CREDITOR PROTECTIONS AND BANKRUPTCY

1. Builders Construction Company performs a contract with Christina to add a sun porch to her house, but she does not pay. In most states, Builders Construction could create a lien and place it on Christina's property by filing

a.a creditor's composition agreement.

b.a writ of attachment.

c.a writ of execution.

d.a written notice of mechanic's lien.

2.Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with Michael, but refuses to pay when the work is done. Michael refuses to return the car to Jill until she pays for the brake work. This is

a.a garnishment order.

b.a mechanic's lien.

c.an artisan's lien.

d.a violation of most states' laws.

3.A court awards a judgment to Loan Collection Agency, who is the creditor, against Margret, who is the debtor. After the judgment, the creditor requests a court order to seize Margret's property to ensure that the judgment will be collectible. This is

a.a judicial lien.

b.a writ of attachment.

c.a writ of execution.

d.a violation of most state laws.

4.Stanley's debt to Town Bank is past due. Town Bank obtains a judgment against Stanley to collect the debt, but he refuses to pay. Town Bank asks the court to order Stanley's employer to pay a portion of his paycheck to the bank. This is a request for

a.a mechanic's lien.

b.an order of garnishment.

c.an order that would violate most state laws.

d.a writ of attachment.

5.George borrows funds from Hometown Credit Union (HCU) to buy real property. George signs a written instrument that gives HCU an interest in the property as security for the debt's payment. This is

a.a mortgage.

b.an artisan's lien.

c.a workout agreement.

d.a suretyship arrangement.

6.Pippin signs a lease on behalf of Quixotic Games, Inc., with Riverview Office Suites. As part of the lease, Pippin signs a document titled "GUARANTY." If Quixotic Games stops paying the rent, it is most likely that liability or loss for the unpaid amount will rest with

a.no one.

b.Pippin and Quixotic Games.

c.Riverview Office Suites.

d.the other tenants on the same property.

7.Dina asks Edie to co-sign a credit application so that she can borrow money and buy a piano from First Chair, a musical instruments and supplies seller. If, after the loan agreement is signed, Dina agrees to a higher rate of interest without telling Edie, then Edie is

a.discharged from the agreement.

b.liable at the higher rate of interest.

c.liable at the lower rate of interest.

d.liable for the principal only.

8.Jordan is a surety for Kelly's loan from Lenders Credit Corporation. When the loan comes due, Kelly tries to pay Lenders Credit, but the creditor rejects the payment. Jordan is

a.released from any obligation on the debt.

b.required to pay the amount of the debt to Lenders Credit.

c.required to pay up to half of the amount of the debt to Lenders Credit.

d.required to pay the amount of the debt to Kelly.

9.Lenders Bank files a financing statement regarding a transaction with Metro Construction Company. To be valid, the financing statement must contain all of the following except

a.a description of the collateral.

b.a statement of the purpose for the transaction.

c.Lenders' name.

d.Metro's name.

10.Debit & Credit Financing, Inc., and Equity Lending Company are secured parties with security interests in property owned by Fleet Shipping Corporation. Priority between these security interests is generally determined by

a.the amount of the claim.

b.the custom in the trade.

c.the time of perfection or attachment.

d.the "float" of the liens.

11.Dredging, Inc., borrows $50,000 from Equity Financing Corporation in a secured transaction using Dredging's equipment as collateral. Dredging then borrows $70,000 from First Choice Lenders, Inc., using the same equipment as collateral. Neither Equity Financing nor First Choice perfects its security interest. Dredging defaults on the loans. The party with priority is

a.Equity Financing, because its interest was the first to attach.

b.First Choice, because Dredging owes it more money.

c.First Choice, because its interest was the second to attach.

d.Equity Financing, because Dredging owes it less money.

12..Roland files a petition in bankruptcy. After all his assets have been sold and the proceeds distributed among his creditors, Roland's remaining debts

a.are discharged.

b.will be paid by the court.

c.must be paid by Roland.

d.are put on hold until Roland has sufficient means to pay them.

13.Patsy files a petition in bankruptcy. At the moment of filing

a.an automatic stay goes into effect.

b.Patsy's debts are discharged.

c.Patsy's petition is dismissed.

d.Patsy's property is distributed to her creditors.

14. Thirty-one days before filing a petition in bankruptcy, Gavin transfers property and makes payments that favor one creditor over another. These are

a.affirmation agreements.

b.preferences.

c.secured interests.

d.unsecured debts.

15. Daniel is a trustee for a federal bankruptcy court. Daniel's duties include

a.collecting the debtor's available estate.

b.establishing priority for the payment of unsecured creditors.

c.operating a debtor's business to obtain maximum profit for creditors.

d.submitting to an examination under oath by the creditors.

16.Tully files a petition for bankruptcy. Tully must include with the petition

a.proof of each creditor's claim.

b.a list of creditors and the amount of the debt owed to each.

c.all of his debit and credit cards to be disposed of by the court.

d an affidavit testifying to his having read the Bankruptcy Code.