Law 19 Quizzes
1. Carlton files a petition in bankruptcy. One of the goals of bankruptcy law with respect to a debtor is to
a. encourage the continued use of credit to borrow funds.
b. ensure that third parties will continue to guarantee loans.
c. provide a fresh start, free from creditors’ claims.
d. shield assets from creditors’ claims.
2.. Nero files a petition in bankruptcy. The proceeding is governed by the Bankruptcy Code, which is encompassed by
a. Article 3 of the Uniform Commercial Code.
b. Chapter 5 of the Federal Register.
c. Section 7 of the appropriate state statute.
d. Title 11 of the United States Code.
3. Mabel files a petition in bankruptcy. The initial proceeding on this petition will be in
a. a federal bankruptcy court.
b. a state bankruptcy court.
c. the highest court in the state in which A is located.
d. the United States Supreme Court.
4. Lulu joins with other creditors to force Mikhail, a debtor, into bankruptcy. One of the goals of bankruptcy law with respect to creditors is to
a. ensure that creditors will continue to lend to insolvent debtors.
b. protect creditor assets from diminution in value.
c. provide equitable treatment in the competition for debtor assets.
d. make all debtor property available for creditor claims.
5. A petition for a discharge in bankruptcy under Chapter 7 may be filed by
a. Employees Credit Union, a corporation.
b. Federal Savings & Loan Association, a corporation.
c. Goodhands Insurance Company, a corporation.
d. Huey, an independent financial adviser.
6. Tina operates a sole proprietorship, a corporation, and a partnership. Tina wants to obtain relief for her individual debts and the debts of her corporation and partnership. Tina may file a petition for each under
a. Chapter 7.
b. Chapter 9.
c. Chapter 11.
d. Chapter 13.
7. Elmo files a petition in bankruptcy. If the court concludes that there are grounds for a finding of “substantial abuse,” the court will most likely
a. dismiss Elmo’s petition.
b. discharge Elmo’s debts.
c. distribute Elmo’s property to Elmo’s creditors.
d. issue an automatic stay against any actions by Elmo’s creditors.
8. Kofi files a petition for bankruptcy. Kofi must include with the petition
a. a list of creditors and the amount of the debt owed to each only.
b. a list of creditors and the amount of the debt owed to each, a list of property, and a statement of financial affairs.
c. a list of property only.
d a statement of financial affairs only.
9. Mia’s voluntary petition for bankruptcy is found to be proper. The order for relief is effective as soon as
a. Mia files the petition.
b. Mia posts a bond to cover the costs of the proceedings.
c. Mia’s creditors agree to the terms.
d. the trustee collects and distributes the property of Mia’s estate.
10. Dona 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.
11. Tasty Pastries declares bankruptcy, idling Tasty’s delivery vehicles. A creditor with a secured interest in the vehicles can compel Tasty to pay a certain amount of money each month to offset the depreciation in the value of the vehicles. This is
a. the adequate protection doctrine.
b. the avoidance doctrine.
c. the creditor preference rule.
d. the Tasty Pastries rule.
12. Ollie files a petition in bankruptcy. At the moment of filing
a. an automatic stay goes into effect.
b. Ollie’s debts are discharged.
c. Ollie’s petition is dismissed.
d. Ollie’s property is distributed to Ollie’s creditors.
13 Valley Ranch cannot provide its creditors with adequate protection during the automatic stay. The bankruptcy court is most likely to
a. deny Valley Ranch a discharge.
b. place the affected assets in the hands of a neutral third party.
c. remove the stay and permit the affected assets to be repossessed.
d. sell the affected assets.
14. Mac files a petition for a discharge in bankruptcy. Mac’s failure to appear at a meeting of the creditors listed in Mac’s schedules may result in Mac being
a. denied a discharge of bankruptcy.
b. fined.
c. held in contempt.
d. imprisoned.
15. Don files a petition for bankruptcy. Don’s creditors must file with the court their proof of claims against Don’s assets within
a. fifteen days of the creditors’ meeting.
b. thirty days of the creditors’ meeting.
c. sixty days of the creditors’ meeting.
d. ninety days of the creditors’ meeting.
16. Elle is a trustee for a federal bankruptcy court. Elle’s duties include
a. collecting a debtor’s property.
b. establishing priority for the payment of unsecured creditors.
c. operating a debtor’s business to obtain maximum profit for creditors.
d. submitting to an examination under oath by the creditors.
17. Eve sells her motorcycle to her brother Floyd for $1,000. Twelve days later, Eve files for bankruptcy under Chapter 7. Floyd dies while riding the cycle. Eve is Floyd’s only heir. With respect to the bankruptcy estate, the inheritance is
a. exempt property.
b. part of the estate if Floyd died more than 180 days after Eve’s filing.
c. part of the estate if Floyd died within 180 days after Eve’s filing.
d. part of the estate if the accident was in some way Eve’s fault.
18. Thirty-one days before filing a petition in bankruptcy, Frida transfers property and makes payments that favor one creditor over another. These are
a. affirmation agreements.
b. preferences.
c. secured interests.
d. unsecured debts.
19. Eve sells her motorcycle to her brother Floyd for $1,000. Twelve days later, Eve files for bankruptcy under Chapter 7. Eve sells her motorcycle to her brother Floyd for $1,000. Twelve days later, Eve files for bankruptcy under Chapter 7. Regarding the sale of the cycle, the trustee may
a. cancel it as a fraudulent transfer.
b. cancel it as a voidable preference.
c. not cancel it because it is a sale, not a gift.
d. not cancel it, but can sue Floyd’s estate for the return of the $1,000.
20. In January, Jazz Dance Studio owes Kay, its musical director, $1,800 for current wages, receives $700 as a down payment for dance lessons from Lora, and pays a Music, Inc., a sheet music supplier, $1,500 of $3,000 owed. In February, the studio files for bankruptcy under Chapter 7. Based on the size of the studio’s estate in bankruptcy, each of Jazz’s creditors will get only 10 percent of their claims. Regarding the payment to Music, Inc., the trustee may
a. not recover it because Music’s claim has priority.
b. not recover it unless Music is an insider.
c. recover it as a fraudulent transfer.
d. recover it as a voidable preference.
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