orders to another person to pay money to a third person.
D. promises to pay someone money.
Q:
Susie Q, business manager for Pizza Uno, sends a check to Papa Bakery. On the check the computer writes TWO DOLLARS in the description line field and has $200.00 in the numeric field. Susie signed the check and did not notice the mistake. The bank should honor the check for $2.00.
Q:
A check payable to the order of cash is an example of bearer paper.
Q:
An instrument can be made payable to two or more payees.
Q:
When there is a conflict on the amount on a check with the printed and the handwritten terms then the handwritten terms will prevails.
Q:
A typed or rubber stamped signature is sufficient if it is put on the instrument to validate it.
Q:
If an instrument is an order to pay, it must contain an unconditional order.
Q:
Under the Revised Article 3 of the UCC, the variable interest rate notes are not negotiable.
Q:
Instruments cannot be negotiable if they are payable in a foreign currency.
Q:
An instrument that is payable on the happening of some uncertain event is negotiable.
Q:
The Ace Corporation is involuntarily petitioned into a Chapter 7 bankruptcy on March 1, 1994. On January 10, 1994, Ace paid the Highstate Gas Company its $1,700 utility bill for natural gas supplied during December of 1993. Is this payment preferential? Why or why not?
Q:
Joe goes into bankruptcy under Chapter 7 and in due course all of his debts are discharged thereby. After the discharge is granted, Joe signs an agreement promising to repay one of those discharged debts. Joe's attorney certifies that Joe is able to pay the debt. Is Joe bound to pay this debt?
Q:
Describe the different approaches taken to transnational insolvencies. What is the approach taken currently?
Q:
If an instrument is negotiable, the general rules of contract law control.
Q:
Under which of the following can a bankruptcy petition be initiated only by a voluntary petition?
A. Chapter 7
B. Chapter 11
C. Chapter 13
D. Chapter 15
Q:
A Chapter 13 debtor must begin making the instalment payments proposed in her plan:
A. within 30 days after the plan is filed.
B. one week after the plan is approved by the creditors.
C. within 60 days after the plan is approved by the court.
D. within one week of the formal submission to the trustee.
Q:
What Chapter of the bankruptcy code is liquidation for businesses?
A. Chapter 12
B. Chapter 11
C. Chapter 15
D. Chapter 7
Q:
Ajax has accumulated debts which the company is unable to pay. The company has four creditors who hold security provided by Ajax and are valued as follows: Ace ($6,000), Crest ($3,000), Maxton ($8,000) and Interon ($9,000). Which of these creditors will be able to successfully file a petition for involuntary bankruptcy for Ajax?
Q:
Under Chapter 12 of the Bankruptcy Act:
A. only farms with an aggregate debt exceeding $5 million are covered.
B. the debtor must cease to operate the farm.
C. no trustee is appointed.
D. the debtor is usually permitted to remain in possession to operate the farm.
Q:
Fanny and her husband Fred own a farm in Iowa. Unfortunately, after earning a $50,000 income on the farming operation and $10,000 in non-related endeavors in 2002, Fanny and Fred accumulated $100,000 in farm-related debt. Their only other debt is a $10,000 on a truck purchased in 2001. Fanny and Fred want to file for a Chapter 12 plan. Which of the following statements is most accurate?
A. Fanny and Fred do not qualify for protection under a Chapter 12 plan.
B. Fanny and Fred will not be able to remain in possession of their farm under the plan.
C. A trustee will be allowed to sell unnecessary assets such as equipment.
D. A trustee will not be appointed under the plan.
Q:
Under Chapter 13 of the Bankruptcy Act:
A. the petition may be voluntary or involuntary.
B. no debt extensions are permitted.
C. no plan may be approved if an unsecured creditor objects.
D. no trustee is appointed.
Q:
A Chapter 13 of the Bankruptcy Code provides an advantage to the debtor by which:
A. the debtor is not obligated to reveal all his assets.
B. unsecured creditors are not recognized as valid creditors.
C. the debtor can avoid the stigma of bankruptcy by getting an opportunity to pay the debts in installments under the protection of a federal court.
D. the court does not appoint a trustee, as it relies on the good faith of the debtor for the settlement of all debts.
Q:
_____ refers to a situation wherein the court forces dissenting creditors to accept a reorganization plan when the court finds that it is fair and equitable.
A. Cram down
B. Make one whole
C. Divestiture
D. Restitution
Q:
A plan is considered to be fair and equitable to a class of impaired claimants with unsecured claims if the reorganization plan:
A. provides for the sale of any property subject to liens securing such claims free and clear of such liens with the liens to attach to the proceeds of the sale.
