Question 1

Which of the following are examples of collateral?

Accepted Answer

A)   Goods.
B)   Indispensable paper.
C)   Intangibles.
D)   Goods, indispensable paper, and intangibles.
E)   Goods and indispensable paper, but not intangibles.F) None of the above
G) C) and E)

Question 2

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 under bankruptcy in regard to Paul's claim to the watch?

Accepted Answer

A)   The watch will be sold with the entire proceeds being used to satisfy claims of creditors.
B)   The watch will remain Paul's property because it is automatically exempt.
C)   The watch will remain Paul's property so long as he can establish that it is needed in his profession.
D)   Paul's interest in the watch is exempt only up to $1,000.
E)   Paul's interest in the watch is exempt only up to $500.F) B) and C)
G) None of the above

Question 3

Which of the following chapters of the Bankruptcy Code recognizes insolvency proceedings pending in a foreign country and relief for foreign debtors?

Accepted Answer

A)   Chapter 7
B)   Chapter 9
C)   Chapter 11
D)   Chapter 14
E)   Chapter 15F) All of the above
G) B) and D)

Question 4

Set forth the steps that a creditor must take to become a secured party.

Accepted Answer

To become a secured party, the creditor ...

Question 5

Which of the following is true under the UCC regarding a security interest in collateral that has been perfected in one state when the collateral is moved to another state?

Accepted Answer

A)   A security interest in collateral that has been perfected in one state will generally expire immediately when the collateral is moved to another state.
B)   A security interest in collateral that has been perfected in one state will generally transfer to another state for a period of four months from the date that the property is brought into the other state.
C)   A security interest in collateral that has been perfected in one state will generally transfer to another state for a period of six months from the date that the property is brought into the other state.
D)   A security interest in collateral that has been perfected in one state will generally transfer to another state for a period of two months from the date that the property is brought into the other state.
E)   A security interest in collateral that has been perfected in one state will generally transfer to another state for a period of 30 days from the date that the property is brought into the other state.F) A) and B)
G) B) and C)

Question 6

Which of the following provides for adjustment of debts of family farmers?

Accepted Answer

A)   Chapter 6
B)   Chapter 8
C)   Chapter 10
D)   Chapter 12
E)   Chapter 20F) C) and D)
G) A) and C)

Question 7

A security interest may not apply to personal property that is not yet in the debtor's possession.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following cannot be forced into involuntary bankruptcy under Chapter 7?

Accepted Answer

A)   Farmers
B)   Ranchers
C)   Nonprofit organizations
D)   Farmers, ranchers, and nonprofit organizations
E)   Farmers and ranchers, but nonprofit organizations may be forced into involuntary bankruptcyF) A) and C)
G) C) and D)

Question 9

How is a determination made regarding the identity of the permanent trustee in a Chapter 7 proceeding?

Accepted Answer

A)   The bankruptcy judge appoints the trustee.
B)   The district court judge appoints the trustee.
C)   The court clerk appoints the trustee.
D)   The debtor appoints the trustee.
E)   The creditors elect the trustee.F) A) and D)
G) B) and D)

Question 10

Which of the following is true regarding the effect of an automatic stay on claims of secured creditors in a Chapter 7 proceeding?

Accepted Answer

A)   The stay affects claims of secured creditors in the same way in which it affects claims of unsecured creditors.
B)   Secured creditors with claims of over $5,000 are not affected by the stay.
C)   Secured creditors with claims of over $15,000 are not affected by the stay.
D)   Secured creditors with claims of over $20,000 are not affected by the stay.
E)   The court may exclude secured creditors from the stay if they petition the court to show that they do not have adequate protection under the stay.F) All of the above
G) B) and C)

Question 11

Which of the following is true under the UCC if a buyer of a consumer good subject to purchase-money security interest later sells the good?

