COMM LAW EXAM 4 PDF

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Professor Hunter's 4th exam with answers. Graded B+....

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MARK EACH STATEMENT TRUE OR FALSE. IF A STATEMENT IS FALSE, CORRECT IT TO BE TRUE BY PROVIDING THE CORRECT INFORMATION. YOU MAY SIMPLY NOT PUT THE WORD "NOT" IN FRONT OF A STATEMENT TO MAKE IT TRUE! USE AS FEW WORDS AS POSSIBLE…. PREFERABLY A SHORT STATEMENT IN MOST CASES!!!!

1. An administrator is the name of the person appointed to oversee a bankruptcy case. False: An administrative process is carried out by a TRUSTEE who is appointed to oversee such cases. – 1. The Process 2. A meeting of creditors is typically called a "Section 8" hearing. False: A meeting of creditors is informally called a “341 MEETING” because of section 341 of the Bankruptcy Code. – 1. The Process 3. An "absolvement" relieves a party from personal liability for specific debts. False: A “DISCHARGE” relieves a party from person liability for specific debts, also known as a “fresh start”. -3.6 Chapter 7 Discharge 4. A “fresh start” applies to giving a creditor extra time to pursue a debtor. False: “Fresh start” applies to discharge, releasing individuals from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. -3.6 Chapter 7 Discharge 5. Even after a bankruptcy proceeding, a creditor may generally continue to pursue a debtor to collect discharged debts. False: Once filing the petition, there is an automatic stay against the debtor. People who are owed money cannot initiate lawsuits or harass you regarding payments or wage garnishments, provided that the creditors name was listed on the petition. Once discharged, that’s it. -3.3 Chapter 7 Procedures, 3.6 Chapter 7 Discharge 6. A secured creditor will generally have no special status in a bankruptcy liquidation. False: Secured creditors are paid first in a bankruptcy liquidation. They may retain some rights to seize property securing an underlying debt even after a discharge is granted. They may also enforce a lien to recover the property secured by the lien in the event that a valid lien has not been avoided in the bankruptcy case. 7. A "means test" is never a part of a bankruptcy proceeding. False: The bankrupt party has to file to see if they are actually bankrupt via the Bankruptcy Code’s requirement of a “means” test to determine whether the chapter 7 filing is presumptively

abusive. In this, the court will acquire what exactly the party has in assets, and if there are too many the court will not let them file under a chapter 7 bankruptcy. 8. Under a Chapter 14 bankruptcy, an individual debtor is permitted to propose a "plan" to repay creditors. False: Under a CHAPTER 13 bankruptcy, it allows the debtor to propose a “plan” to repay creditors over time, usually 3-5 years. -4. Chapter 13 9. A Chapter 13 debtor will normally cede possession of property to a court appointed third party. False: Chapter 13 debtors usually remain in possession of the property of estate and makes payments to creditors through the trustee. 10. In a Chapter 7 proceedings, a debtor may receive a discharge provided that the debtor makes a "good faith" effort to meet the requirements of the liquidation plan, even if the plan is not “technically” complied with. False: The court will deny a Chapter 7 discharge if the debtor previously received a discharge in a Chapter 12 (designed for family farmers and fishermen) or Chapter 13 case filed within six years before the date of the filing of the second case unless (1) the debtor paid all “allowed unsecured” claims in the earlier case in full, or (2) the debtor made payments under the plan in the earlier case totaling at least 70 percent of the allowed unsecured claims and the debtor’s plan was proposed in good faith and the payments represented the debtor’s best effort. 11. A Chapter 11 Reorganization filing will result in the immediate closure of a business in order to satisfy business creditors. False: Under Chapter 11, the debtor normally goes through a period of consolidation and emerges with a reduced debt load and a reorganized business. Under the confirmed plan, the debtor can reduce its debts by repaying a portion of its obligations and discharging others. 12. A debt not "listed" or "scheduled" will nevertheless be discharged as long as the failure to list the debt was not the result of negligence. False: One of the most common types of non-dischargeable debts are debts not set forth by the debtor on the lists and schedules the debtor must file with the court, called non-scheduled debts. -6.1 13. A debt incurred as a result of negligence is the type of debt that is not dischargeable. TRUE 14. A debt incurred as a result of the operation of a motor vehicle while the debtor is intoxicated is nevertheless dischargeable. False: Congress has determined that such types of debts are NOT dischargeable for public policy reasons such as the nature of the debts or the fact that the debts were incurred due to improper behavior of the debtor, such as drunken driving.

15. In general, a debt incurred for a government funded educational loan is dischargeable for the cost of graduate but not undergraduate education. False: One of the most common types of non-dischargeable debt is debts for most government funded or guaranteed educational loans, but not private loans. – 6.1 16. A debtor is not required to complete a course in "personal financial management" as a condition of a Chapter 7 discharge if the debtor can show proper educational credentials, such a degree from a business school, attendance in a course offered by Professor Hunter, or five years of financial experience. False: The court may deny a Chapter 7 discharge for any of the reasons described in section 727(a) of the Bankruptcy Code, including failure to complete a course on personal financial management which is required to teach them how to use their money post-bankruptcy. 17. A court may not take an action against a creditor who attempts to collect a debt after a discharge has been granted. False: A discharge is a permanent order prohibiting creditors from attempting to collect debt after the discharge is granted, therefore, the court can take action against said creditor if the debtor files a motion reporting the action and asking that the case be reopened. A creditor can be sanctioned by the court for violating the discharge injunction. The normal sanction for violating the discharge injunction is civil contempt, which is often punishable by a fine. 18. Only an individual may file for bankruptcy under Chapter 7. False, any person or company that owns property, businesses, or permanent residence can file for chapter 7 bankruptcy. To qualify for relief under Chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. 19. Exempt property is defined exclusively under federal law. False: The Bankruptcy Code allows an individual debtor to protect some property from the claims of creditors because it is exempt under federal bankruptcy law or under the laws of the debtor’s home state 20. In the case of a Chapter 7 filing, a creditor may still pursue a debtor so long as the "notice to collect" has been filed prior to the Chapter 7 filing. False?: To object to the debtor’s discharge, a creditor must file a complaint in the bankruptcy court before the deadline set out in the notice. Filing a complaint starts a lawsuit referred to in bankruptcy as an “adversary proceeding.” The court may deny a Chapter 7 discharge. There is no such notice to collect. 21. A preferential transfer is defined as one made to a creditor within one year of the filing of the bankruptcy petition. False: The preferential transfer period is within 90 DAYS before the petition. 22. A secured creditor has no preference among the creditors of a debtor.