B. provides for the realization by the holders of the "indubitable equivalent" of such claims.
C. provides that each holder of a claim will receive or retain on account of the claim property of a value equal to the allowed amount of such claim.
D. provides the holder of any interest that is junior to the interests of such class will not receive any property on account of such junior claim.
Q:
In a reorganization petition under Chapter 11 of the Bankruptcy Code, if any particular class of creditors rejects the reorganization plan, the Court will:
A. disallow the claims of the rejecting creditors.
B. force the trustee to renegotiate with the rejecting creditors so that a compromise maybe reached at.
C. order the debtor to file bankruptcy under Chapter 13.
D. force the rejecting creditors to accept the reorganization plan, if the plan is fair and equitable towards the rejecting creditors.
Q:
Debtors have to file a statement of their calculations under the _____ as part of their schedule of current income and expenditures.
A. limiting test
B. Fizeau test
C. means test
D. Sagnac test
Q:
Which of the following is true regarding reorganizations under Chapter 11?
A. Only corporations are eligible for Chapter 11.
B. Chapter 11 proceedings are voluntary only.
C. No trustee can be appointed.
D. The court must confirm any reorganization plan approved by the creditors.
Q:
To which of the following is Chapter 11 not available?
A. Manufacturing corporations
B. A sole proprietorship that sells used cars
C. A bank
D. A natural person
Q:
If there are insufficient funds to satisfy all the creditors within a class:
A. the debtors have the last say on the amount that each member shall receive.
B. the class members decide amongst themselves the amount that each of the members should receive.
C. the court makes an arbitrary decision regarding the share of each member.
D. each class member receives a pro rata share of his claim.
Q:
Under Chapter 7, a debtor is denied discharge of all debts when:
A. the debtor has transferred property in order to defraud creditors.
B. the debtor has unpaid tax liabilities.
C. the debtor has made a preferential transfer to a creditor.
D. the debtor has made a fraudulent transfer.
Q:
In order to safeguard the debtor from reaffirmation agreements the Court:
A. allows the debtor to rescind the reaffirmation agreement within a period of 60 days.
B. is empowered to declare all reaffirmation agreements as void.
C. may order the creditor to demand only 50 percent of the original debt amount.
D. may allow a reaffirmation agreement only if the debtor is represented by an attorney.
Q:
_____ refers to the agreement between the debtors and the creditors wherein creditors put pressure on debtors to pay, debts that have been discharged in bankruptcy.
A. Reaffirmation agreement
B. Miranda warning
C. Blank endorsement
D. Buy-sell agreement
Q:
The means test is designed to determine the:
A. debtor's ability to repay general unsecured claims.
B. creditor's ability to recover unpaid claims from the debtor.
C. court's ability to guarantee exemptions for the debtor.
D. government's ability to bar corporations from availing the provision of discharge of debts.
Q:
In a Chapter 7 liquidation proceeding, the claims of creditors are paid in which of the following order?
A. Priority claims take precedence over claims made by secured and unsecured creditors.
B. The claims of secured creditors are satisfied first, followed by priority claims, and lastly claims made by unsecured creditors.
C. Older claims are given priority over more recent claims.
D. Claims of secured creditor are satisfied first, followed by unsecured creditors, and lastly priority claims.
Q:
Under the Bankruptcy Code a judge is allowed to reduce the debt of an unsecured consumer creditor by what percentage?
A. 20%
B. 30%
C. 50%
D. 75%
Q:
Unsecured creditors, to the extent that the Bankruptcy estate is solvent, share in proportion to what?
A. Amount paid in legal fees
B. Claims against the debtor
C. Based on size of the creditors
D. Based on the geographic locations of creditors
Q:
An individual will not be granted a discharge, if such discharge has been granted to the individual within the previous:
A. five years.
B. six years.
C. seven years.
D. eight years.
Q:
Which of the following fits within one of the exceptions to the Bankruptcy Act's preference provision?
A. A perfected Article 9 security interest.
B. A transfer to an insider of the debtor.
C. A transfer made in the ordinary course of the debtor's business.
D. A consumer's transfer of less than $2.000 to a creditor who has sold her consumer goods.
Q:
Selena pays back a $2,000 loan from her parents within one year before she files the bankruptcy petition. This is an example of:
A. anticipatory breach.
B. a secured transaction.
C. preferential payment.
D. a failure of consideration.
Q:
A creditor might try to obtain an advantage over other creditors by obtaining a(n) _____ on the debtor's property to secure an existing debt.
A. surety
B. preferential lien
C. presentment
D. equity of redemption
Q:
Which of the following transfers would be considered fraudulent under the 2005 revisions of the Bankruptcy Code?
