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The start of the bankruptcy process is:
A. the submission of a plan of repayment.
B. the bankruptcy court’s issuance of an order for relief.
C. a meeting of creditors.
D. the appointment of a trustee.
B
Edward bought a sports car from Luxury Imports by entering into a note and security agreement promising the car as collateral for the purchase money security interest. When Edward faced some tough financial times, he failed to make three monthly payments. Luxury Imports repossessed the car by removing the car wheels and advertised a public auction of the car. Edward appealed to his good friend Charles and managed to pay off the debt balance and Luxury’s expenses of repossessing and advertising the sale. Edward’s actions represent:
A. recollection.
B. redemption.
C. disposal of the collateral.
D. termination.
B
A payor bank is:
A. the same bank as the presenting bank.
B. a collecting bank that acts as an agent for the depositary bank.
C. the bank that will eventually honor or dishonor the check on the drawer's account.
D. interchangeable with the term "depositary bank."
C
All but which of the following may be used as collateral in a secured transaction under UCC Revised Article 9?
A. Bank deposit accounts.
B. Personal injury tort claims of individuals.
C. Tort claims of a corporation.
D. A computer program if, by purchasing a computer, the buyer of the computer acquires the right to use that embedded program.
E. Both b and c.
B
A Chapter 7 debtor's agreement to pay a creditor on a debt after receiving a discharge in bankruptcy is called a:
A. voidable preference.
B. reaffirmation.
C. payment plan.
D. all of the above terms refer to the same concept.
B
A thief stole Gilligan's ATM card, learned his identification number, and withdrew $600 from the bank account without authority. Gilligan notified the bank within two days after the card was stolen. Gilligan's liability is:
A. limited to $50 because he reported the theft within two days of discovering the theft.
B. limited to $500 because he reported the theft within 60 days of the theft.
C. limited to $50 because he reported the theft within 60 days of the theft.
D. unlimited, he suffers the loss of $600.
A
Grand Lighting Co. has filed a petition for voluntary bankruptcy under Chapter 7 of the Code. The following property will be exempt from the bankruptcy process:
A. work tools.
B. up to three company cars.
C. up to $20,200 in the value of the company’s real property.
D. All of the above.
E. None of the above.
E
If repossessed collateral is sold or otherwise disposed of by the creditor, the time, place, manner, and method of disposal must be:
A. commercially reasonable.
B. scheduled with the debtor so that the debtor is able to attend.
C. court ordered.
D. perfected.
A
A security interest in money may be perfected by:
A. filing a financing statement.
B. creating a PMSI.
C. possession only.
D. redemption.
C
According to the case In Re: John & Julie Hoffman, a court:
A. cannot approve a reaffirmation agreement under Chapter 7.
B. may void reaffirmation agreements under Chapter 13.
C. will approve a reaffirmation agreement provided there is proof that the debtor can make the required payments.
D. will approve a reaffirmation agreement if it is signed by a financial institution.
C
Without notifying his bank, Shabah wrote a postdated check to State University for his tuition. Which statement is correct?
A. Shabah's bank will be liable if it cashes the check before its date unless it gets permission from Shabah.
B. Shabah's bank will not be liable if it cashes the check before its date.
C. Shabah's bank cannot cash the check.
D. Shabah's bank can only make provisional credit available until the check's date.
B
In the case Kruser v. Bank of America, the Court held that:
A. the bank was liable under the Electronic Fud Transfer Act.
B. the bank was liable under UCC Section 4-105.
C. the bank was not liable under the Electronic Fud Transfer Act.
D. the bank was liable under the Consumer Protection Act.
C
Debts that cannot be discharged in bankruptcy, include all EXCEPT:
A. alimony.
B. income taxes.
C. negligence judgments.
D. fraud judgments.
C
If a bank does not return canceled checks to its customers, the bank must keep legible copies on hand for:
A. 30 days.
B. six months.
C. one year.
D. seven years.
D
On April 10, Amy agreed to buy a riding lawn mower from Mowers Plus, signing a promissory note and security agreement giving Mowers Plus a security interest in the mower. On April 15, Amy took delivery of the mower. On May 1, Mowers Plus filed a financing statement. Which of the following is correct?
A. Despite the agreement, Mowers Plus could not create a security interest in the mower since it is a consumer good.
B. Mowers Plus has had attachment of a security interest in Amy's mower.
C. Mowers Plus completed the attachment of a security interest in the mower when it filed the financing statement on May 1.
D. The security interest has not attached, but attachment is unimportant to enforceability of a security interest.
B
Kylie filed a Chapter 7 bankruptcy petition in which she exempted her home, valued at $125,000. Kylie can exempt her entire home from all creditors if:
A. she claims her exemptions under the federal Bankruptcy Code.
B. she lives in a state that allows for an exemption amount of $125,000 or more.
C. she lives in a state that allows an exemption amount of $125,000 or more, she has lived in that state for at least two years prior to the bankruptcy, and there are no secured creditors with perfected liens against the home.
D. None of the above.
C
Ramona has received a discharge in bankruptcy, but wants to reaffirm a debt to her sister. To be valid, the reaffirmation:
A. will be scrutinized by the court to make sure her sister has not unfairly pressured Ramona.
B. will be automatically disallowed because allowing Ramona to promise to pay a discharged debt would be contrary to the goals of the bankruptcy proceedings.
