1.Which of the following do not qualify as goods subject to security interests?

Multiple Choice

• Consumer goods
• Farm products
• Professional services
• Inventory
• Equipment

2.Overextended Debtor. Dennis purchased a big-screen television from ABC Electronics (ABC) and financed the purchase through ABC based on an agreement granting the retailer a security interest in the television and requiring that Dennis make monthly payments. Three (3) months later, Dennis was unable to continue making payments on the television because he had purchased a boat, a new car, an expensive engagement ring for his girlfriend, and some other items. The ABC store manager called Dennis and asked him to return the television. Dennis refused on the basis that ABC never perfected its interest in the television. Which of the following is the correct designation for the television in the agreement between Dennis and ABC?

Multiple Choice

• It is a pledged good.
• It is an acknowledged good.
• It is collateral.
• It is a designated security.
• It is a fungible good.

3.A(n) _____ forms when a debtor uses borrowed money from a secured party to purchase certain collateral.

Multiple Choice

• accord and satisfaction
• purchase-money security interest
• third-party beneficiary contract
• perfected security interest
• novation

4.After _____ year(s), if a secured party does not renew its financing statement, the statement _____ and the security interest is not protected.

Multiple Choice

• five (5); expires
• four (4); is held in abeyance
• three (3); is withdrawn
• two (2); is renegotiated
• one (1); requires additional collateral

5.Generally, a security interest in collateral that has been perfected in one state will _____.

Multiple Choice

• transfer to another state for a period of four (4) months from the date that the property is brought into the state
• transfer to another state for a period of six (6) months from the date that the property is brought into the state
• transfer to another state for a period of one (1) year from the date that the property is brought into the state
• transfer to another state for a period of five (5) years from the date that the property is brought into the state
• not transfer to another state

6.A(n) _____ good is used (or purchased for use) primarily for personal, family, or household purposes.

Multiple Choice

• retail
• consumer
• commercial
• intangible
• unsecured

7.A secured party's interest in proceeds lasts for _____ after the debtor receives the proceeds.

Multiple Choice

• three (3) years
• one (1) year
• ninety (90) days
• thirty (30) days
• ten (10) days

8.In a dispute between two secured parties with unperfected security interests, which of the following is true?

Multiple Choice

• The party who attached its interest first will prevail.
• The party who attached its interest second will prevail.
• The parties must divide the proceeds evenly between them.
• The party who loaned the most money on the collateral has priority.
• The party who loaned the least money on the collateral has priority.

9.According to the Uniform Commercial Code (UCC), what happens if a buyer of a consumer good subject to purchase-money security interest later sells the good?

Multiple Choice

• The security interest immediately terminates.
• The security interest passes to the new buyer.
• Regardless of whether the new buyer is aware of the security interest, the security interest terminates if the sale to the buyer is made before the original secured party files a financial statement.
• As long as the new buyer is not aware of the security interest, purchases the good for his or her personal use, and purchases the good before the secured party files a financial statement, the buyer obtains the good free of the security interest.
• As long as the new buyer is not aware of the security interest, purchases the good for resale, and purchases the good before the secured party files a financial statement, the buyer obtains the good free of the security interest.

10.Since the Uniform Commercial Code (UCC) does not define default, how is it usually defined?

Multiple Choice

• By state statutes
• By federal statutes
• By the bankruptcy court
• By the security agreement
• By theRestatement (Second) of Secured Transactions

11.Repossession. Tina sold used vehicles. She sold a used pick-up truck to Joan and a used convertible to Barry. She properly obtained a security interest in both vehicles. Both Joan and Barry defaulted on payments owed to Tina for the vehicles. Tina told her assistant Samantha that the only legal remedy was repossession; that she was going after the vehicles; and that Samantha should call law enforcement if she did not show up at the office by 10 a.m. for the next few mornings. Tina decided that she would repossess Joan's pick-up at Joan's house. Therefore, Tina slipped into the driveway at midnight one night and started the engine. Joan immediately ran out and confronted Tina. Tina shoved Joan away and drove off in the pick-up truck. Tina was able to repossess Barry's convertible in a public parking lot with no altercation with him. Which of the following is true regarding whether repossession was the only remedy available to Tina?

