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Exam 15: Creditor Debtor Relations and Bankruptcy

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Question 1

True/False

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Foreclosure is a process that allows a lender to legally repossess and auction off the property that is securing a loan.

A) True
B) False

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Question 2

True/False

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Any payment of the principal obligation by the debtor will discharge the surety or the guarantor from the obligation.

A) True
B) False

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Question 3

Multiple Choice

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Under Chapter 7, the primary effect of a discharge is to

If all classes of creditors accept the debtor's Chapter 11 plan, the court cannot refuse to confirm it.

Brew Pub's debt to Credit Service is past due. Credit obtains a judgment against Brew, but the firm refuses to pay. Credit asks the court to order the seizure of Brew's property. This is a request for

Brie, Cam, and Dei are co-sureties of Edie's debt to Finance LLC. Brie pays the entire debt. Her right of contribution entitles her to recover any amount paid above the surety's obligation from

Under Chapter 7, creditors are paid in a certain order of priority. The highest-priority class comprises claims for

Every state allows a defaulting borrower to redeem the property before the foreclosure sale.

Once a bankruptcy petition is properly filed, creditors can commence or continue most legal actions against the debtor to recover claims.

A voluntary petition in bankruptcy must include

Because the purpose of a Chapter 7 proceeding is to provide a debtor with a fresh start, a discharge under Chapter 7 frees a debtor of all of his or her debts.

Under Chapter 11, a plan to conserve and administer the debtor's assets must be submitted for acceptance and confirmation to

Under Chapter 7, a debtor who fails to appear at the creditors' meeting when required may be

In a Chapter 7 proceeding, the bankruptcy trustee collects the debtor's estate and reduces it to cash, preserving the interests of the debtor and creditors.

To buy a townhouse, Becky obtains a mortgage loan from Countywide Bank. The lender should record the mortgage to

In a few states, if a judgment debtor does not have a family, a creditor may be entitled to collect the full amount realized from the sale of the debtor's home.

Gina's creditors attempt to force her into bankruptcy proceedings. The creditors will be unsuccessful if Gina

To purchase a farmhouse, Clay obtains a mortgage loan from Debit Bank. Clay defaults on the payments on the loan. The bank has

Qian resides in a state that has a $50,000 homestead exemption. She defaults on a loan extended by Rely Bank, owing $60,000. Her home is sold at auction for $90,000. The creditor is entitled to

Coco and Delany borrow $110,000 from Employees Credit Union to buy a home. The loan is a fixed-rate mortgage at 3.38 percent with a thirty-year term, subject to an acceleration clause, and secured by the home. When the borrowers have paid off $10,000 of the mortgage-still owing $100,000, plus interest-they stop making payments. Meanwhile, the home's market value declines to $85,000. After six months, the lender decides to take steps to recover the unpaid amount of the loan. What are the lender's options? Which option seems most likely? Why? What steps are involved?