Exam Review SU#20

Question 1

The bonds that are an obligation to a surety is

Answer 1

Official Bonds: a statute may require public officers to provide bonds to secure the appropriate performance of their duties. The surety is obligated for losses caused by the negligence or nonperformance of the official

Question 2

What rights does one cosurety have against another cosurety

Answer 2

Contribution: is the right of a cosurety who has paid more than her proportionate or agreed-to share to proceed against the other cosureties

Question 3

Under Chapter 11 of the Bankruptcy Code

Answer 3

Creditors & shareholders accept, not confirm plans for reorganization. Confirmation is performed by the bankruptcy court. The holders of more than 50% of the creditors claims representing at least 2/3 of the dollar amount of the claims must accept. A class of equity shareholders accepts the plan if holders of at least 2/3 in dollar amount of the interest approve the plan.

Question 4

A mortgagor’s right of redemption will be terminated by a judicial foreclosure sale unless

Answer 4

The jurisdiction has enacted a statutory right of redemption which provides the mortgagor with the opportunity to repurchase the property after the foreclose sale, for a certain period not exceeding 1 year

Question 5

Which events will release a surety from liability

Answer 5

Modification by the principal debtor & the creditor of their contract that fundamentally increases the surety’s risk of loss or creates a substituted contract operates to release a surety from liability unless she consents to the modification

Question 6

Which statement describes the effect of the entry of the court’s final decree under chapter 11

Answer 6

an entity is granted chapter 11 status will be discharged from its debts & liabilities that occurred prior to the confirmation of the plan. The effect of confirmation is to make the plan binding on all parties and to grant the debtor a discharge from claims not protected by the plan

Question 7

Artisan’s & mechanic’s liens have

Answer 7

priority over all other security interests in property, unless a statute expressly provides otherwise

Question 8

Consent of creditors is

Answer 8

NOT required of assignment and is similar to a composition

Question 9

Bankruptcy is

Answer 9

a formal alternative means of resolving the conflict between creditor rights and debtor relief. The objectives are to ensure that

1. debtor assets are equitably distributed to creditors
2. the debtor is given a fresh start

Question 10

A secured creditor may

Answer 10

petition the court to recognize the priority of the existing security interest and to grant relief from the automatic stay, thus permitting foreclosure

Question 11

Abuse is found when

Answer 11

1. the debtor does not pass the means test

2. general grounds exist for the finding

Question 12

The estate consists of

Answer 12

all debtor’s nonexempt legal & equitable interests in property at the beginning of the case

Question 13

Which debtors are eligible for exemptions

Answer 13

Only individual debtors, not corporations

Question 14

The trustee can void a transfer of preferential assets that occurred within

Answer 14

90 days prior to filing the petition

Question 15

Tradespeople who extend unsecured credit in the ordinary course of business after filing of an involuntary petition

Answer 15

have priority over unsecured general creditors

Question 16

In Chapter 7

Answer 16

certain debts are not covered bay a chapter 7 discharge, they remain binding on the debtor but do not preclude a general discharge

Question 17

A discharge previously granted may be revoked within

Answer 17

1 year if the trustee or a creditor proves that

1. the discharge was obtained fraudulently
2. the debtor knowingly & fraudulently retained property of the estate
3. the debtor failed to obey a court order

Question 18

Chapter 13 provides for

Answer 18

adjustments of debts of an individual. Its focus is on payment from future income. Thus, it may be preferable to liquidation because the debtor often is able to retain more assets

Question 19

A grantor is

Answer 19

secondarily liable for the debtor’s obligation

Question 20

The following defenses are available to the debtor but not the surety

Answer 20

1. The debtors incapacity due to infancy or mental incompetence
2. Discharge of the debtors obligation in bankruptcy
3. A debtors claim against the creditor for set-off

Question 21

A surety is

Answer 21

primarily liable for the debtors obligation. A creditor may proceed directly against the surety upon default. A guarantor has secondary liability;

Question 22

A claim will not be discharged in a bankruptcy proceeding if it

Answer 22

Arises from an extension of credit based upon false representation

Question 23

The bankruptcy estate consists of

Answer 23

all the debtors legal & equitable interests in

1. Property
2. Life insurance proceeds
3. Property from divorce settlements
4. inheritances received within 180 days of the commencement of bankruptcy proceedings

Question 24

Under the federal bankruptcy code, which rights or powers does a trustee in bankruptcy NOT have

Answer 24

1. The right to avoid any statutory liens against the debtor’s property that were effective before the bankruptcy petition was filed

Question 25

When a principal debtor defaults & a surety pays the creditor the entire obligation, the remedies available to the surety are

Answer 25

Subrogation: is the right to succeed to the legal rights of the creditor against the principal debtor, cosureties, or any collateral