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Q:
Under the Sherman Act, courts are given the power to order the dissolution of violators of the Act in extreme cases.
Q:
Even behavior that affects only intrastate (purely local) commerce is within the scope of the federal antitrust laws.
Q:
The Foreign Trade Antitrust Improvement Act provides that the Sherman Act shall never apply to nonimport trade.
Q:
When is a debtor allowed to void liens on his properties? What type of liens can be voided on this basis?
Q:
Who are the different unsecured creditors who receive distributions of a debtor's estate?
Q:
A petition for Chapter 13 proceedings:
A. can be initiated by the voluntary petition of a debtor.
B. can be initiated by the involuntary petition of creditors.
C. can be initiated by the trustee.
D. can be initiated by the secured creditors.
Q:
What are the primary purposes of the Bankruptcy Code?
Q:
Describe the creditor actions that are automatically stayed when the debtor files a bankruptcy petition.
Q:
Which of the following statements concerning reaffirmation agreements is correct?
A. Reaffirmation agreements are unlawful under the Bankruptcy Act.
B. Reaffirmation agreements must be made before a discharge in bankruptcy is granted.
C. A debtor cannot voluntarily pay any dischargeable obligation without entering into a reaffirmation agreement.
D. Court approval is required for the reaffirmation of loans secured by real property.
Q:
Which of the following statements is true for Chapter 11 of the Bankruptcy Code?
A. Chapter 11 cases are liquidated rather than reorganized.
B. Unlike Chapter 13, in Chapter 11 cases, the debt is predominately nonconsumer debt.
C. Petitions for Chapter 11 cases cannot be filed voluntarily by the debtor.
D. The reorganization plan is essentially a contract between a debtor and its trustees.
Q:
Under Chapter 11 of the Bankruptcy Act, a reorganization plan:
A. must divide the creditors into classes and set forth how each creditor will be satisfied.
B. need not state which claims are impaired or adversely affected by the plan.
C. need not necessarily treat all creditors in a given class the same.
D. must give creditors and trustees shares in the corporation in exchange for the debt owed to them.
Q:
In 1986, ____ of the Bankruptcy Code was added to target the financial problems of the family farm.
A. Chapter 7
B. Chapter 11
C. Chapter 13
D. Chapter 12
Q:
Under Chapter 13 of the Bankruptcy Act, debtors:
A. can be free of all debts that are not dischargeable under Chapter 7.
B. cannot retain more property than is exempt from bankruptcy under state law.
C. are free from garnishment of their property by creditors.
D. can pay a lesser percentage of debts owed to the creditors than in straight bankruptcy proceedings.
Q:
A bankrupt person who has not been guilty of certain dishonest acts and who has fulfilled his duties as a bankrupt is entitled to a _____ in bankruptcy.
A. reaffirmation
B. claim
C. reorganization
D. discharge
Q:
Debts created by larceny or embezzlement by the debtor while acting in a fiduciary capacity are:
A. dischargeable.
B. secured.
C. nondischargeable.
D. unsecured.
Q:
Bill filed a petition for bankruptcy under Chapter 7 of the Bankruptcy Act. Bill listed, among others, the following debts: a debt to the National Bank for $10,000 secured by his 1980 truck, which is valued at $3,500; an unsecured debt to his friend, Frances; a $500 debt to the IRS for 1989 federal income taxes; and a $500 student loan to the university which was due one year ago. Under these circumstances:
A. the $500 debt to the IRS is a nondischargeable debt.
B. Frances can claim the debt even without filing a proof of claim.
C. the $500 student loan to the university is a dischargeable debt.
D. the bank can receive preferential payment because the debt owed to it is highest.
Q:
If a creditor is owed a debt that is provable and nondischargeable, he/she may:
A. participate in the distribution of the debtor's estate.
B. not pursue the debtor for payment even after the completion of the bankruptcy proceedings.
C. not enter into any voluntary agreement with the debtor for discharge of the debt.
D. need court approval for reaffirmation of loans.
Q:
Which of the following payments is considered preferential?
