Question 1

Which of the following was the result on appeal in In re Girolamo Afonica, the case in the text in which the debtor, without a certificate of title, transferred a vehicle securing a loan of over $11,000 to another party purportedly because the debtor's ex-wife objected to the presence of the car in the driveway?

Accepted Answer

A)   That the debt was nondischargeable in bankruptcy because the debtor acted to defraud the bank.
B)   That the debt was nondischargeable in bankruptcy because the debtor acted willfully and maliciously to cause injury to the collateral.
C)   That the debt was nondischargeable in bankruptcy both because the debtor acted to defraud the bank and because the debtor acted willfully and maliciously to cause injury to the collateral.
D)   That the debt was totally dischargeable in bankruptcy because proof of fraud was not established.
E)   That because the debtor acted willfully and maliciously to cause injury to the collateral, only 50% of the debt was dischargeable.F) A) and D)
G) A) and C)

Question 2

Which of the following is called straight bankruptcy?

Accepted Answer

A)   Liquidation
B)   Reorganization
C)   Reformation
D)   Acknowledgment
E)   AvoidanceF) A) and B)
G) D) and E)

Question 3

Which of the following is an individual who takes over administration of the debtor's estate?

Accepted Answer

A)   Administrator
B)   Aligner
C)   Organizer
D)   Reformer
E)   TrusteeF) A) and E)
G) A) and C)

Question 4

Which of the following occurs when a debtor turns over all assets to a trustee?

Accepted Answer

A)   Liquidation
B)   Reorganization
C)   Reformation
D)   Acknowledgment
E)   AvoidanceF) B) and E)
G) B) and C)

Question 5

Which of the following is an example of indispensable paper?

Accepted Answer

A)   Fixtures.
B)   Documents of title.
C)   Accounts.
D)   Fixtures, documents of title, and accounts.
E)   Fixtures and documents of title, but not accounts.F) C) and D)
G) B) and E)

Question 6

Which of the following is true regarding the UCC's definition of default?

Accepted Answer

A)   The UCC defines default as failure to make any payment when due.
B)   The UCC defines default as failure to make a payment within 30 days after a payment is due.
C)   The UCC defines default as failure to make a payment within 60 days after a payment is due.
D)   The UCC defines default as failure to make a payment within 90 days after a payment is due.
E)   None of these because the UCC does not define default.F) A) and B)
G) D) and E)

Question 7

Which of the following was the ruling by the U.S. Supreme Court in Rousey v. Jacoway, the case in the text involving whether funds in an Individual Retirement Account (IRA)  qualify for a federal exemption in bankruptcy proceedings?

Accepted Answer

A)   That funds in an IRA account are exempt from claims of creditors.
B)   That funds in an IRA account are not exempt from claims of creditors.
C)   That funds in an IRA account are exempt from claims of creditors only up to $5,000.
D)   That funds in an IRA account are exempt from claims of creditors only up to $50,000.
E)   That funds in an IRA account are exempt from claims of creditors only up to $500,000.F) B) and E)
G) A) and E)

Question 8

When _____________ occurs, the creditor becomes the secured party who has a security interest in the collateral.

Accepted Answer

A)   Attachment.
B)   Transformation.
C)   Reaffirmation.
D)   Security.
E)   Perfection.F) A) and E)
G) All of the above

Question 9

Which of the following is false regarding Chapter 12 of the bankruptcy code?

Accepted Answer

A)   A family farmer under Chapter 12 must have regular annual income.
B)   The family farmer's gross income must be at least 50 percent farm-dependent.
C)   More than 80 percent of the debt must be farm-related.
D)   The total debt must be under $1.5 million.
E)   Congress modeled Chapter 12 after Chapter 7 relief.F) C) and E)
G) B) and C)

Question 10

According to the UCC, value is consideration.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true regarding the manner in which a secured party may sell collateral?

Accepted Answer

A)   The sale must be in a private sale.
B)   The sale must be in a public sale.
C)   The sale must be in an acknowledged sale.
D)   The sale may be in a private sale, public sale, or an acknowledged sale.
E)   The sale may be in either a private sale or a public sale.F) A) and E)
G) None of the above

Question 12

In which of the following did Congress make comprehensive changes to bankruptcy law?

