Questions and Answers
For a creditor to get a perfected security interest in the debtor's property, the debtor must sign three documents.
True
Must Dirk give his lottery winnings to the bankruptcy trustee for payment of his creditors?
No
Which of the following are non-dischargeable debts under a Chapter 7 bankruptcy filing?
What happens when Jane is sued by American Express after filing for Chapter 7 bankruptcy?
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Which creditor has the highest priority for payment when a Chapter 7 bankruptcy trustee distributes the debtor's assets?
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Must John's Hardware give back the $10,000 payment made by Dan before filing for bankruptcy?
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How much will Chase Bank get in the bankruptcy case if general creditors receive 10 cents on the dollar?
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Mindy is worried that the hospital will sue her for __________ in medical bills.
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Study Notes
Perfected Security Interest
- A perfected security interest requires three documents: a security agreement detailing collateral, a promissory note for debt repayment, and a power of attorney granting creditor control over the debtor's assets if the debt is unpaid.
Chapter 7 Bankruptcy and Lottery Winnings
- Dirk Debtor, with over $100,000 in credit card debt, files Chapter 7 bankruptcy. Winning $2 million in the lottery after filing means he does not have to pay his creditors from these winnings.
Non-Dischargeable Debts in Chapter 7
- Alimony, child support, and intentional torts are considered non-dischargeable debts under Chapter 7 bankruptcy filings.
Automatic Stay in Bankruptcy
- An automatic stay occurs when Jane files for Chapter 7 bankruptcy; American Express' lawsuit becomes part of the bankruptcy process, halting further legal action.
Priority of Payments in Bankruptcy
- In Chapter 7 bankruptcy, secured creditors—those with collateral backing their loans—have the highest priority for payment from the debtor's assets.
Preferential Payments
- John’s Hardware must return a $10,000 payment made by Dan Debtor 60 days prior to filing for bankruptcy because it is considered a preferential payment.
Chase Bank and Bankruptcy Recovery
- In a scenario where Debtor files for Chapter 7 bankruptcy owing $11,000 while the car's cash value is $8,000, Chase Bank will recover $8,300 based on the distribution terms for secured creditors.
Mindy's Medical Debt Concern
- Mindy, with a $100,000 house and $150,000 medical bills, faces potential lawsuit threats for unpaid debts, raising concerns about protecting her only asset during financial distress.
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Description
Test your knowledge on Article 9 of the UCC and bankruptcy concepts in this quiz. You will explore key documents like security agreements and promissory notes. Perfect for BUS 201 students aiming to understand creditor-debtor relationships.