A. Payments made in the ordinary course of business.
B. Payment of monthly utility bills.
C. Payment made by an insolvent debtor within 50 days of the filing of the bankruptcy petition.
D. Payment to a creditor giving him a greater percentage of a preexisting debt than other creditors.
Q:
Six months before filing for bankruptcy, Shirley sold her new car to her brother, Claude, for $100 so that her creditors could not claim it. The market value of the car was $8,000 at the time of the sale. Under these circumstances:
A. the transfer is voidable by the trustee because Shirley did not receive fair consideration for this transfer.
B. the transfer is not voidable by the trustee because the transfer occurred 6 months before Shirley filed her bankruptcy petition.
C. the transfer is not voidable because the transfer occurred between two relatives.
D. the transfer is voidable by the creditors.
Q:
Which of the following statements is true for claims?
A. A trustee doesn't receive the defenses that a bankrupt person enjoys against claims.
B. If the debtor's property is subject to a secured claim of a creditor, that creditor has the first claim to it.
C. If a claim is provable, a creditor can participate in the distribution of the assets of the bankruptcy estate.
D. Both secured and unsecured creditors are required to file proofs of claims.
Q:
Objections to a discharge of bankruptcy can be filed by ___.
A. a creditor, the trustee, or the U.S. attorney
B. the U.S. attorney only
C. the trustee only
D. the secured creditors only
Q:
Under the Bankruptcy Code, exemptions are only available to ___.
A. corporations
B. loan associations
C. individual debtors
D. non-profit organizations
Q:
A bankrupt debtor:
A. can elect to use the set of exemptions provided by either the state or federal bankruptcy law.
B. can elect to keep some items exempted under the state law and other items under the federal law.
C. cannot elect which set of exemptions will be allowed; the creditors' committee or trustee makes that decision.
D. can elect the exemptions of the place where she/he was domiciled for 100 days before filing of the petition.
Q:
Involuntary petitions in straight bankruptcy can be filed against:
A. banking corporations and credit unions.
B. savings and loan associations.
C. a debtor engaged in business.
D. a nonprofit organization.
Q:
When a debtor files a bankruptcy petition, the creditor may be relieved from an automatic stay on his actions against the debtor:
A. if the creditor can show that his actions do not give adequate protection to the debtor.
B. if the debtors file a plan of reorganization that has a reasonable chance of being confirmed.
C. if his actions are aimed at obtaining possession of the debtor's property.
D. if the creditor can show that the stay jeopardizes his interest in certain property.
Q:
The court orders relief only if:
A. the debtor is generally not paying his/her debts as they become due.
B. a custodian takes possession of the debtor's property within six months of the filing of the petition.
C. the debtor is involved in a case to establish paternity.
D. the creditor wants to enforce a lien against the debtor's property.
Q:
A bankrupt person's estate is administered by ___.
A. the creditors
B. the creditors' committee
C. the trustee
D. the bankruptcy judge
Q:
Which of the following is true about a trustee's duties?
A. He represents the debtor in bankruptcy proceedings.
B. He represents the creditors in bankruptcy proceedings.
C. He cannot have the debtor's property appraised.
D. He cannot sell the debtor's nonexempt property.
Q:
Chapter 11 of the Bankruptcy Code deals with ___.
A. liquidations
B. consumer debt adjustments
C. reorganizations
D. fishing operations
Q:
A reorganization plan is essentially:
A. a supervised attempt by the state to solve a debtor's financial problems.
B. a contract between a debtor and its creditors.
C. a contract filed voluntarily by the creditors.
D. a contract between a debtor, its creditors and trustees.
Q:
Chapter 13 of the Bankruptcy Act:
A. permits compositions of credit.
B. does not help debtors to overcome their financial difficulties.
C. does not allow time extensions to pay debts.
D. permits reductions of debts.
Q:
Bankruptcy judges:
