Question 1

Debts that remain after a liquidation are not discharged, and the debtor retains his or her obligation to pay them.

Accepted Answer

A) True 
 B)False

Question 2

Ran is a surety for Su's loan from Tempo Credit. When Su pays the debt owed to the lender, Ran's right of subrogation entitles the surety to

Accepted Answer

A)   any right that the creditor had against the debtor.
B)   a proportionate share of any overpayment due to the loan's prepayment.
C)   all outlays made on behalf of the suretyship arrangement.
D)   title to and possession of the property serving as collateral for the loan.E) A) and D)
F) B) and C)

Question 3

Any debtor who is eligible for bankruptcy relief under Chapter 7 is eligible under Chapter 11.

Accepted Answer

A) True 
 B)False

Question 4

A bankruptcy trustee is accountable for

Accepted Answer

A)   administering the debtor's estate.
B)   exempting certain property from the bankruptcy.
C)   operating a debtor's business to obtain maximum profit for the creditors.
D)   commencing actions against the debtor to recover creditors' claims.E) A) and C)
F) None of the above

Question 5

A debtor cannot defend against an involuntary bankruptcy petition because that would be contrary to the definition of involuntary.

Accepted Answer

A) True 
 B)False

Question 6

Petro Refinery asks Quality Bank for a loan to increase its inventory. Quality requires Roma, Petro's president, to sign a personal guaranty to pay the debt if Petro defaults. The guaranty is required to be in writing because

Accepted Answer

A)   the debtor has a right of redemption.
B)   the co-signer has a right of contribution.
C)   the main purpose rule applies.
D)   the main purpose rule does not apply.E) B) and C)
F) None of the above

Question 7

Compared to Chapter 7 and 11 plans, a Chapter 13 plan

Accepted Answer

A)   permits creditors to force a debtor into involuntary bankruptcy.
B)   allows a debtor to retain possession of his or her assets.
C)   is more expensive and more complicated.
D)   permits any interested party to file a repayment plan.E) A) and C)
F) A) and D)

Question 8

Under Chapter 7, once the proceeds of the bankruptcy estate have been distributed, the debtor's remaining debts

Accepted Answer

A)   are discharged.
B)   paid by the court.
C)   renewed without legal action as obligations of the debtor.
D)   subject to legal actions to recover any unpaid amounts.E) B) and C)
F) A) and D)

Question 9

Because a mortgage involves the transfer of real property, to comply with the Statute of Frauds, it must be

Accepted Answer

A)   in good faith.
B)   recorded.
C)   written.
D)   witnessed by a disinterested third party.E) None of the above
F) C) and D)

Question 10

If a voluntary petition in bankruptcy is found to be proper, the court's entry of an order for relief

Accepted Answer

A)   puts into place an automatic stay.
B)   discharges the debtor's obligations.
C)   dismisses the petition.
D)   distributes the debtor's assets to his or her creditors.E) None of the above
F) A) and B)

Question 11

To initiate a foreclosure, a lender must pay the full amount of the debt, plus any costs that have accrued.

Accepted Answer

A) True 
 B)False

Question 12

In a Chapter 13 proceeding, the debtor retains possession of his or her assets.

Accepted Answer

A) True 
 B)False

Question 13

In a Chapter 7 bankruptcy, on a finding that the use of Chapter 7 would constitute substantial abuse, the court is most likely to

Accepted Answer

A)   extend the time for the debtor's payment of overdue debts.
B)   allow a creditor to collect a previous judgment on a disputed debt.
C)   force a creditor to obtain a new judgment on a claimed debt.
D)   dismiss the debtor's petition.E) B) and D)
F) C) and D)

Question 14

Auto Sales & Finance wants to get paid for its goods and services, so it will not sell goods or lend funds unless payment is guaranteed. To obtain those goods or services, a customer or borrower might pledge

Accepted Answer

A)   allegiance.
B)   forbearance.
C)   collateral.
D)   a composition agreement.E) None of the above
F) A) and C)

Question 15

To qualify for a Chapter 7 bankruptcy, a debtor must complete a means test to determine whether the debtor has been living within his or her means.

