M1 Bankruptcy: Part 1 Flashcards
MCQ-01343
Under Chapter 7 of the federal Bankruptcy Code, what effect does a bankruptcy discharge have on a judgment creditor when there is no bankruptcy estate?
The debtor is relieved of any personal liability to the judgment creditor.
Under Chapter 7, a discharge discharges most debts of a debtor, whether or
not there is a bankruptcy estate from which to pay the debts.
MCQ-01345
A family farmer with regular annual income may file a voluntary petition for bankruptcy under any of the following Chapters of the federal Bankruptcy Code, except:
9
Chapter 9 is for municipal debt adjustment; a family farmer cannot seek relief under this chapter.
MCQ-10971
A reorganization under Chapter 11 of the federal Bankruptcy Code requires all of the following, except the:
Liquidation of the debtor.
There is no requirement of liquidation in a reorganization.
MCQ-08646
Which of the following types of debtor are not eligible for relief under Chapter 11 of the Bankruptcy Code?
Stockbrokers
Although both individuals and corporations are generally eligible for relief under Chapter 11, stockbrokers are specifically excluded.
MCQ-10977
Under Chapter 11 of the federal Bankruptcy Code, which of the following would not be eligible for reorganization?
Savings and loan corporation
Savings and loan corporations may not participate in Chapter 11 (or Chapter 7) bankruptcy proceedings.
MCQ-01888
Filing a valid petition in bankruptcy acts as an automatic stay of actions to:
- Garnish the debtor’s wages
- Collect alimony from the debtor
Yes; No
The “automatic stay” created upon filing a petition in bankruptcy stops any attempt by creditors to collect through the garnishment of the debtor’s wages. However, the
automatic stay does not stop the collection of alimony.
MCQ-01892
The filing of an involuntary petition in bankruptcy:
Stops the enforcement of a judgment lien against property in the bankruptcy estate.
The filing of a petition in bankruptcy (voluntary or involuntary) stops the enforcement of all judgment liens and collection actions against the debtor (called “automatic stay”).
MCQ-10970
Which of the following conditions, if any, must a debtor meet to file a voluntary bankruptcy petition under Chapter 7 of the federal Bankruptcy Code?
- Insolvency
- Three or more creditors
No; No
A debtor need not be insolvent to file a voluntary petition under Chapter 7. Although the debtor’s income may not exceed certain specified levels, insolvency is not a
requirement. Additionally, there is no requirement of 3 creditors in a voluntary petition. An involuntary petition requires at least 3 creditors to file if the debtor has 12 or more creditors.
MCQ-15637
Which of the following requirements must be met for creditors to file an involuntary bankruptcy petition under Chapter 7 of the federal Bankruptcy Code?
The debtor has not been paying its bona fide debts as they become due.
An involuntary petition for bankruptcy can be filed if a debtor owes more than $18,600 in unsecured debt and is not paying its debts as they become due.
MCQ-08884
Under the federal Bankruptcy Code, an involuntary petition in bankruptcy may not be filed against
which of the following parties?
A farmer
Farmers and nonprofit charities cannot be petitioned involuntarily into bankruptcy.
MCQ-10969
A debtor owes a total of $40,000 to three secured creditors and a total of $100,000 to 15 unsecured creditors. The debtor has not been paying debts as they become due. Which of the following requirements must be met for the debtor’s creditors to file an involuntary bankruptcy petition under Chapter 7 of the federal Bankruptcy Code?
At least three unsecured creditors must join in the petition.
If a debtor is not paying debts as they become due and and has 12 or more unsecured creditors, at least three of the unsecured creditors who together are owed at least
$18,600 must join to bring an involuntary petition
MCQ-10972
Which of the following statements is correct with respect to the reorganization provisions of Chapter 11 of the federal Bankruptcy Code?
The commencement of a bankruptcy case may be voluntary or involuntary.
Under Bankruptcy Code Section 303, creditors may petition a debtor involuntarily into a Chapter 11 bankruptcy reorganization proceeding.
