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Exam 13: Creditor-Debtor Relations and Bankruptcy

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Question 21

True/False

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A small-amount mechanic's lien typically stays on record until the property against which it has been filed is sold when it is paid out of the sale proceeds.

A) True
B) False

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Question 22

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In a Chapter 7 proceeding,if the value of the debtor's estate does not provide sufficient cash to pay all the creditors,it is given back to the debtor.

A) True
B) False

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Question 23

Multiple Choice

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Under Chapter 11,the debtor's obligations most likely to be discharged are

In a Chapter 7 bankruptcy,on a finding that the use of Chapter 7 would constitute substantial abuse,the court is most likely to

Because a writ of attachment is a prejudgment remedy,a debtor does not need to be given notice and an opportunity to be heard before the property is seized.

Petro Refinery asks Quality Bank for a loan to increase its inventory.Quality requires Rose,Petro's president,to sign a personal guaranty to pay the debt if Petro defaults.Rose is a guarantor.The guaranty is required to be in writing because

To purchase a house,Leo borrows funds from Metro Bank.The terms of the loan give the lender a security interest in the property being acquired by the borrower as security for payment of the debt.This is

Debts that remain after a liquidation are not discharged,and the debtor retains his or her obligation to pay them.

Recording a mortgage ensures that a creditor is officially on record as holding an interest in the property.

To qualify for a Chapter 7 bankruptcy,a debtor must complete a means test to determine whether the debtor has been living within his or her means.

Rancho West owes Silo & Barn Inc.$5,000 on their contract,but refuses to pay.To collect,Silo files a mechanic's lien,under which security for the debt is represented by

Building Company adds a shipping dock to the property of Corporate Complex,but the owner does not pay.Building files a lien on Corporate's property.The property

Anyone obligated to a creditor can declare bankruptcy.

In a Chapter 7 proceeding,unsecured creditors' claims are subordinate to the claims of secured creditors.

If a debtor's income falls below the median income in the area in which the debtor lives,there is a presumption of bankruptcy abuse.

Irma delivers her Jeep to be fixed at Kent's Auto Repair.Irma agrees to pay cash.Kent's performs,but Irma does not pay.Kent's keeps the Jeep until she pays.This is

Federal law provides a minimal framework to protect debtors from losing all their income in order to pay judgment debts.

The roof in Rosalyn's house springs a leak.She contracts with Shelter Roofing & Restoration Company to repair the roof and fix the damage to the house.Rosalyn pays 10 percent of the price in advance.Shelter Roofing does the work,but Rosalyn refuses to pay the rest of the price.What can Shelter Roofing do,and how is it done?

A Chapter 13 proceeding is more expensive and complicated than a Chapter 11 or Chapter 7 proceeding.

Refresh Inc.'s debt to Spring Water Company is past due.Spring brings a legal action against Refresh to collect the debt.Spring asks the court to order Tempo Bank,in which Refresh has an account,to pay a portion of the funds to Spring.This is a request for