Chapter 14- Creditors' Rights and Bankruptcy

Question 1

Affidavit

Answer 1

Statement of facts confirmed by the oath made before a person having the authority to administer the oath or affirmation

Question 2

Artisan’s Lien

Answer 2

Lien on personal property of another person to ensure payment to a person who has made improvements on that property.

Question 3

Attachment

Answer 3

Process of seizing another’s property to secure satisfaction of a judgment yet to be rendered

Question 4

Automatic Stay

Answer 4

Suspension of all judicial proceedings on the occurrence of an independent event.

Question 5

Co-Surety

Answer 5

One who assumes liability jointly with another surety for the payment of an obligation

Question 6

Consumer-Debtor

Answer 6

One whose debts result primarily from the purchases of goods for personal, family, or household use.

Question 7

Cram-Down Provision

Answer 7

Bankruptcy Code that allows a court to confirm a debtor’s Chapter 11 reorganization plan even though only one class of creditors has accepted it

Question 8

Creditors’ Composition Agreement

Answer 8

Agreement between a debtor and creditors where creditors agree to accept a lesser sum than that owed by the debtor

Question 9

Debtor in Possession (DIP)

Answer 9

In Chapter 11 bankruptcy, debtor is allowed to continue possession of the business and to continue business operations.

Question 10

Discharge

Answer 10

The termination of a debtor’s obligation

Question 11

Estate in Property

Answer 11

All of the property owned by a person, including real estate and personal property

Question 12

Garnishment

Answer 12

Creditor appropriates a debtor’s property or wages that are in the hands of a third party

Question 13

Guarantor

Answer 13

Person who agrees to satisfy the debt when the debtor fails to pay the debt

Question 14

Homestead Exemption

Answer 14

Allows an owner to designate their house (and adjoining land) as a homestead and is exempt from liability for their debt

Question 15

Lien

Answer 15

Claim against specific property to satisfy a debt

Question 16

Liquidation

Answer 16

Sale of assets for cash and the distribution of the cash received to creditors, with the balance going to the owner(s).

Question 17

Mechanic’s Lien

Answer 17

Created to ensure priority of payment for work performed

Question 18

Order for Relief

Answer 18

Relieves the debtor of the immediate obligation to pay the debts listed in the bankruptcy petition

Question 19

Petition in Bankruptcy

Answer 19

Document filed with a bankruptcy court to initiate bankruptcy proceedings

Question 20

Preference

Answer 20

property transfer or payment made by the debtor that favors one creditor over others

Question 21

Preferred Creditor

Answer 21

A creditor who has received a preferential transfer from a debtor

Question 22

Reaffirmation Agreement

Answer 22

Between a debtor and a creditor where debtor voluntarily agrees to pay a debt dischargeable in bankruptcy

Question 23

Reorganization

Answer 23

Readjustment of a corporation and its debts, the submission of the plan to a bankruptcy court, and the court’s approval or rejection of the plan

Question 24

Right of Contribution

Answer 24

Co-surety pays more than their share on a debtor’s default to recover the excess paid from other co-sureties

Question 25

Right of Reimbursement

Answer 25

Person will be repaid or indemnified for costs, expenses, or losses incurred or expended on behalf of another

Question 26

Right of Subrogation

Answer 26

The right of a person to stand in the place of (be substituted for) another, giving the substituted party the same legal rights against the debtor that the creditor had.

Question 27

Secured Creditor

Answer 27

A lender or seller who has a security interest in collateral that secures a debt

Question 28

Surety

Answer 28

Third party who agrees to be responsible for the debt of another

Question 29

Suretyship

Answer 29

Express contract where the surety promises to be responsible for a debtor’s obligation to a creditor

Question 30

U.S. Trustee

Answer 30

Government official who performs certain administrative tasks that a bankruptcy judge would otherwise have to perform

Question 31

Unsecured Creditor

Answer 31

Creditor whose debt is not backed by any collateral

Question 32

Workout

Answer 32

Out-of-court agreement between a debtor and creditors that establishes a payment plan for discharging the debtor’s debts

Question 33

Writ of Attachment

Answer 33

Used to enforce obedience to an order or judgment of the court

Question 34

Writ of Execution

Answer 34

Puts in force a court’s decree or judgment

Question 35

A lien may be defined as

Answer 35

a claim against a debtor’s property to satisfy a debt or protect a claim for the payment of a debt

Question 36

Kelly promises Mountain State Bank that she will be responsible for a loan taken out by her niece Dallas such that at the moment the debt is due, Mountain State may demand repayment from Kelly. This is known as

Answer 36

a suretyship

Question 37

In each state of the United States, debtors are permitted to either retain their family home or keep up to a specified dollar amount of the value of the home. This is known as

Answer 37

the homestead exemption

Question 38

If, in a court’s opinion, granting relief under Chapter 7 would constitute a “substantial abuse” of the law, what may the court do?

Answer 38

Dismiss the petition for bankruptcy relief

Question 39

If Deroy’s creditors force him into bankruptcy proceedings, what is this called?

Answer 39

an involuntary bankruptcy

Question 40

In bankruptcy proceedings, an automatic stay on (suspension of) all litigation and other actions by creditors against the debtor or the debtor’s property arises

Answer 40

once the petition in bankruptcy is filed

Question 41

Normally, in order to receive a portion of a debtor’s estate, what must each creditor file

Answer 41

a proof of claim

Question 42

The type of bankruptcy proceeding used most commonly by corporations is a reorganization

Answer 42

Chapter 11

Question 43

One of the advantages of Chapter 13 repayment plans is that:

Answer 43

they are less expensive and less complicated than reorganization proceedings or liquidation proceedings.

Question 44

Chapter 12 of the Bankruptcy Code is aimed at helping which group?

Answer 44

Family Farmers