Multiple Choice

• Tina was correct regardless of whether a vehicle or another type of good was involved.
• Tina was correct, but only because a vehicle was involved.
• Tina was incorrect because only when a vehicle is involved, a party must disregard the collateral and proceed to judgment.
• Tina was incorrect because regardless of whether a vehicle or another type of good was involved, Tina only had the right to ignore the collateral and proceed to judgment.
• Tina was incorrect because regardless of whether a vehicle or another type of good was involved, Tina had the right to either take possession of the collateral or ignore rights in the collateral and proceed to judgment.

12.Bart is having serious difficulties paying the debts he owes to his creditors in a timely fashion. Bart is a(n) _____.

Multiple Choice

• misdemeanant
• insolvent debtor
• financial malfeasant
• financial miscreant
• common law debtor

13.Perma-Bloom Flowers, LLC is having its financial affairs reorganized under the supervision of the bankruptcy court. What type of bankruptcy is this?

Multiple Choice

• Chapter 2
• Chapter 5
• Chapter 7
• Chapter 9
• Chapter 11

14.Which of the following is false regarding the provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005?

Multiple Choice

• Under the BAPCPA, an individual may not generally be considered a debtor unless within 180 days prior to filing, the debtor receives credit counseling from a nonprofit budget and credit counseling agency.
• Under the BAPCPA, if an individual was a debtor in a bankruptcy case that was dismissed within 180 days of the current case, the individual is generally not eligible to be a debtor under Chapters 7, 11, or 13.
• Under the BAPCPA, if a previous bankruptcy was completed rather than dismissed, the individual is generally permitted to file for bankruptcy again.
• Under the BAPCPA, if a party completes a Chapter 7 bankruptcy, the party is not permitted to seek a Chapter 7 bankruptcy again for eight years.
• Under the BAPCPA, if a party has at least $10,000 in assets, the party may not file for any type of bankruptcy protection.

15.Which of the following parties cannot be forced into involuntary bankruptcy under Chapter 7?

Multiple Choice

• Farmers
• Ranchers
• Nonprofit organizations
• Farmers, ranchers, and nonprofit organizations
• Farmers and ranchers, but nonprofit organizations can be forced into involuntary bankruptcy

16.By filing a(n) _____ petition under Chapter 7, creditors can attempt to force into bankruptcy a debtor who is not paying debts as they become due.

Multiple Choice

• voluntary
• involuntary
• declaratory
• injunctive
• interlocutory

17.Which of the following is true regarding actions that may be taken while an automatic stay is in effect in a Chapter 7 proceeding?

Multiple Choice

• Creditors can attempt to repossess property.
• A creditor who received a judgment against the debtor prior to the bankruptcy filing may act to enforce the judgment.
• Legal actions to collect child support payments are not subject to the automatic stay.
• Legal actions to determine paternity are subject to the automatic stay.
• Legal actions to determine alimony payments are subject to the automatic stay.

18.Under which test may a court presume that an individual is abusing the bankruptcy provisions of Chapter 7 when an individual's debt is primarily consumer debt and the individual's income is above the median income in his or her state?

Multiple Choice

• The means test
• The assets test
• The liabilities test
• The balance sheet test
• The liquidation test

19.Claims to Funds. Paul had a great job as a bank executive. Unfortunately, his bank came under scrutiny by federal regulators, and although Paul had done nothing illegal, he ended up being fired. Unfortunately for Paul, he had a number of debts. Among his assets were a house worth $250,000 on which he owed $150,000 to a bank that held a security interest; three vehicles; an expensive watch worth $5,000; and $120,000 in an Individual Retirement Account (IRA). He owed $900 per month in child support to his ex-wife Suzy and was behind on payments in the amount of $1,800. He also owed $2,000 in wages consisting of four months of back pay to Bob who took care of Paul's landscaping needs and swimming pool care. Unable to find a job and believing that he had no other option, Paul filed for Chapter 7 bankruptcy. All creditors angrily demanded payment from liquidation of Paul's assets. Paul, on the other hand, claims that he needs all the above-mentioned assets and that he should not have to give up anything. Only federal bankruptcy exemptions apply to Paul's case. Which of the following parties has first claim to proceeds from the house?

Multiple Choice

• The bank with the security interest
• Suzy
• Sam
• Suzy and Sam, with each having a one-half interest
• The bank, Suzy, and Sam, with each having a one-third interest

20.Which of the following is an agreement by which the debtor agrees to pay a debt even though it could be discharged?

Multiple Choice

• An admission against interest
• A reaffirmation agreement
• A compromise agreement
• An accord and satisfaction
• A novation