A. Transfers that are intended by the debtor and creditor to be a contemporaneous exchange for new value.
B. Transfers that led to the creation of a security interest in new property where new value was given by the secured party to enable the debtor to obtain the property.
C. Transfers made in payment of a debt incurred in the ordinary course of the business of the debtor and the transferee.
D. Transfers to or for the benefit of an insider under an employment contract and not in the ordinary course of business.
Q:
An absolute $136,875 homestead cap applies if:
A. the debtor's aggregate interest exceeds $1,450 in value in jewellery held primarily for the personal, family, or household use of the debtor.
B. retirement funds that are in a fund or account are exempt from taxation under the Internal Revenue Code.
C. the debtor's interest exceeds $136,875 in value in real or personal property.
D. the bankruptcy court determines that the debtor has been convicted of a felony.
Q:
The debtor is also permitted to void _____ liens against exempt properties that impair her exemptions.
A. medical
B. tax
C. attorney
D. judicial
Q:
_____ refers to securing exempt personal property from secured creditors by paying them the full value of the collateral at the time the property is redeemed.
A. Automatic stay
B. Discharge
C. Exemption
D. Redemption
Q:
Abe and Hanna are husband and wife. They have filed for Chapter 7 Bankruptcy. However, they cannot agree on which set of property exemptions they want to use. Abe wants to use the federal set of exemptions, but Hanna wants to use the set of Michigan, where they have lived for 10 years. Under these circumstances:
A. the federal exemptions will apply to this bankruptcy proceeding.
B. the Michigan exemptions will apply to this bankruptcy proceeding.
C. the federal exemptions will apply to Abe's property and the Michigan exemptions will apply to Hanna's property.
D. the bankruptcy court will decide which set of exemptions to apply here.
Q:
If a petition for bankruptcy is filed by a health care business:
A. the creditors bear the financial responsibility for the disposal of patient records where there are insufficient funds to continue to store them.
B. the trustee is instructed to transfer patients in a health care business that is in the process of being closed to an appropriate health care business.
C. the necessary costs of closing a health care business is borne by the adjudicating court.
D. the automatic stay provisions apply to actions by the Secretary of Health and Human Services to exclude the debtor from participating in federal health care programs.
Q:
Under the Bankruptcy Code a debtor:
A. must elect to use either the set of exemptions provided by the state or the set provided by the federal bankruptcy law.
B. must honor the instructions of the adjudicating court with regard to the set of exemptions that he should take.
C. must accept the decision of the creditors with regard to the exemptions to be taken so as to not jeopardize their chances of recovery.
D. may pick and choose between them the set of exemptions provided by the state or the set provided by the federal bankruptcy law.
Q:
Which of the following items of a debtor's property are exempt from sale in a bankruptcy proceeding under the federal set of exemptions?
A. Life insurance contracts valued at $10,000.
B. Real or personal property valued at $50,000.
C. Jewelry whose value exceeds $10,000.
D. Individual retirement account exceeding $1 million.
Q:
According to the 2005 revisions of the Bankruptcy Code individual debtors must file, along with their schedules of assets and liabilities:
A. copies of all payment advices and other evidence of payments they have received from any employer within 30 days before the filing of the petition.
B. a statement of the amount of gross yearly income, itemized to show how the amount is calculated.
C. a certificate from the Clerk of the Bankruptcy Court that they must receive credit counseling to be eligible for relief.
D. a statement showing any anticipated increase in income or expenditures over the 24-month period following the date of filing the petition.
Q:
Under the Bankruptcy Act's exemption provisions:
A. the debtor must choose either the state or the federal exemption scheme.
B. the full value of one's motor vehicle is exempt.
C. federal exemptions defeat state exemptions in case of a clash between them.
D. state exemption laws that exceed the federal limits (i.e., that are too generous) are void.
Q:
The 2005 revisions of the Bankruptcy Code makes it the responsibility of the _____ to determine that a pleading of insolvency is well grounded in fact and is either warranted by existing law or is based on a good faith argument for extending existing law.
A. attorney
B. debtor
C. creditor
D. court
Q:
The filing of a bankruptcy petition operates as a(n):
A. exemption of certain items of property.
B. discharge, relieving the bankrupt person of further responsibility for dischargeable debts, giving him/her a fresh start.
C. automatic stay, holding in abeyance various forms of creditor action against a debtor or his/her property.
D. redemption of exempt personal property from secured creditors by paying them the full value of the collateral at the time the property is redeemed.
