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Exam 15: Creditor Debtor Relations and Bankruptcy

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Question 41

True/False

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If a debtor's income falls below the median income in the area in which the debtor lives, bankruptcy abuse will be presumed.

A) True
B) False

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Question 42

Multiple Choice

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

A) taxes accruing within the last three years.
B) claims based on the debtor's willful or malicious conduct or fraud.
C) none of the choices.
D) domestic-support obligations.

E) A) and B)
F) B) and C)

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Question 43

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Because the homestead exemption interacts with other areas of the law that relate to creditors' rights and remedies, it can sometimes operate to cancel out

Retail Stores Inc. wants to agree with its creditors on a plan under which it pays a portion of its debt and is discharged of the rest. To accomplish this goal, the corporation should file a petition in bankruptcy under Chapter 11 for relief through

Rashi is a student at State University. To pay tuition, Rashi asks Tempo Loans Inc. for a short-term loan. The lender agrees to make a loan if Rashi will have someone who is financially responsible guarantee the loan payments. Upton, a well-known businessperson and a friend of Rashi's family, calls Tempo and agrees to pay the loan if Rashi cannot. Because of Upton's reputation, the loan is made. Rashi is making the payments, but because of illness he is unable to work for one month. He asks Tempo to extend the loan for three months. The lender agrees, raising the interest rate for the extended period. Upton is not notified of the extension (and thus does not consent to it). One month later, Rashi drops out of school. All attempts to collect the remainder of the loan from Rashi fail. Can Tempo assert a claim against Upton on the debt?

Bach borrows funds from City Bank to pay his tuition. Dvorak co-signs the credit application. After the loan agreement is signed, Bach agrees to a higher rate of interest without telling Dvorak, who is thereby

A mortgagor need not obtain the mortgagee's permission for a short sale.

Equipment Company holds a lien on Fertile Farm's equipment. The equipment can be sold to satisfy the debt

The purpose of a homestead exemption is to ensure that a debtor will retain some form of shelter.

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

A mortgage gives a creditor a lien on a debtor's real property as security for payment of a debt.

Under Chapter 13, after the completion of all payments under the plan, the court will grant a discharge of