MCQ-15638
A contested involuntary petition in bankruptcy will be dismissed if the debtor:
Is an individual engaged in the business of farming.
An individual engaged in the business of farming cannot be involuntarily petitioned into bankruptcy
MCQ-01348
Under the liquidation provisions of Chapter 7 of the U.S. Bankruptcy Code, certain property acquired by the debtor after the filing of the petition becomes part of the bankruptcy estate. An example of such property is:
Inheritances received by the debtor within 180 days after the filing of the petition.
The estate includes income generated from estate property and property the debtor receives from a bequest, devise, inheritances, property settlement, divorce, or beneficial
interest in life insurance within 180 days after filing of the petition.
MCQ-01350
Under the liquidation provisions of Chapter 7 of the federal Bankruptcy Code, certain property acquired by the debtor after the filing of the petition becomes part of the bankruptcy estate. An example of such property is:
Municipal bond interest received by the debtor within 180 days after the filing of the petition.
The bankruptcy estate includes property the debtor receives from a bequest, devise, inheritance, property settlement, divorce decree or beneficial interest in a life insurance
policy or death benefit plan within 180 days after the filing of the petition. In addition, the estate includes any income generated by estate property (rents, interest and dividends) after the petition is filed. Earned income after the case commences is generally excluded.
MCQ-01883
Which of the following assets would be included in a debtor’s bankruptcy estate in a liquidation proceeding?
Proceeds from a life insurance policy received 90 days after the petition was filed.
Proceeds from life insurance, inheritance or divorce settlement received within 180 days after the filing of the petition are included in the estate.
MCQ-10968
Under the liquidation provisions of Chapter 7 of the federal Bankruptcy Code, which of the following statements applies to a person who has voluntarily filed for and received a discharge in bankruptcy?
The person must surrender for distribution to the creditors amounts received as an inheritance, if the receipt occurs within 180 days after filing the bankruptcy petition.
The bankruptcy estate is deemed to include money inherited within 180 days after the bankruptcy petition is filed.
MCQ-10985
A debtor who filed voluntarily and received a discharge in bankruptcy under the provisions of Chapter 7 of the federal Bankruptcy Code:
Must surrender for distribution to the creditors any amount received as an inheritance if received within 180 days after filing the petition.
An inheritance received within 180 days after filing of the petition must be surrendered for distribution to the creditors.
MCQ-15449
Deft, CPA, is an unsecured creditor of Golf Co. for $19,000. Golf has a total of 10 creditors, all of whom are unsecured. Golf has not paid any of the creditors for three months. Under Chapter 11 of the U.S. Bankruptcy Code, which of the following statements is correct?
Deft may file an involuntary petition in bankruptcy against Golf.
When there are fewer than 12 unsecured creditors, any one creditor who is owed at least $18,600 (as adjusted for inflation) in unsecured debt or more may file an involuntary petition in bankruptcy.
MCQ-10987
Flax, a sole proprietor, has been petitioned involuntarily into bankruptcy under the federal Bankruptcy Code’s liquidation provisions. Simon & Co., CPAs, has been appointed trustee of the bankruptcy estate. If Simon also wishes to act as the tax return preparer for the estate, which of the following
statements is correct?
Simon may employ itself to prepare tax returns if authorized by the court and may receive a separate fee for services rendered in each capacity.
A court appointed trustee may serve as both a trustee of an estate and also be its tax return preparer if authorized by the court. The CPA may receive a separate fee for services
rendered in each capacity
MCQ-05033
Karen sells her one-year-old sports car to her mother for $100. The next week, Karen files for bankruptcy under Chapter 7. Regarding the sale of the car, the trustee may:
Cancel it as a fraudulent transfer.
Transfers made within two years of the filing date with an intent to hinder, delay, or defraud creditors or any transfer where the debtor received less than equivalent value while
the debtor was insolvent are fraudulent transfers and may be set aside by the trustee. A one year old car typically is worth far more than $100, and because Karen filed for bankruptcy the next week, she likely was insolvent when she made the transfer.