Accepted Answer

A) True 
 B)False

Question 16

Under any chapter of the Bankruptcy Code, failing to file the necessary documents with the debtor's petition for relief can result in

Accepted Answer

A)   an automatic stay.
B)   the discharge of the debtor's obligations.
C)   the dismissal of the petition.
D)   the distribution of the debtor's assets to his or her creditors.E) All of the above
F) B) and D)

Question 17

A Chapter 13 proceeding is more expensive and complicated than a Chapter 11 or Chapter 7 proceeding.

Accepted Answer

A) True 
 B)False

Question 18

Today, there is no significant difference in the liability of a surety and a guarantor in any state at common law or otherwise.

Accepted Answer

A) True 
 B)False

Question 19

Under Chapter 11, soon after the entry of the order for relief

Accepted Answer

A)   any business debtor can choose to avoid creditors' committees.
B)   the debtor's creditors file a plan to distribute the debtor's assets.
C)   a creditors' committee of unsecured creditors is appointed.
D)   the debtor's assets are liquidated to pay tax claims.E) C) and D)
F) B) and D)

Question 20

The basic duty of a bankruptcy trustee in a Chapter 7 proceeding requires that the trustee be accountable for administering the debtor's estate.

Accepted Answer

A) True 
 B)False

Exam 15: Creditor Debtor Relations and Bankruptcy

Under Chapter 7, once the proceeds of the bankruptcy estate have been distributed, the debtor's remaining debts

Correct AnswerverifiedShow Answer

Ran is a surety for Su's loan from Tempo Credit. When Su pays the debt owed to the lender, Ran's right of subrogation entitles the surety to

Correct AnswerverifiedShow Answer

A Chapter 13 proceeding is more expensive and complicated than a Chapter 11 or Chapter 7 proceeding.

Correct AnswerverifiedShow Answer

Because a mortgage involves the transfer of real property, to comply with the Statute of Frauds, it must be

Correct AnswerverifiedShow Answer

Compared to Chapter 7 and 11 plans, a Chapter 13 plan

Correct AnswerverifiedShow Answer

Any debtor who is eligible for bankruptcy relief under Chapter 7 is eligible under Chapter 11.

Correct AnswerverifiedShow Answer

Today, there is no significant difference in the liability of a surety and a guarantor in any state at common law or otherwise.

Correct AnswerverifiedShow Answer

A debtor cannot defend against an involuntary bankruptcy petition because that would be contrary to the definition of involuntary.

Correct AnswerverifiedShow Answer

Under Chapter 11, soon after the entry of the order for relief

Correct AnswerverifiedShow Answer

Debts that remain after a liquidation are not discharged, and the debtor retains his or her obligation to pay them.

Correct AnswerverifiedShow Answer

In a Chapter 13 proceeding, the debtor retains possession of his or her assets.

Correct AnswerverifiedShow Answer

Petro Refinery asks Quality Bank for a loan to increase its inventory. Quality requires Roma, Petro's president, to sign a personal guaranty to pay the debt if Petro defaults. The guaranty is required to be in writing because

Correct AnswerverifiedShow Answer

Under any chapter of the Bankruptcy Code, failing to file the necessary documents with the debtor's petition for relief can result in

Correct AnswerverifiedShow Answer

A bankruptcy trustee is accountable for

Correct AnswerverifiedShow Answer

The basic duty of a bankruptcy trustee in a Chapter 7 proceeding requires that the trustee be accountable for administering the debtor's estate.

Correct AnswerverifiedShow Answer

Auto Sales & Finance wants to get paid for its goods and services, so it will not sell goods or lend funds unless payment is guaranteed. To obtain those goods or services, a customer or borrower might pledge

Correct AnswerverifiedShow Answer

If a voluntary petition in bankruptcy is found to be proper, the court's entry of an order for relief

Correct AnswerverifiedShow Answer

To initiate a foreclosure, a lender must pay the full amount of the debt, plus any costs that have accrued.

Correct AnswerverifiedShow Answer

In a Chapter 7 bankruptcy, on a finding that the use of Chapter 7 would constitute substantial abuse, the court is most likely to

Correct AnswerverifiedShow Answer

To qualify for a Chapter 7 bankruptcy, a debtor must complete a means test to determine whether the debtor has been living within his or her means.

Correct AnswerverifiedShow Answer

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