A. are considered to be units of the district court.
B. are not considered to be part of the district court.
C. are considered to be units of local circuit courts.
D. are considered to be units of the federal court.
Q:
Voluntary petitions in bankruptcy may be filed by a(n):
A. individual.
B. insurance corporation.
C. municipal corporation.
D. loan association.
Q:
People who file a voluntary petition:
A. must be insolvent.
B. must be able to allege that they have debts.
C. seek to have the debtors' assets distributed among the trustees.
D. must have 12 or more creditors.
Q:
The Bankruptcy Code:
A. is a provision of the Uniform Commercial Code.
B. is a federal law.
C. is a state law.
D. comes under both the federal and the state law.
Q:
A major purpose of the Bankruptcy Code is:
A. to ensure that some creditors get more advantages than others.
B. to protect honest debtors against the demands for payment by creditors.
C. to ensure that a debtor can never be discharged of the debts he owes to the creditors.
D. to protect debtors from creditors who try to diminish the debtor's assets.
Q:
A straight bankruptcy is brought under _____ of the Bankruptcy Code.
A. Chapter 7
B. Chapter 11
C. Chapter 13
D. Chapter 15
Q:
Under Chapter 12 of the Bankruptcy Code, a debtor is usually permitted to remain in possession to operate the farm or fishing operation.
Q:
Creditors of the debtor may not file an involuntary petition for a Chapter 13 proceeding.
Q:
If a husband and wife involved in bankruptcy cannot decide whether to use the state or the federal set of exemptions, the state set is elected by default.
Q:
Preferential liens are treated in a manner similar to preferential payments.
Q:
Both secured and unsecured creditors are required to file proofs of claims.
Q:
Those creditors who do not take any collateral to secure the debt owed to them are unsecured creditors.
Q:
After the bankrupt person has paid all the required fees, creditors are no longer able to file objections to the discharge of the bankrupt.
Q:
Educational loans are dischargeable debts.
Q:
A voluntary petition can only be filed by a corporation.
Q:
The person who files a voluntary petition must be insolvent.
Q:
If a debtor has more than a dozen creditors, an involuntary petition to declare bankruptcy must be signed by at least three.
Q:
An order of relief is granted automatically if the debtor does not contest the filing of an involuntary petition.
Q:
Exemptions are available to both individual debtors as well as corporations.
Q:
Explain a creditor's three potential courses of action upon default.
Q:
Debtors are considered insolvent if they are unable or fail to pay their debts as they become due.
Q:
A liquidation proceeding was traditionally known as straight bankruptcy.
Q:
Explain the meaning of a purchase money security interest in consumer goods with an example.
Q:
(p. 897; 898) Nick bought a diamond ring on credit from Rike as an engagement present for his fiance. He signed a purchase money security agreement giving Rike a security interest in the ring until it was paid for. Rike did not file a financing statement covering its security interest. Nick filed for bankruptcy. The bankruptcy trustee claimed that the diamond ring was part of the bankruptcy estate because Rike did not perfect his security interest. Rike claimed that it had a perfected security interest in the ring. Did Rike have to file a financing statement to perfect its security interest in the diamond ring?
Q:
Under Article 9 of the UCC, in which order are proceeds from the sale of collateral by the creditor to be distributed?
A. First, any expenses of repossessing the collateral are paid. Second, the proceeds are used to satisfy the debt. Third, any other junior liens are paid. Finally, if any proceeds remain, the debtor is entitled to them.
B. First, the proceeds are used to satisfy the debt. Second, junior liens are paid. Third, any expenses of repossessing the collateral are paid. Finally, if any proceeds remain, the debtor is entitled to them.
C. First, the proceeds are used to satisfy the debt. Second, any expenses of repossessing the collateral. Lastly, the debtor is entitled to remaining proceeds. Finally, if any proceeds remain, the debtor is entitled to them.
D. First, the junior liens are paid. Second, any expenses of repossessing the collateral are paid. Third, the proceeds are used to satisfy the debt. Finally, if any proceeds remain, the debtor is entitled to them.
