Question 1

If a creditor is successful in a legal action against a debtor, the court will award the creditor a judgment lien.

Accepted Answer

A) True 
 B)False

Question 2

If a debtor refuses to pay an unsecured creditor, and the debtor is insolvent, the unsecured creditor collects:

Accepted Answer

A)   nothing
B)   one-half of the bill
C)   one-quarter of the bill
D)   the full amount of the bill, over time
E)   the bill plus associated attorney's feesF) C) and D)
G) A) and D)

Question 3

The law concerning liens is primarily:

Accepted Answer

A)   federal common law
B)   state law, either common or statutory
C)   federal statutory law
D)   administrative law
E)   regulatory lawF) C) and E)
G) A) and D)

Question 4

Don borrows $90,000 to buy a home. His mortgage is with Western Bank. Don is unable to make his mortgage payments. Western forecloses on Don's house and sells it in a judicial sale. The bank gets $95,000 for the house. In this case, it:

Accepted Answer

A)   must return the extra $5,000 to Don
B)   keeps the extra money to reimburse it for its expenses
C)   must pay the secretary of state for the expenses the office has incurred
D)   obtain a mechanic's lien against Don
E)   seize Don's personal property to satisfy its claimsF) All of the above
G) B) and E)

Question 5

There is a model United Nations bankruptcy law.

Accepted Answer

A) True 
 B)False

Question 6

Under a floating lien:

Accepted Answer

A)   specific collateral only is used
B)   when collateral is sold the lien expires
C)   new inventory is unavailable to replace old collateral
D)   real estate is the collateral used
E)   none of the other choicesF) B) and D)
G) C) and D)

Question 7

An evaluation of a person's financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan are all included in:

Accepted Answer

A)   pre-bankruptcy counseling
B)   pre-debit counseling
C)   creditor counseling
D)   real counseling
E)   financial counselingF) D) and E)
G) C) and D)

Question 8

An artisan's (possessory) lien attaches to personal property.

Accepted Answer

A) True 
 B)False

Question 9

Goods that are movable at the time a security interest attaches, or begins are classified as:

Accepted Answer

A)   notable property
B)   intangible property
C)   movable property
D)   insubstantial property
E)   none of the other choices are correctF) A) and B)
G) A) and E)

Question 10

The final stage of bankruptcy is known as:

Accepted Answer

A)   disruption in bankruptcy
B)   removal in bankruptcy
C)   distancing of the debtor
D)   discharge in bankruptcy
E)   divorce from the proceedingsF) B) and C)
G) None of the above

Question 11

As a creditor, a business should:

Accepted Answer

A)   determine the debtor' ability to repay
B)   establish debt collection practices
C)   determine how much capital it needs to borrow
D)   determine the debtor' ability to repay and establish debt collection practices
E)   all of the other specific choicesF) A) and E)
G) All of the above

Question 12

When filing for personal bankruptcy. A person is more likely to file for Chapter 13 rather than Chapter 7 if the debtor's income is:

Accepted Answer

A)   higher than the state average income
B)   lower than the state average income
C)   not related to the choice of kind of bankruptcy chosen
D)   expected to decline in future years
E)   none of the other choicesF) A) and B)
G) A) and E)

Question 13

If a negotiable instrument is transferred by negotiation, the transferee takes the instrument:

Accepted Answer

A)   with all of the transferor's rights and responsibilities
B)   free of the transferor's responsibilities
C)   with the duties that have been assigned to the instrument by the bearer
D)   with the rights that have been assigned to the instrument by the holder in due course
E)   none of the other choicesF) A) and B)
G) C) and D)

Question 14

Under ____ proceedings the debtor files a plan for payment of creditors over five years.

Accepted Answer

A)   Chapter 13
B)   Chapter 7
C)   Chapter 5
D)   Chapter 11
E)   Chapter 6F) D) and E)
G) A) and B)

Question 15

When a note is to be paid in regular payments but also includes a final payment more than double the regular payments, the note is called:

Accepted Answer

A)   an installment note
B)   a collateral note
C)   a payee note
D)   a maker note
E)   none of the other choicesF) C) and D)
G) A) and E)

Question 16

Promises to pay include drafts and checks.

Accepted Answer

A) True 
 B)False

Question 17

In the case of bankruptcy, which of the following classes of creditors have highest priority?

Accepted Answer

A)   federal taxes
B)   costs of preserving and administering the debtor's estate
C)   secured creditors
D)   rent claims
E)   general creditorsF) C) and D)
G) B) and E)

Question 18

The Brechers owned Contractors Source, which had a company account at Amegy Bank. Straten was a bookkeeper for Contractors. She stole money by forging check over 32 months. Amegy agreed that the checks were forgeries but argued that the terms of the account agreement said that forgeries must be reported within 30 days, so it was not responsible for most forgeries, as it had sent monthly statements that had not been checked. Under the UCC, is Amegy correct?

Accepted Answer

A)   ​No, banks are responsible for all forgeries when the signature does not match the authentic signature on file.
B)   ​No, banks are responsible for all forgeries that occur "in the normal course of business" as was true here.
C)   ​Yes, it paid the checks in good faith and could not reasonably be expected to compare signatures on all checks.
D)   ​Yes, it sent monthly statements, so the Brechers should have looked for problems.
E)   ​None of the other answers are correct.F) A) and C)
G) D) and E)

Question 19

Bankruptcy proceedings hold that transfers of debtor's property ____to the bankruptcy filing are void.