Accepted Answer

A)   The Bankruptcy Amendments of 2005
B)   The Bankruptcy Fraud Protection Act of 2007
C)   The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
D)   The Bankruptcy Fraud and Consumer Shield Act of 2006
E)   The Insolvency Protection Amendments of 2006F) D) and E)
G) None of the above

Question 13

Which of the following is formed when a debtor uses borrowed money from the secured party to buy the collateral?

Accepted Answer

A)   A secured possessory interest.
B)   A loaned money possessory interest.
C)   A purchase-money security interest.
D)   A purchase-cash consumer interest.
E)   A perfected security interest.F) B) and C)
G) C) and D)

Question 14

Assuming a purchase-money security interest is not involved, which of the following is true regarding priority when there are two secured parties and neither has perfected?

Accepted Answer

A)   The party who attached its interest first will prevail.
B)   The party who attached its interest second will prevail.
C)   The parties will divide the proceeds evenly between them.
D)   The party who loaned the most money on the collateral has priority.
E)   The party who loaned the least amount on the collateral has priority.F) A) and B)
G) B) and D)

Question 15

Which of the following is a moratorium for almost all creditor litigation against a debtor in a Chapter 7 bankruptcy?

Accepted Answer

A)   A stop order
B)   An automatic stay
C)   A semi-automatic dismissal
D)   A semi-discharge
E)   A means dischargeF) A) and E)
G) None of the above

Question 16

Reference - Overextended Debtor. Dennis purchased a big screen television from ABC Electronics and financed the purchase through ABC Electronics based on an agreement granting ABC Electronics a security interest in the television and requiring that Dennis make monthly payments. Three months later, because Dennis had bought a boat, a new car, an expensive engagement ring for his girlfriend, and some other items, he was unable to continue making payments on the television. The manager from ABC Electronics called and asked Dennis to return the television. Dennis refused on the basis that ABC Electronics never perfected its interest in the television. Which of the following is the proper designation under the UCC for the television?

Accepted Answer

A)   It is a consumer good.
B)   It is a pledge.
C)   It is an allonge.
D)   It is unsecured property.
E)   It is both unsecured and unperfected property.F) A) and B)
G) A) and C)

Question 17

Which of the following is true regarding rights of a trustee in a Chapter 7 bankruptcy?

Accepted Answer

A)   The trustee takes possession of the debtor's property and has it appraised.
B)   If someone else holds the debtor's property, the trustee has the power to require the person to return that property.
C)   The trustee may temporarily take over the debtor's business.
D)   The trustee takes possession of the debtor's property and has it appraised; if someone else holds the debtor's property, the trustee has the power to require the person to return that property; and the trustee may temporarily take over the debtor's business.
E)   The trustee takes possession of the debtor's property and has it appraised; and if someone else holds the debtor's property, the trustee has the power to require the person to return that property; but the trustee may not take over the debtor's business even temporarily.F) A) and D)
G) B) and E)

Question 18

Reference - Claims to Funds. Paul had a great job as a bank executive. Unfortunately, his bank came under scrutiny by federal regulators and while Paul had done nothing illegal, he ended up being fired. Unfortunately for Paul, he had a number of debts. Among his assets were a house worth $250,000 on which he owed $150,000 to a bank which held a security interest; three vehicles; an expensive watch worth $5,000; and $120,000 in an Individual Retirement Account "IRA". He owed $900 per month in child support to his ex-wife Suzy and was behind on payments in the amount of $1,800. He also owed $2,000 in wages consisting of four months of back pay to Bob who took care of Paul's landscaping needs and swimming pool care. Unable to find a job and believing that he had no other option, Paul filed for Chapter 7 bankruptcy. All debtors angrily demanded payment from liquidation of Paul's assets. Paul, on the other hand, claims that he needs all the above mentioned assets and that he should not have to give up anything. Only federal bankruptcy exemptions apply to Paul's case. Which of the following is true in regard to Paul's claim to his IRA account?

Accepted Answer

A)   The IRA is entirely exempt from claims of creditors.
B)   The IRA is entirely subject to claims of creditors.
C)   The IRA is exempt up to $1,000.
D)   The IRA is exempt up to $10,000.
E)   The IRA is exempt up to $100,000.F) A) and B)
G) A) and C)

Question 19

Which of the following means that bankruptcy relief is ordered and that the bankruptcy proceedings can continue?

