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Question 1
MoCo has filed for bankruptcy protection by submitting its petition in bankruptcy to the court. However, one of its creditors continues to harass the company about suing the firm and sending collection agents to collect its security. If the lender engaged in such an act it would be:
Correct
Incorrect!
Correct Upon the filing of a petition in bankruptcy, the individual or company is now temporarily free from the activity of angry creditors. A court will not tolerate the harassment of a debtor that occurs during self-help repossession against a creditor that has filed for bankruptcy protection.
Incorrect! Upon the filing of a petition in bankruptcy, the individual or company is now temporarily free from the activity of angry creditors. A court will not tolerate the harassment of a debtor that occurs during self-help repossession against a creditor that has filed for bankruptcy protection.
Correct
Incorrect!
Correct
Incorrect!
Question 2
Jimmy has been forced into bankruptcy by his creditors. Such a bankruptcy is apt to be:
Correct
Incorrect!
Correct
Incorrect!
Correct A filing which is forced on a debtor by its creditors is known as an involuntary filing. This is typical in Chapter 7 filings, less common in Chapter 11 fillings, and not allowed in Chapter 13 filings. Such an action on the part of a creditor is generally undertaken to ensure that the debtor does not waste or otherwise hide its assets from the creditor or the courts.
Incorrect! A filing which is forced on a debtor by its creditors is known as an involuntary filing. This is typical in Chapter 7 filings, less common in Chapter 11 fillings, and not allowed in Chapter 13 filings. Such an action on the part of a creditor is generally undertaken to ensure that the debtor does not waste or otherwise hide its assets from the creditor or the courts.
Correct
Incorrect!
Question 3
Toby is the trustee in bankruptcy of NoMoCo. Which of the following tasks is he allowed to do in his attempts to satisfy creditors:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct A trustee in bankruptcy is given fairly wide latitude in his administration of the bankruptcy estate. He or she will have pretty much free reign over the assets transferred into the property of the bankruptcy estate and may act by whatever means he sees fit (so long as they are legal) to ensure that creditors are satisfied to the full extent possible. Additionally, the order in a bankruptcy's priority is such that the trustee of the bankruptcy is allowed to subtract his fee first to insure that individuals and companies will continue to act in that capacity.
Incorrect! A trustee in bankruptcy is given fairly wide latitude in his administration of the bankruptcy estate. He or she will have pretty much free reign over the assets transferred into the property of the bankruptcy estate and may act by whatever means he sees fit (so long as they are legal) to ensure that creditors are satisfied to the full extent possible. Additionally, the order in a bankruptcy's priority is such that the trustee of the bankruptcy is allowed to subtract his fee first to insure that individuals and companies will continue to act in that capacity.
Question 4
Doris, the trustee in bankruptcy of GoneFishin', Inc. has begun paying off creditors from the bankruptcy property. One creditor in particular has been troublesome and annoying to the other creditors. As such, Doris decides to pay off that creditor first to insure that the rest of the process goes smoothly. Such an action by Doris would be:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct The bankruptcy code makes it abundantly clear that a trustee in bankruptcy is not allowed to favor one creditor over any other creditor. While it might be possible that a release by all the other creditors and the court would allow Doris to perform this act, it is much more likely that a court would simply silence the creditor rather than cause inequity in the liquidation process. This rule is generally engineered to ensure that a trustee does not favor one creditor over another in a manner that generates inequity in the creditor group by favoring a creditor who is preferred, for whatever reason, by the trustee.
Incorrect! The bankruptcy code makes it abundantly clear that a trustee in bankruptcy is not allowed to favor one creditor over any other creditor. While it might be possible that a release by all the other creditors and the court would allow Doris to perform this act, it is much more likely that a court would simply silence the creditor rather than cause inequity in the liquidation process. This rule is generally engineered to ensure that a trustee does not favor one creditor over another in a manner that generates inequity in the creditor group by favoring a creditor who is preferred, for whatever reason, by the trustee.
Question 5
At the meeting between the creditors and the trustee, which of the following items will occur?
Correct
Incorrect!
Correct In the initial meeting between creditors and the trustee, each creditor is required to submit proof of the debt owed by the debtor. This meeting is conducted without the court's presence. Additionally, while the debtor will be given the opportunity to once again hear his rights under the bankruptcy rules, he will not be given the opportunity to alter his filing at this time.
Incorrect! In the initial meeting between creditors and the trustee, each creditor is required to submit proof of the debt owed by the debtor. This meeting is conducted without the court's presence. Additionally, while the debtor will be given the opportunity to once again hear his rights under the bankruptcy rules, he will not be given the opportunity to alter his filing at this time.
Correct
Incorrect!
Correct
Incorrect!
Question 6
Steve has filed for bankruptcy protection under Chapter 7. However, in making his filing, he failed to include one of the debts he owed to his former employer. Because the employer no longer had any regular contact with Steve, he was unaware of the filing and failed to give proof of claim to the trustee. Because of this:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct Because it was Steve's fault to include the debt, the court will not discharge the debt against Steve upon the completion of the bankruptcy. While in some situations, a court may grant leave either to the debtor or the creditor to amend the filing in order to include the debt, there is no guarantee that such leeway will be given.
Incorrect! Because it was Steve's fault to include the debt, the court will not discharge the debt against Steve upon the completion of the bankruptcy. While in some situations, a court may grant leave either to the debtor or the creditor to amend the filing in order to include the debt, there is no guarantee that such leeway will be given.