Chapter 30 Property - Bankruptcy & Reorganization Quiz

1. Which of the following are goals of bankruptcy laws in the United States?

a. to ensure that debts are paid in full
b. to ensure that debtors are given a fresh start
c. to ensure equitable treatment of creditors who compete for a debtor's assets
d. both A and B

2. Bankruptcy law _______________ specifically authorized in the Constitution. Debtors have _______________ protection today than they had in the past.

a. is, more
b. is; less
c. is not; more
d. is not; less

3. Which of the following is true of bankruptcy proceedings?

a. They are held in state courts, and may be appealed to federal courts.
b. They are held in bankruptcy courts, and are appealed to Circuit Courts.
c. They are held in district courts, and appealed to Circuit Courts.
d. They are held in bankruptcy courts, and appealed to district courts.

4. In a Chapter 7 "straight" bankruptcy, a debtor turns over all assets to a _____________. After these goods are sold and the money distributed to creditors, the remaining debts _______________ discharged.

a. court; are
b. court; are not
c. trustee; are
d. trustee; are not

5. Al declares bankruptcy, and intentionally fails to report all assets to the court. This action may

a. carry a fine.
b. carry a jail sentence.
c. both A and B
d. none of the above

6. John has 10 creditors to whom he owes $10,000 each. How many of them must band together to start an involuntary bankruptcy proceeding?

a. 1
b. 3
c. 5
d. 10

7. Who may initiate bankruptcy proceedings?

a. debtors only
b. creditors only
c. either debtors or creditors
d. debtors, creditors, affected neighbors

8. Which of the following is true of when persons may file for bankruptcy?

a. They may only file when they are insolvent.
b. They may only file when their debts exceed 20% of their annual income.
c. They may file, so long as they do not substantially abuse the system.
d. They may file at any time.

9. John has 20 creditors to whom he owes $3,000 each. How many of them must join together to force an involuntary bankruptcy proceeding?

a. 1
b. 3
c. 4
d. 6

10. After all secured creditors have been paid, a trustee has $10,000 to satisfy all other debts. The remaining debts are as follows: $4,000 for contributions made to the debtor's employee benefit plan, $4,000 in child support payments, and $4,000 to the Mastercard. How much will Mastercard receive?

a. $4,000
b. $3,333
c. $3,000
d. $2,000

11. A creditor who commits _______________ violation of an automatic stay can be hit with penalties. These penalties _______________ include punitive damages.

a. any; may
b. any; will not
c. a knowing; may
d. a knowing; will not

12. What must a creditor do to be entitled to a portion of a debtor's estate?

a. attend a meeting in the bankruptcy court only
b. file a proof of claim within 30 days
c. file a report within 90 days
d. none of the above

13. Under the Bankruptcy Code, which of the following are completely exempt from creditors?

a. a burial plot
b. any single vehicle
c. any piece of jewelry
d. all of the above

14. Once a petition for bankruptcy has been filed, which of the following is true?

a. Litigation against the debtor by creditors is suspended.
b. Liens may not be foreclosed upon.
c. both A and B
d. none of the above

15. Which of the following debts is not discharged by Chapter 7 bankruptcy? That is, which of these creditors can still demand money after all Chapter 7 money has been distributed?

a. taxes owed to the government
b. court ordered fines and penalties
c. judgments against one convicted of driving while intoxicated
d. all of the above

16. Which of the following forms of debt relief may be sought by an individual (a real person and not a business)?

a. Chapter 7
b. Chapter 11
c. both A and B
d. none of the above

17. When a corporation files for Chapter 11 reorganization, they generally pay _______ of their debts, and they _______________ allowed to continue doing business.

a. none; are
b. none; are not
c. some; are
d. some; are not

18. Once a petition has been filed for Chapter 11 relief for a business, does the debtor continue to be able to manage the business?

a. yes, always
b. no, never
c. yes, if the business files appropriate paperwork
d. yes, unless the business is grossly mismanaged

19. When a business reorganizes under Chapter 11, can it reject a recently negotiated collectively bargained labor contract?

a. yes, always
b. yes, if it would further the successful rehabilitation of the debtor
c. yes, if management decides to do so by a unanimous vote
d. no

20. Which of the following requires a creditors' committee of unsecured creditors be appointed before court orders can be entered under Chapter 11?

a. all businesses
b. all business that do not deal in real estate
c. all businesses with debts of over $2 million
d. No one--the committees are formed voluntarily.

21. A plan has been submitted to a creditors' committee. Each class of creditors ____________ accept the plan if it does not adversely affect their interests, and a class has accepted a plan when _______________ of voters who represent 2/3 of the amount of the total claim approve it.

a. must; a majority
b. must, 2/3
c. does not have to; a majority
d. does not have to; 2/3

22. A debtor files for Chapter 11 reorganization and submits a plan which all classes of creditors approve. The plan does not provide for the following payments in cash: back alimony and back child support. May the debtor's ex-wife and/or child block the plan?

a. Yes, the wife may.
b. Yes, the child may.
c. Yes, either the child or the spouse may.
d. no

23. A repayment plan may be filed voluntarily _______________. It _______________ bring about an automatic stay.

a. only; does
b. only; does not
c. or involuntarily; does
d. or involuntarily; does not

24. Fraudulently incurred debt _______________ dischargeable under Chapter 13, and _______________ dischargeable under Chapter 7.

a. is; is
b. is; is not
c. is not; is
d. is not; is not

25. Which of the following are criteria for Chapter 12 relief as provided for in the Family Farmer Bankruptcy Act?

a. Debts must be at least 80% farm related.
b. A majority of gross income comes from farming.
c. Total debt must not be over $1.5 million.
d. All of the above must apply.