Accepted Answer

A)   up to 90 days prior
B)   up to 30 days prior
C)   up to 5 days prior
D)   up to 120 days
E)   up to 7 daysF) B) and E)
G) B) and C)

Question 20

Refer to Fact Pattern 12-1. Assume that once Gena defaults on her loan payments Marvin steps in and makes those payments for Gena. Once Marvin finishes paying off this debt, he may:

Accepted Answer

A)   seek reimbursement from First Fidelity
B)   seek reimbursement from Gena
C)   seek exoneration against Gena
D)   seek reimbursement from First Fidelity and seek exoneration against Gena
E)   seek reimbursement and exoneration from GenaF) A) and E)
G) B) and D)

Exam 13: Negotiable Instruments, Credit, and Bankruptcy

Promises to pay include drafts and checks.

Correct Answer
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Correct Answer
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If a negotiable instrument is transferred by negotiation, the transferee takes the instrument:

Correct Answer
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Don borrows $90,000 to buy a home. His mortgage is with Western Bank. Don is unable to make his mortgage payments. Western forecloses on Don's house and sells it in a judicial sale. The bank gets $95,000 for the house. In this case, it:

Correct Answer
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There is a model United Nations bankruptcy law.

Correct Answer
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The final stage of bankruptcy is known as:

Correct Answer
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When filing for personal bankruptcy. A person is more likely to file for Chapter 13 rather than Chapter 7 if the debtor's income is:

Correct Answer
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When a note is to be paid in regular payments but also includes a final payment more than double the regular payments, the note is called:

Correct Answer
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The law concerning liens is primarily:

Correct Answer
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Under a floating lien:

Correct Answer
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An artisan's (possessory) lien attaches to personal property.

Correct Answer
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If a creditor is successful in a legal action against a debtor, the court will award the creditor a judgment lien.

Correct Answer
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As a creditor, a business should:

Correct Answer
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In the case of bankruptcy, which of the following classes of creditors have highest priority?

Correct Answer
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Goods that are movable at the time a security interest attaches, or begins are classified as:

Correct Answer
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If a debtor refuses to pay an unsecured creditor, and the debtor is insolvent, the unsecured creditor collects:

Correct Answer
verified

An evaluation of a person's financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan are all included in:

Correct Answer
verified

Bankruptcy proceedings hold that transfers of debtor's property ____to the bankruptcy filing are void.

Correct Answer
verified

Refer to Fact Pattern 12-1. Assume that once Gena defaults on her loan payments Marvin steps in and makes those payments for Gena. Once Marvin finishes paying off this debt, he may:

Correct Answer
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Under ____ proceedings the debtor files a plan for payment of creditors over five years.

Correct Answer
verified

Exam 13: Negotiable Instruments, Credit, and Bankruptcy

Promises to pay include drafts and checks.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a negotiable instrument is transferred by negotiation, the transferee takes the instrument:

Correct AnswerverifiedShow Answer

Don borrows $90,000 to buy a home. His mortgage is with Western Bank. Don is unable to make his mortgage payments. Western forecloses on Don's house and sells it in a judicial sale. The bank gets $95,000 for the house. In this case, it:

Correct AnswerverifiedShow Answer

There is a model United Nations bankruptcy law.

Correct AnswerverifiedShow Answer

The final stage of bankruptcy is known as:

Correct AnswerverifiedShow Answer

When filing for personal bankruptcy. A person is more likely to file for Chapter 13 rather than Chapter 7 if the debtor's income is:

Correct AnswerverifiedShow Answer

When a note is to be paid in regular payments but also includes a final payment more than double the regular payments, the note is called:

Correct AnswerverifiedShow Answer

The law concerning liens is primarily:

Correct AnswerverifiedShow Answer

Under a floating lien:

Correct AnswerverifiedShow Answer

An artisan's (possessory) lien attaches to personal property.

Correct AnswerverifiedShow Answer

If a creditor is successful in a legal action against a debtor, the court will award the creditor a judgment lien.

Correct AnswerverifiedShow Answer

As a creditor, a business should:

Correct AnswerverifiedShow Answer

In the case of bankruptcy, which of the following classes of creditors have highest priority?

Correct AnswerverifiedShow Answer

Goods that are movable at the time a security interest attaches, or begins are classified as:

Correct AnswerverifiedShow Answer

If a debtor refuses to pay an unsecured creditor, and the debtor is insolvent, the unsecured creditor collects:

Correct AnswerverifiedShow Answer

An evaluation of a person's financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan are all included in:

Correct AnswerverifiedShow Answer

Bankruptcy proceedings hold that transfers of debtor's property ____to the bankruptcy filing are void.

Correct AnswerverifiedShow Answer

Refer to Fact Pattern 12-1. Assume that once Gena defaults on her loan payments Marvin steps in and makes those payments for Gena. Once Marvin finishes paying off this debt, he may:

Correct AnswerverifiedShow Answer

Under ____ proceedings the debtor files a plan for payment of creditors over five years.

Correct AnswerverifiedShow Answer

Correct Answer
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