Q:
If the proceeds of sale of collateral are not sufficient to satisfy the debt, then the creditor is usually entitled to a:
A. future advance.
B. deficiency judgment.
C. fixture filing.
D. warehousing arrangement.
Q:
Define future advances and explain how covering future advances in the security agreement benefits the creditor.
Q:
(p. 889; 894) Explain how a security interest is created.
Q:
When the security interest is perfected and the buyer knows of its existence, a buyer in the ordinary course of business:
A. is subject to the security interest created by his seller.
B. takes free from a security interest created by his seller.
C. takes free from a security interest only if the person is buying farm products from a person engaged in a farming operation.
D. is not protected if the dealership is in default of its loan agreement.
Q:
An artisan's lien:
A. is ineffective against other creditors unless a proper financing statement has been filed.
B. may be given priority even over perfected security interests in collateral if the artisan has possession of the goods.
C. is invalid if the artisan did not inform the debtor, before beginning the work, that he intended to claim a lien.
D. gives a retailer prevalence over someone who buys the collateral from the debtor if the buyer gives value for goods.
Q:
An appliance store sells a television set to Adam for $750 on a conditional sales contract, reserving a security interest in the set until Adam has paid for it. The store does not file a financing statement but relies on attachment for perfection. Adam later borrows money from a credit union and gives it a security interest in the television set. Adam defaults on his loans and the credit union tries to claim the set. Under these circumstances:
A. the credit union has a better claim to the set than does the appliance store.
B. the appliance cannot claim the set as they relied on attachment for perfection.
C. the appliance store has a better claim to the set than does the credit union.
D. neither the appliance store nor the credit union can claim the set.
Q:
A perfected security interest in fixtures has priority over the conflicting interest of an encumbrancer or owner of the real property:
A. only if the debtor is in possession of the real property.
B. if the security interest is a purchase money security interest.
C. even if the interest of the encumbrancer arose after the goods became fixtures.
D. if the fixtures' security interest is perfected by a "fixtures filing" anytime after the goods became fixtures.
Q:
Which of the following statements is true of sale of collateral?
A. In disposing of the collateral, the creditor must use a commercially reasonable method to produce the greatest benefit for himself.
B. The creditor must sell the collateral unless the consumer orally objects to the sale, otherwise, the creditor may keep the collateral in satisfaction of the debt.
C. If less than 80% of the purchase price has been paid, the creditor may propose to the debtor that the creditor keep the collateral in satisfaction of the debt.
D. If the creditor has a security interest in consumer goods and the debtor has paid 60% or more of the purchase price, the creditor must sell the repossessed collateral.
Q:
A purchase money security interest may be automatically perfected if it covers:
A. future advances.
B. inventory.
C. consumer goods.
D. proceeds.
Q:
Identify the statement that is true of perfection of attachment of consumer goods.
A. If the secured party filed a financing statement for the collateral, the new buyer takes the collateral free of any security interest.
B. If the goods are to become fixtures, the creditor can get full protection through perfection by attachment.
C. If the new buyer buys from the debtor without knowledge of the interest, for value and for personal use, the new buyer takes free of the security interest.
D. If the consumer goods are motor vehicles for which the state issues certificates of title, perfection by attachment is effective.
Q:
Nellie borrowed money from Solvent National Bank and gave the bank a security interest in her business equipment, both present and after-acquired. She later borrowed money from Resilient Savings and Loan to purchase additional business equipment. Three weeks after Nellie purchased the new equipment and took possession of it, an employee of Resilient discovered the bank's filed financing statement concerning the bank's loan to Nellie. Resilient immediately recorded a financing statement, so as to perfect its purchase money security interest in the equipment. Nellie then defaulted on the obligation owed to the bank and on the obligation owed to Resilient. Who has the first priority security interest in the equipment purchased by Nellie with the funds borrowed from Resilient?