I don’t think I understand this question, but False? Secured Creditors are first in line in the order of repayment. It would be preferential if there was a floating lien. 23. A creditor may reaffirm a debt after having been granted a discharge by the bankruptcy court. False: Secured creditors have some rights to seize property securing an underlying debt after discharge is granted. If a debtor wants to keep certain secured property, they can “reaffirm” the debt BEFORE the discharge is entered. 24. Recording of a mortgage is accomplished by placing a notice in an acceptable legal publication or newspaper. False: Recording of a mortgage is either in the grantor-grantee index or in the Torrens system, and are normally recorded on the deed. 25. A secured creditor may select a property of similar value for re-possession upon default. False: The secured creditor can effect repossession of the collateral without judicial process so long as the repossession does not “breach the peace.” All property subject to the security agreement must be described sufficiently to identify it. 26. An interest in real property is completed upon the execution of a mortgage- filing is not required. False: in order to protect the interests of the lender or mortgagee, the common law requires that a mortgage must exist and the mortgage must be properly recorded. Today, the most important “place” for filing is the location of the debtor, meaning, the state of residence of the debtor or where the debtor is organized if the debtor is a business. 27. Intangible personal property includes "goods" that are both movable and tangible. False: Intangible personal property includes such assets as accounts receivable, promissory notes, securities (such as stocks and bonds), letters of credit (dealing with the PAYMENT FOR GOODS, often involving international business), and other interests. 28. A security interest must always be specific and would never include what may be termed as a "floating lien." False: If a creditor takes a security interest in virtually all of the property of the debtor, this is known as a blanket security interest. The security interest may also take the form of a “floating lien” over inventory. 29. A financing statement is generally known as a "UCC Form X." False: The most common method of perfection is by filing the financing statement called the UCC 1. 30. The location of collateral is the most important focus of perfection under the Revised Article 9.

False: Today, the most important “place” for filing is the location of the debtor, meaning, the state of residence of the debtor or where the debtor is organized if the debtor is a business. 31. The UCC-1 will remain effective for a three year period. False: a UCC 1 is valid for 5 YEARS. 32. In terms of financial instruments, the secured party may not take possession of the instrument. False: Article 9 permits perfection of a security interest by possession; that is, the creditor will take physical possession of an instrument or other property. 33. Repossession of collateral must always be accomplished with the assistance of a judicial officer. False: If a creditor makes an unsecured loan or extends credit to a debtor, and the debtor defaults, then the creditor must ordinarily commence an action (file a lawsuit) and obtain a judgment. After the judgment is entered, the creditor cannot simply take possession the debtor’s property. The creditor must THEN enforce the judgment by a process called execution through a sheriff or some other judicial officer. If there is any doubt about whether or not repossession will result in a “breach the peace,” it may be wise to secure the aid of a Marshall, the local sheriff, or a court officer to affect the repossession 34. A secured party may acquire an interest in property that the debtor has received temporarily but has no rights to the property. False: If the secured party assigns the rights to the security agreement to another party, that party will assume all of the rights of the secured party. 35. A debtor may authenticate a security agreement by filing a “statement of intent” with a sheriff or some other judicial officer. False: To "authenticate" generally is understood as “to sign.” Authentication may also include electronic signatures or any other symbol, encryption or similar process with identifies the debtor and indicates an acceptance of the underlying obligation. 36. Authentication can be accomplished by posting a notice of acceptance in a local newspaper. False?: It just needs to be signed and can be notarized but is not required. 37. A fixture is an item of personal property that is easily removable from real property. False: A fixture is something that is permanently attached to a real property. 38. A buyer "in the ordinary course of the debtor's business" (i.e., is a “good faith purchaser for value”) will nonetheless take the property subject to a security interest.

False: If the property is sold or transferred to a third party after the transferee has conducted a proper search of records within the proper time frame to indicate whether a security interest had been perfected on the property, the transferee will be considered as a “good faith transferee (purchaser) for value” of the property and will take the property free of that security interest. If they can show they are a good faith purchaser and have searched for UCC 1, they can take the security interest free. 39. A secured creditor is limited to repossessing property for a period of 30 days after default. True. 40. There is no relationship between bankruptcy and secured transactions. False: Article 9 governs secured transactions, which are triggered by the debtor not paying on loans, mortgages, cars, etc. Security interests are merely a bargain to avoid debts and repossessions that stem from bankruptcy. Therefore, the right of creditor/lender is superior because they’ve extracted this bargain, and it trumps non-dischargeable items because that property is no longer in the bankruptcy.

EXTRA CREDIT: The names of Professor Hunter’s and Kevin’s children are Sophia, Matilda, Jennie, Helen, Hattie, and Wally. False! There’s Gerty (the little tan one), Helen (black lab) who does as she pleases, and grandma Sophia as the oldest!...