Accepted Answer

A)   An order of relief
B)   A stay enforcement order
C)   An approval order
D)   A liquidation order
E)   None of these because if bankruptcy relief is ordered, all collection efforts must cease.F) A) and B)
G) B) and C)

Question 20

Which of the following is a writing that demonstrates a right to payment of money?

Accepted Answer

A)   Chattel paper.
B)   Goods paper.
C)   Payment paper.
D)   An instrument.
E)   An authorization.F) A) and B)
G) A) and C)

Exam 18: Holder in Due Course, Liability, and Defenses

Which of the following is true regarding the manner in which a secured party may sell collateral?

Correct Answer
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Which of the following is true regarding the UCC's definition of default?

Correct Answer
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According to the UCC, value is consideration.

Correct Answer
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Assuming a purchase-money security interest is not involved, which of the following is true regarding priority when there are two secured parties and neither has perfected?

Correct Answer
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Which of the following is a moratorium for almost all creditor litigation against a debtor in a Chapter 7 bankruptcy?

Correct Answer
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Correct Answer
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Which of the following is an example of indispensable paper?

Correct Answer
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Which of the following is true regarding rights of a trustee in a Chapter 7 bankruptcy?

Correct Answer
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Correct Answer
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Correct Answer
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Which of the following is called straight bankruptcy?

Correct Answer
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Which of the following occurs when a debtor turns over all assets to a trustee?

Correct Answer
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Which of the following was the ruling by the U.S. Supreme Court in Rousey v. Jacoway, the case in the text involving whether funds in an Individual Retirement Account (IRA) qualify for a federal exemption in bankruptcy proceedings?

Correct Answer
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Which of the following is a writing that demonstrates a right to payment of money?

Correct Answer
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Which of the following is an individual who takes over administration of the debtor's estate?

Correct Answer
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In which of the following did Congress make comprehensive changes to bankruptcy law?

Correct Answer
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Which of the following means that bankruptcy relief is ordered and that the bankruptcy proceedings can continue?

Correct Answer
verified

When _____________ occurs, the creditor becomes the secured party who has a security interest in the collateral.

Correct Answer
verified

Which of the following is formed when a debtor uses borrowed money from the secured party to buy the collateral?

Correct Answer
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Which of the following is false regarding Chapter 12 of the bankruptcy code?

Correct Answer
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Exam 18: Holder in Due Course, Liability, and Defenses

Which of the following is true regarding the manner in which a secured party may sell collateral?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the UCC's definition of default?

Correct AnswerverifiedShow Answer

According to the UCC, value is consideration.

Correct AnswerverifiedShow Answer

Assuming a purchase-money security interest is not involved, which of the following is true regarding priority when there are two secured parties and neither has perfected?

Correct AnswerverifiedShow Answer

Which of the following is a moratorium for almost all creditor litigation against a debtor in a Chapter 7 bankruptcy?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is an example of indispensable paper?

Correct AnswerverifiedShow Answer

Which of the following is true regarding rights of a trustee in a Chapter 7 bankruptcy?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is called straight bankruptcy?

Correct AnswerverifiedShow Answer

Which of the following occurs when a debtor turns over all assets to a trustee?

Correct AnswerverifiedShow Answer

Which of the following was the ruling by the U.S. Supreme Court in Rousey v. Jacoway, the case in the text involving whether funds in an Individual Retirement Account (IRA) qualify for a federal exemption in bankruptcy proceedings?

Correct AnswerverifiedShow Answer

Which of the following is a writing that demonstrates a right to payment of money?

Correct AnswerverifiedShow Answer

Which of the following is an individual who takes over administration of the debtor's estate?

Correct AnswerverifiedShow Answer

In which of the following did Congress make comprehensive changes to bankruptcy law?

Correct AnswerverifiedShow Answer

Which of the following means that bankruptcy relief is ordered and that the bankruptcy proceedings can continue?

Correct AnswerverifiedShow Answer

When _____________ occurs, the creditor becomes the secured party who has a security interest in the collateral.

Correct AnswerverifiedShow Answer

Which of the following is formed when a debtor uses borrowed money from the secured party to buy the collateral?

Correct AnswerverifiedShow Answer

Which of the following is false regarding Chapter 12 of the bankruptcy code?

Correct AnswerverifiedShow Answer

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