A. Solvent National Bank
B. Resilient Savings and Loan
C. Both Resilient and Solvent have equal priority
D. Both Nellie and Resilient have equal priority
Q:
A perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory if :
A. the purchase money security interest is perfected three months after the debtor receives possession of the inventory.
B. the purchase money secured party gives an oral notification to the prior secured creditor before the debtor receives the inventory.
C. the holder of the competing security interest received notification within eight years before the debtor receives the inventory.
D. the notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory.
Q:
A purchase money security interest in noninventory collateral prevails over a prior perfected security interest if:
A. the purchase money security interest is perfected at the time the debtor takes possession or within 20 days afterward.
B. the purchase money secured party gives notification in writing to the prior secured creditor before the debtor receives the inventory.
C. the holder of the competing security interest received notification within five years before the debtor receives the inventory.
D. the notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory.
Q:
In a field warehousing arrangement, perfection of a security interest in inventory is accomplished by:
A. central filing.
B. local filing.
C. possession.
D. automatic perfection.
Q:
A financing statement is valid for a period of:
A. five years from the date of filing.
B. one year from the date of filing.
C. two months from the date of filing.
D. five months from the date of filing.
Q:
To be sufficient, a financial statement:
A. must not provide any additional information concerning the property on which the collateral is located.
B. must be effective for a period of two years from the date of filing.
C. must be filed only in the state of the debtor's residence.
D. must indicate the collateral covered by the financing statement.
Q:
When a consumer debtor completely fulfills all debts and obligations secured by a financing statement, he/she is entitled to a:
A. continuation statement.
B. termination statement.
C. statement of benefits.
D. statement of claims and defenses.
Q:
A security interest in money can be perfected:
A. by filing a financing statement.
B. by change of possession.
C. by filing a public notice.
D. by mere attachment.
Q:
Change of possession is:
A. the most common way of perfecting a security interest.
B. the only way to perfect a security interest in money.
C. the most convenient way of perfecting a security interest in consumer goods.
D. not a practical method of perfecting security interests in commercial collateral.
Q:
Milt borrowed $200 from Anne. He promised to pay the money back in two weeks. As a showing of his good faith, he agreed verbally that Anne could take possession of his baseball card collection and keep it until he had repaid the loan in full. The next day, after Anne had the baseball card collection in her possession, Orin heard that Milt was in need of money. Knowing that Milt's baseball card collection could be worth a great deal of money in a few years, Orin offered to purchase the collection from Milt for $150. Milt accepted the offer, took Orin's money, and promised to retrieve the collection from Anne and deliver it to Orin the next day. Anne, however, refused to give up possession of the collection until she was paid in full. Both Milt and Orin now take the position that Anne has no rights in and to the collection because she does not have a signed security agreement and she has not filed a financing statement. Which of the following statements is true?
A. Milt and Orin are correct in their arguments.
B. Anne's security interest is not attached in the absence of a written security agreement even though she maintained possession of the baseball card collection.
C. Anne's possession of the collection satisfies the perfection requirement because it puts a third party like Orin on notice of Anne's interest in the property.
D. Anne's failure to file a public notice rejects the perfection of the agreement even though she is in possession of the collateral.
Q:
A "perfected" security interest:
A. protects the creditor's security interest in collateral against other creditors of the debtor.
B. becomes effective even when the creditor does not give anything of value to the debtor.
C. gives the creditor protection against other creditors of the collateral but not against other purchasers of the collateral.
D. does not provide the creditor rights vis--vis the debtor.
Q:
The most common way of perfecting a security interest is by:
A. automatic perfection.
B. filing a financing statement in the appropriate public office.
C. posting private notice of the interest.
D. mere attachment of the security interest.
Q:
A continuation statement:
A. can be filed a month before the expiration date.
B. can be filed within five months before the expiration date.
C. can be filed within three months before the expiration date.
D. can be filed within six months before the expiration date.
Q:
Documents of title include:
A. stock and bonds.
B. dock warrants and dock receipts.
C. certificates of deposit.
D. conditional sales contracts.