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Law
Q:
Certain debtors may not qualify to have all debts discharged in bankruptcy.
Q:
Certain debts are not dischargeable in bankruptcy.
Q:
An individual debtor is allowed to exempt certain property from the bankruptcy.
Q:
The basic duty of a trustee is to collect and reduce to cash the property in the bankruptcy estate that is not exempt.
Q:
A bankruptcy estate consists of all the debtor's interests in property currently held, wherever located.
Q:
An involuntary bankruptcy occurs when the debtor's credit does not cover all of his or her debts.
Q:
If a debtor's income is below the median income, there is a presumption of bankruptcy abuse.
Q:
A debtor wishing to file for bankruptcy must complete the means test to determine whether he or she qualifies.
Q:
A debtor does not need to be insolvent to file for bankruptcy relief.
Q:
Any "person" may be a debtor in a liquidation proceeding.
Q:
A debtor's vehicle is never exempt from satisfaction of a judgment debt.
Q:
Personal property that is most often exempt from satisfaction of judgment debts does not include livestock.
Q:
Each state permits a debtor to retain the family home, in its entirety or in part, free from the claims of unsecured creditors.
Q:
A homestead exemption allows a debtor to subtract the value of the family home from the amount of a debt.
Q:
Subrogation refers to the right of a co-surety to recover from the other co-sureties the amount paid above his or her proportionate share of a debt.
Q:
Making any material modification in the terms of a debtor's contract, without the consent of the surety, will not discharge the surety's obligation.
Q:
Payment of the principal obligation will not discharge the surety from the obligation.
Q:
A guarantor can be required to pay an obligation only after the principal debtor defaults.
Q:
A surety is secondarily liable for the debt of a principal.
Q:
Creditors may contract with a debtor for discharge of the debtor's liquidated debts.
Q:
Federal law governs garnishment actions.
Q:
A creditor's composition agreement is usually held to be unenforceable.
Q:
Under federal law, an employer can dismiss an employee because his or her wages are being garnished.
Q:
A writ of execution is a court order to execute a debtor after the entry of a final judgment in a creditor's lawsuit against the debtor.
Q:
The holder of an artisan's lien can foreclose and sell the property subject to the lien to satisfy the debt.
Q:
Region Bank wants to perfect its security interest in timber owned by Superior Lumber, Inc. Most likely, a financing statement should be filed with
A.the local chamber of commerce.
B.the county clerk.
C.the federal loan officer.
D.the secretary of state's office.
Q:
County Bank wants to perfect its security interest in collateral owned by Direct Sales Company. Most likely, a financing statement should be filed with
A.the local chamber of commerce.
B.the county clerk.
C.the federal loan officer.
D.the secretary of state's office.
Q:
Mona lives in New Jersey, but she works in New York. Mona borrows $1,000 from National Bank, using her motorcycle as collateral. To perfect its security interest, the bank must file its financing statement in at least
A.every state.
B.New Jersey.
C.New Jersey and New York.
D.New York.
Q:
The payment of Yves's debt to Zac is guaranteed by Yves's personal property. Their agreement describes Yves's subject property by serial number. To establish Zac's interest, this is
A.irrelevant.
B.not sufficient.
C.sufficient if it accurately describes the parties' agreement.
D.sufficient unless it is too tedious to review.
Q:
Fact Pattern 18-1
Excel Vehicles, Inc., makes and sells automobiles to auto dealers, including Fine Auto Sales. Fine sells the cars to consumers and businesses.
Refer to Fact Pattern 18-1. Ira, a police officer, buys an Excel from Fine to drive in his off-duty hours. Ira's Excel is
A.a consumer good.
B.an accession.
C.equipment.
D.inventory.
Q:
Fact Pattern 18-1
Excel Vehicles, Inc., makes and sells automobiles to auto dealers, including Fine Auto Sales. Fine sells the cars to consumers and businesses.
Refer to Fact Pattern 18-1. Holly, a professional driver, buys an Excel from Fine to drive in a Grand Prix race. Holly's Excel is
A.a consumer good.
B.an accession.
C.equipment.
D.inventory.
Q:
Fact Pattern 18-1
Excel Vehicles, Inc., makes and sells automobiles to auto dealers, including Fine Auto Sales. Fine sells the cars to consumers and businesses.
Refer to Fact Pattern 18-1. A car in Fine's possession is probably
A.a consumer good.
B.an accession.
C.equipment.
D.inventory.
Q:
The payment of Nero's debt to Olly is guaranteed by Nero's personal property. Nero is located in Pennsylvania. Olly communicates to the appropriate state official a security agreement that uses only Quality Engineering, the trade name of Nero's business. To perfect Olly's interest, this is
A.irrelevant.
B.not sufficient.
C.sufficient if Quality Engineering is a sole proprietorship.
D.sufficient if the trade name is spelled correctly or misspelled slightly.
Q:
The payment of John's debt to Kirsten is guaranteed by John's personal property. Kirsten is most likely to perfect her interest by
A.attaching a bright label to John's property.
B.calculating the precise amount of John's debt.
C.correcting grammatical errors in the parties' written agreement.
D.filing a financing statement with the appropriate authority.
Q:
Rich Financial, Inc., files a financing statement regarding a transaction with Supreme Business Company. To be valid, the financing statement must contain all of the following except
A.a description of the collateral.
B.a statement of the purpose for the transaction.
C.Rich's name.