Accepted Answer

A)   The security interest immediately terminates.
B)   The security interest passes to the new buyer.
C)   Regardless of whether the buyer is aware of the security interest, the security interest terminates if the sale to the new buyer is made before the original secured party files a financial statement.
D)   As long as the buyer is not aware of the security interest, purchases the good for his or her personal use, and purchases the good before the secured party files a financial statement, the new buyer obtains the good free of the security interest.
E)   As long as the buyer is not aware of the security interest, purchases the good for resale, and purchases the good before the secured party files a financial statement, the buyer obtains the good free of the security interest.F) A) and B)
G) B) and D)

Question 12

Under the UCC, a buyer in the ordinary course of business can take goods free of any security interest created by the seller of the goods even if the security interest is perfected.

Accepted Answer

A) True 
 B)False

Question 13

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 parties has first claim to proceeds from the house?

Accepted Answer

A)   The bank with the security interest.
B)   Suzy.
C)   Sam.
D)   Suzy and Sam with each having a 50% interest.
E)   The bank, Suzy, and Sam with each having a 1/3 interest.F) B) and D)
G) A) and C)

Question 14

A _____________ is a written federal court order signed by a bankruptcy judge stating that the debtor is immune from creditor actions to collect debts.

Accepted Answer

A)   Discharge
B)   Release
C)   Grant of immunity
D)   Relinquishment
E)   AbandonmentF) C) and E)
G) A) and D)

Question 15

Which of the following is true regarding the number of creditors who must vote to accept a reorganization plan under a Chapter 11 proceeding?

Accepted Answer

A)   For the plan to be accepted, one-third of the creditors of each class of creditors must vote to approve it.
B)   For the plan to be accepted, one-half of the creditors of each class of creditors must vote to approve it.
C)   For the plan to be accepted, two-thirds of the creditors of each class of creditors must vote to approve it.
D)   For the plan to be accepted, three-fourth of the creditors of each class of creditors must vote to approve it.
E)   For the plan to be accepted, one-fourth of the creditors of each class of creditors must vote to approve it.F) A) and E)
G) All of the above

Question 16

Perfection of a security interest in a motor vehicle generally occurs when the secured party files the interest with the state's Department of Motor Vehicles.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following chapters of the Bankruptcy Code is used for a sale of a debtor's assets by a trustee and the distribution of money to creditors?

Accepted Answer

A)   Chapter 7
B)   Chapter 9
C)   Chapter 11
D)   Chapter 13
E)   Chapter 15F) A) and D)
G) C) and D)

Question 18

Which of the following types of collateral must be perfected through possession?

Accepted Answer

A)   Certificates of deposit.
B)   Stocks.
C)   Bonds.
D)   Certificates of deposit, stocks, and bonds.
E)   There are no types of collateral that must be perfected through possession.F) C) and D)
G) A) and B)

Question 19

Which of the following may a buyer purchase in the ordinary course of business and obtain the goods free of any security interest so long as the buyer is unaware of any security interest in the good?

Accepted Answer

A)   Chattel paper.
B)   An instrument.
C)   An authorization.
D)   Chattel paper, instruments, and authorizations.
E)   Chattel paper and instruments, but not authorizations.F) A) and C)
G) B) and C)

Question 20

Which of the following titles of the United States Code contains the Bankruptcy Code?

Accepted Answer

A)   Title 9
B)   Title 11
C)   Title 7
D)   Title 15
E)   Title 34F) A) and B)
G) A) and C)

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

Which of the following types of collateral must be perfected through possession?

Correct Answer
verified

Which of the following chapters of the Bankruptcy Code recognizes insolvency proceedings pending in a foreign country and relief for foreign debtors?

Correct Answer
verified

Which of the following may a buyer purchase in the ordinary course of business and obtain the goods free of any security interest so long as the buyer is unaware of any security interest in the good?

Correct Answer
verified

Which of the following is true under the UCC if a buyer of a consumer good subject to purchase-money security interest later sells the good?

Correct Answer
verified

Which of the following is true under the UCC regarding a security interest in collateral that has been perfected in one state when the collateral is moved to another state?

Correct Answer
verified

Which of the following are examples of collateral?

