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Exam 13: Creditor-Debtor Relations and Bankruptcy

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Question 31

Multiple Choice

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Paxton agrees to pay QuikChek Lenders a debt that is otherwise dis-chargeable in bankruptcy.This is

A) a reaffirmation.
B) a rescission.
C) a reorganization.
D) a revocation.

E) A) and D)
F) All of the above

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Question 32

Multiple Choice

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Roland files a petition in bankruptcy.After all his assets have been sold and the proceeds distributed among his creditors, Roland's remaining debts

A) are discharged.
B) will be paid by the court.
C) must be paid by Roland.
D) are put on hold until Roland has sufficient means to pay ths.

E) B) and C)
F) B) and D)

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Question 33

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Beatrix defaults on a debt to Credit Loan Corporation (CLC) .As a creditor, CLC can place liens on all of Beatrix's property except

Foreclosure is the legal process by which a lender repossesses and auctions off property that has secured a loan.

If a homeowner defaults, or fails to make the mortgage payments, the lender has the right to foreclose on the mortgaged property.

A court awards a judgment to Loan Collection Agency, who is the creditor, against Margret, who is the debtor.After the judgment, the creditor requests a court order to seize Margret's property to ensure that the judgment will be collectible.This is

In a repayment plan case, the plan must provide for payment of all obligations in full.

Philo files a petition in bankruptcy for relief through an individual's repayment plan.He is granted a discharge.Debts that will not be discharged include claims for

The lender does not have to strictly comply with the state statute governing foreclosure-substantial compliance is sufficient.

Fleet Trucking, LLC, buys a white van from Go Motors, Inc., on credit under a guaranty signed by Herbie, Fleet's president, making him personally liable if the company does not pay.Herbie is

Liens generally take priority over other claims against the same property.

Federal Bank is a secured party on a $50,000 loan to Gigi, who owns Home HealthCare, an assisted living facility.When Gigi experiences financial difficulty, creditors other than Federal Bank petition her into involuntary bankruptcy.The value of the secured collateral has substantially decreased in value.On its sale, the debt to Federal Bank is reduced to $25,000.Gigi's estate consists of $100,000 in exempt assets and $20,000 in nonexempt assets.After the bankruptcy costs and back wages to Gigi's employees are paid, nothing is left for unsecured creditors.Gigi receives a discharge in bankruptcy.Later she decides to go back into business.By selling a few exempt assets and getting a small loan, she is able to buy Indulgence, a small, profitable nightclub.Gigi goes to Federal Bank for the loan.The bank claims that the balance of its secured debt was not discharged in Gigi's bankruptcy.She signs an agreement to pay Federal Bank the $25,000, and the bank makes a new unsecured loan to her.Is Federal Bank correct that the balance of its secured debt was not discharged in bankruptcy? What is the legal effect of Gigi's agreement to pay the bank $25,000 after the discharge in bankruptcy?

One goal of bankruptcy law is to ensure equitable treatment of creditors who are competing for a debtor's assets

In the distribution of the debtor's estate, unsecured creditors take priority over secured creditors.

George borrows funds from Hometown Credit Union (HCU) to buy real property.George signs a written instrument that gives HCU an interest in the property as security for the debt's payment.This is

The clerk of a bankruptcy court must provide consumer-debtors with information on the types of services available from credit counseling agencies.

In a Chapter 11 case, the court cannot confirm a reorganization plan over the objections of a class of creditors.

Nell's debt to Olsen is past due.Olsen obtains an order of garnishment to require Nell's employer Pro Transmission Service, Inc., to pay part of Nell's paycheck to Olsen.The law

If a debtor does not pay a mechanic's lien, the debtor's property can be sold to sat-isfy the debt.

If a creditor wins a judgment against a debtor and the debtor will not or cannot pay the amount due, the dispute is at an end.