D.Standard's name.
Q:
Lena borrows from Mac and Nicol, using the same collateral for both loans. Only Nicol has a perfected security interest. Lena defaults on both loans. The party with first rights to the collateral is
A.Lena.
B.Mac and Nicol, in proportion to Lena's debt to each.
C.Mac only.
D.Nicol only.
Q:
The payment of Jose's debt to Klint is guaranteed by Jose's personal property. The process by which Klint can protect himself against the claims of third parties to this property is
A.attachment.
B.communication.
C.perfection.
D.search and seizure.
Q:
Summit Credit Corporation lends funds to Toby, a consumer, to apply to the cost of a sport utility vehicle (SUV), which is the collateral for the loan. An enforceable security interest also requires
A.a written agreement and Summit's possession of the SUV.
B.a written agreement or Summit's possession of the SUV.
C.the vehicle seller's acknowledgement of the loan in writing.
D.Toby's possession of the SUV.
Q:
Olaf is the creditor in a transaction with Phil. Once certain requirements are met, Olaf's rights will attach, which means that Olaf will have
A.an indivisible ownership right to Phil's property.
B.an enforceable security interest in Phil's property.
C.a notice affixed to Phil's property.
D.the permission of a court to seize Phil's property.
Q:
The payment of Hu's debt to Ian is guaranteed by Hu's personal property. To give public notice of his interest in Hu's property, Ian is most likely to
A.attach a bright label to Hu's property.
B.e-mail other potential creditors.
C.file a financing statement with the appropriate authority.
D.publish a collection notice in local newspapers.
Q:
The payment of Eden's debt to Flem is guaranteed by Eden's personal property. This property is
A.a secured party.
B.a secured transaction.
C.a security interest.
D.collateral.
Q:
The payment of Frida's debt to Gianini is guaranteed by Frida's personal property. Gianini is
A.a debtor.
B.a secured party.
C.a secured transaction.
D.a security interest.
Q:
Dag is the secured party in a secured transaction with Elmo. In this transaction, Dag
A.has a security interest.
B.owes payment.
C.owes performance.
D.owns collateral.
Q:
The payment of Mo's debt to Neil is guaranteed by Mo's personal property. This is
A.governed by Article 2 of the UCC.
B.governed by Article 3 of the UCC.
C.governed by Article 9 of the UCC.
D.not governed by the UCC.
Q:
The payment of Brian's debt to Chuck is guaranteed by Brian's personal property. This is
A.a reorganization.
B.a secured transaction.
C.a suretyship agreement.
D.a violation of most state laws.
Q:
The price that a secured party obtains on a sale of collateral is all that the creditor can recover on the debt.
Q:
If collateral consists of consumer goods subject to a purchase-money security interest, the secured party must "purchase" the goods on default.
Q:
To qualify as a commercially reasonable sale, a secured party's sale of collateral, after default and repossession, must be public.
Q:
On default, unless the security agreement states otherwise, the secured party has the right to repossess collateral.
Q:
When a secured debt is paid, the secured party must file a termination statement regardless of the goods' classification.
Q:
A secured party can release the collateral described in a filed financing statement only if the debtor has paid the debt.
Q:
Under certain conditions, a purchase-money security interest will take priority over a previous creditor's interest in after-acquired property.
Q:
A buyer in the ordinary course of business has priority over any security interest created by the seller.
Q:
The first security interest to be perfected is the last in priority over any other perfected security interests.
Q:
When two conflicting security interests are unperfected, the first to attach has priority.
Q:
The last security interest to be perfected is the first in priority over any other perfected security interests.
Q:
The concept of a floating lien does not apply to a shifting stock of goods.
Q:
A security interest that provides for a security interest in proceeds is a floating lien.
Q:
Intermittent advances against a line of credit can be subject to the same collateral.
Q:
A future advance against a line of credit must be of the same type as the original advance to be subject to the same collateral.
Q:
Proceeds consist of whatever is received when collateral is sold.
Q:
A continuation statement is effective only if it is filed within six months before the expiration of a financing statement.
Q:
A financing statement is effective for no more than five months from the date of filing.
Q:
Filing a financing statement with the appropriate public office is the only way to perfect a purchase-money security interest in consumer goods.
Q:
A purchase-money security interest arises only when a seller provides a buyer with the "purchase money" to buy goods.
Q:
A purchase-money security interest in consumer goods is perfected automatically at the time of a credit sale.
Q:
A pledge is a promise by a debtor to take reasonable care of the collateral.
Q:
An improper filing renders a secured party unperfected.
Q:
The state office in which a financing statement should be filed depends on the creditor's location.
Q:
A description of collateral as "all the debtor's assets" is too general to reasonably identify the subject of a security agreement.
Q:
To be valid, a security agreement must contain a description of the collateral.
Q:
A financing statement is effective only if it is filed electronically.
Q:
A security agreement must be filed in person to be valid and enforceable.
Q:
A security interest cannot be perfected without the filing of a financing statement.
Q:
A security interest may attach to intangible collateral but cannot be perfected.
Q:
For a creditor to have an enforceable security interest, the debtor must have title to the collateral.
Q:
To create an enforceable security interest, the secured party must give value.
Q:
A security interest is enforceable only if the collateral is in the secured party's possession.
Q:
A security interest is not enforceable after the creditor's rights have attached to the collateral.
Q:
The person who owes the payment of a secured obligation is the secured party.