C. will be automatically allowed if Ramona voluntarily chooses to make it.
D. must clearly disclose that Ramona has the right to rescind at any time since the debt was already discharged.
A
Bill negligently ran his car into Philip, causing $50,000 in injuries. Bill was intoxicated at the time of the accident. Can Bill discharge this debt in bankruptcy?
A. Yes, claims based on negligence are dischargeable.
B. Yes, provided a court orders discharge.
C. No, such claims are not dischargeable in bankruptcy.
D. No, unless discharge is expressly requested in the petition.
C
The correct order of payment of claims from the debtor's estate would be:
A. secured claims, priority claims, unsecured claims.
B. secured claims, unsecured claims, priority claims.
C. priority claims, secured claims, unsecured claims.
D. priority claims, unsecured claims, secured claims.
A
Issam and James planned to spend spring break in Mexico. James was to make the final plans. To pay for the trip, Issam gave James a signed check that left the name of the payor and amount blank. Using Issam's check, James made the check out to himself for $500. Issam's bank paid the check not knowing that the completion was improper. The bank:
A. is liable because the instrument was forged.
B. is liable because the instrument was unauthorized.
C. is liable for half of the loss.
D. is not liable.
D
Wedney, Inc. sold a meat processing machine to Yoro Chickens, taking a security interest in the machine. Yoro Chickens defaulted on the loan. Wedney repossessed the machine. Wedney would like to retain the machine to use as a model. Which of the following statements is correct?
A. Wedney must notify the debtor that it intends to retain the machine and give Yoro 20 days to object.
B. By taking possession, Wedney automatically foreclosed on the collateral. Wedney has valid title and need do nothing else.
C. Since the machine is equipment, Wedney cannot retain the machine. Wedney must dispose of the collateral in a commercially reasonable manner.
D. Wedney can retain the machine but must pay Yoro the surplus, the difference between the fair market value of the machine and the amount of the debt.
A
Frank purchased a plasma TV with his store credit card. He later sold the TV to Greg. Frank defaulted on his payments to the store and declared bankruptcy. The store may:
A. repossess the TV as it has a security interest in it.
B. not repossess the TV if Greg shows he did not know about the security interest the store had in the TV.
C. not repossess the TV as security interests may not be attached to consumer goods.
D. repossess the TV as Frank’s title was void.
B
Country Bank, located in Indiana, loaned Chmelik $5,000 and obtained a security interest in a copyright Chmelik owns. Chmelik lives in Illinois, but works in Indiana. In order to perfect its interest, Country Bank files a financing statement in Indiana. The financing statement provides Chmelik’s correct name, his business address, and a reasonable description of the copyright used as collateral. Is the financing statement sufficient?
A. Yes, it meets the UCC requirements for contents and filing.
B. No, if the debtor is an individual, the secured party must file in the state of the debtor’s principal residence, which in this case would be Illinois.
C. No, the contents of the financing statement are incomplete.
D. Both b and c are correct.
D
Which of the following statements about a buyer in ordinary course of business (BIOC) is true?
A. The BIOC takes the goods and is liable for the attached security interest provided it has been perfected.
B. The BIOC takes the goods and is liable for the security interest if the goods are consumer goods.
C. The BIOC takes the goods free of a security interest even though the security interest is perfected.
D. None of the above is true.
C
Under the federal Bankruptcy Code, the exemption amount for the debtor's personal residence is:
A. $20,200.
B. $37,100.
C. unlimited.
D. $50,000.
A
Wombart Manufacturing sells a machine on credit to Cryslie Printing Co. Wombart insists on a security interest in the machine to:
A. give itself a legal interest in the machine.
B. give itself a legal interest in all of Cryslie’s property.
C. establish a priority claim in the machine ahead of other creditors of Cryslie.
D. Both a and c.
D
To perfect a security interest in a negotiable instrument, Second State Savings and Loan should:
A. file a financing statement.
B. take possession of the instrument.
C. do nothing. Perfection is automatic.
D. secure a court order.
B
Which of the following parties can defeat a perfected security interest?
A. A "buyer in ordinary course of business."
B. A buyer of consumer goods if the buyer is not aware of the security interest, gives value for the goods, will continue to use the goods as consumer goods, and the secured party has not filed a financing statement.
C. A buyer who purchases chattel paper or an instrument in the ordinary course of business, and then takes possession.
D. All of the above are correct.
D
Brandon owes Sadie $50. Brandon naively signs a blank check and tells Sadie to fill in the amount of $50. Sadie takes this opportunity to steal money from Brandon and fills the check in for $1000. Sadie then takes the check to the payor bank, cashes it, and is never heard from again. Which of the following is correct?
A. If the bank pays the check, it is liable for $950. This is an altered check, so Brandon is liable for the original tender of $50.
B. If the bank pays the check, it is not liable at all since Brandon bears the risk of loss for giving the signed, incomplete check to Sadie. The bank may be liable if it was on notice that the completion was improper.
C. If the bank pays the check, it is liable for $1000.
D. Brandon and the bank will share the loss; 50/50.
B
Danson Corp. sends 15 snow blowers by rail to Gene Hardware. To show where the goods will be shipped and who gets them when they arrive, Danson will obtain ____, which can be used as collateral in a secured transaction.
A. a warehouse receipt.
B. chattel paper.
C. a bill of lading.
D. a certificate of deposit.
C
x of y cards