Q:
According to the 2005 revisions of the Bankruptcy Code:
A. any eviction proceedings in which the landlord obtained a judgment of possession prior to the filing of the bankruptcy petition can be continued.
B. any eviction proceedings in which the landlord obtained a judgment of abandonment prior to the filing of the bankruptcy petition can be continued.
C. any eviction proceedings in which the landlord obtained a judgment of defeasance prior to the filing of the bankruptcy petition can be continued.
D. any eviction proceedings in which the landlord obtained a judgment of vicarious liability prior to the filing of the bankruptcy petition can be continued.
Q:
A bankruptcy petition under Chapter 7:
A. can only be filed by the debtor.
B. can only be filed by the debtor's creditors.
C. can only be filed by the trustee.
D. can be filed either by the debtor or his creditors.
Q:
A voluntary petition under Chapter 7:
A. cannot be filed by an insurance corporation.
B. requires that the debtor's debts exceed his assets by $5,000.
C. requires that the debtor have at least three creditors.
D. cannot be made by an individual.
Q:
An involuntary bankruptcy petition can be filed against:
A. banking corporations.
B. multinational companies.
C. agricultural corporations.
D. nonprofit organizations.
Q:
The Bankruptcy Act of 2005 increases the responsibility of a debtor's attorneys thereby raising concerns that bankruptcy practice may become less attractive as:
A. the attorney has to operate on relatively thin margins as provisions increase along with costs and risks.
B. the attorney owes a duty to client for getting the debtor's property appraised.
C. the attorney has to call a meeting of all the creditors of the debtor.
D. the attorney has to classify the priority of creditors as per the 10 classes of priority given in the Bankruptcy Code.
Q:
Chapter 13 bankruptcy petitions may be either voluntary or involuntary.
Q:
An individual is barred under federal law from filing for bankruptcy twice within a 4-year period.
Q:
Insolvency occurs when a debtor:
A. is unable to pay his/her debts as they become due.
B. has a larger number of unsecured creditors than secured creditors.
C. is unemployed for two consecutive years.
D. is declared bankrupt by a Certified Accountant.
Q:
What Chapter of the Bankruptcy Code covers liquidation?
A. Chapter 7
B. Chapter 13
C. Chapter 5
D. Chapter 11
Q:
In order to prevent debtors from misusing the provisions of the Bankruptcy Code, the scope of dismissal of a bankruptcy petition has been widened to a broader interpretation of abuse, and not just restricted to substantial abuse.
Q:
Chapter 12 is available only for family farmers and fishermen with regular income.
Q:
Chapter 13 of the Bankruptcy Code gives individuals an opportunity to pay their debts free of such problems as garnishments and attachments of their property by creditors.
Q:
A bankrupt person who conceals property in order to hinder, delay, or defraud creditors loses any discharge that he may have had regarding that property, but his other debts still are dischargeable.
Q:
As per the provisions relating to reaffirmation agreements, the Court can under special circumstances order the debtor to become party to the reaffirmation agreement.
Q:
A secured creditor is classified as an unsecured creditor, to the extent of the debt amount which exceeds the value of the collateral held by such secured creditor.
Q:
The priority claims to a Bankruptcy Estate are pain after the secured claims but before the unsecured claims.
Q:
One of the kinds of property that is exempt from bankruptcy under Chapter 7's federal exemptions is one's interest (not to exceed $3,675 in value) in one motor vehicle.
Q:
Bob has not paid his ex-wife alimony as required under court order. His ex-wife is trying to collect the alimony Bob owes her. Bob files a bankruptcy petition. This automatically stays his ex-wife's collection efforts.
Q:
Bill's bicycle business has gone bust. The week before Bill went into bankruptcy, he paid $200 for a used bicycle that he intended to re-sell for a profit. This $200 payment is a preference under Chapter 7.
Q:
Bettina knows that she is going bankrupt. One month before the filing of her voluntary petition, Bettina sells a painting worth $50,000 to her brother for $100. This is legal under Chapter 7. However, if Bettina had simply given her brother $49,900, the transfer would have been voidable.
Q:
Creditors wishing to obtain funds from a bankruptcy must typically file proof of a claim with the estate within a certain time.
Q:
Straight bankruptcy or liquidation is covered under Chapter 7 of the Bankruptcy Code.
Q:
Chapter 14 of the Bankruptcy Code allows for special protections for family farmers.
Q:
Dave, who is in financial trouble, has ten creditors. An involuntary bankruptcy petition against Dave requires that three of these creditors sign.
Q:
As per the 2005 amendments, the trustee of a bankruptcy estate has the authority to sell personally identifiable information to persons not affiliated to the debtor.