Correct Answer
verified

Which of the following chapters of the Bankruptcy Code is used for a sale of a debtor's assets by a trustee and the distribution of money to creditors?

Correct Answer
verified

Which of the following is true regarding the number of creditors who must vote to accept a reorganization plan under a Chapter 11 proceeding?

Correct Answer
verified

Which of the following provides for adjustment of debts of family farmers?

Correct Answer
verified

A _____________ is a written federal court order signed by a bankruptcy judge stating that the debtor is immune from creditor actions to collect debts.

Correct Answer
verified

How is a determination made regarding the identity of the permanent trustee in a Chapter 7 proceeding?

Correct Answer
verified

Under the UCC, a buyer in the ordinary course of business can take goods free of any security interest created by the seller of the goods even if the security interest is perfected.

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Which of the following is true regarding the effect of an automatic stay on claims of secured creditors in a Chapter 7 proceeding?

Correct Answer
verified

Which of the following titles of the United States Code contains the Bankruptcy Code?

Correct Answer
verified

Perfection of a security interest in a motor vehicle generally occurs when the secured party files the interest with the state's Department of Motor Vehicles.

Correct Answer
verified

Which of the following cannot be forced into involuntary bankruptcy under Chapter 7?

Correct Answer
verified

A security interest may not apply to personal property that is not yet in the debtor's possession.

Correct Answer
verified

Set forth the steps that a creditor must take to become a secured party.

Correct Answer
verified
To become a secured party, the creditor ...
View Answer

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

Which of the following types of collateral must be perfected through possession?

Correct AnswerverifiedShow Answer

Which of the following chapters of the Bankruptcy Code recognizes insolvency proceedings pending in a foreign country and relief for foreign debtors?

Correct AnswerverifiedShow Answer

Which of the following may a buyer purchase in the ordinary course of business and obtain the goods free of any security interest so long as the buyer is unaware of any security interest in the good?

Correct AnswerverifiedShow Answer

Which of the following is true under the UCC if a buyer of a consumer good subject to purchase-money security interest later sells the good?

Correct AnswerverifiedShow Answer

Which of the following is true under the UCC regarding a security interest in collateral that has been perfected in one state when the collateral is moved to another state?

Correct AnswerverifiedShow Answer

Which of the following are examples of collateral?

Correct AnswerverifiedShow Answer

Which of the following chapters of the Bankruptcy Code is used for a sale of a debtor's assets by a trustee and the distribution of money to creditors?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the number of creditors who must vote to accept a reorganization plan under a Chapter 11 proceeding?

Correct AnswerverifiedShow Answer

Which of the following provides for adjustment of debts of family farmers?

Correct AnswerverifiedShow Answer

A _____________ is a written federal court order signed by a bankruptcy judge stating that the debtor is immune from creditor actions to collect debts.

Correct AnswerverifiedShow Answer

How is a determination made regarding the identity of the permanent trustee in a Chapter 7 proceeding?

Correct AnswerverifiedShow Answer

Under the UCC, a buyer in the ordinary course of business can take goods free of any security interest created by the seller of the goods even if the security interest is perfected.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true regarding the effect of an automatic stay on claims of secured creditors in a Chapter 7 proceeding?

Correct AnswerverifiedShow Answer

Which of the following titles of the United States Code contains the Bankruptcy Code?

Correct AnswerverifiedShow Answer

Perfection of a security interest in a motor vehicle generally occurs when the secured party files the interest with the state's Department of Motor Vehicles.

Correct AnswerverifiedShow Answer

Which of the following cannot be forced into involuntary bankruptcy under Chapter 7?

Correct AnswerverifiedShow Answer

A security interest may not apply to personal property that is not yet in the debtor's possession.

Correct AnswerverifiedShow Answer

Set forth the steps that a creditor must take to become a secured party.

Correct AnswerverifiedTo become a secured party, the creditor ...View AnswerShow Answer

Correct Answer
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To become a secured party, the creditor ...
View Answer