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Creditors' Rights Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. As a new business, I'll be obtaining a business credit card. I'll use this credit card to make purchases for my business, like supplies and inventory. This credit card is a type of:

Question 2 2. When a debtor fails to fulfill the terms of the security agreement, it's known as a:

Question 3 3. What type of debt is credit card borrowing?

Question 4 4. This type of bankruptcy is less common and is a repayment plan used for individuals with a regular source of income.

Question 5 5. Let's say I owe $50,000 for the building when I default on the mortgage. The bank forecloses on my building and sells it but for $30,000. I still owe the bank $20,000 for my building debt. To reclaim what I owe, the bank can pursue me with a:

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Question 6 6. Jody decides to file bankruptcy. She's a single mother of two children and has very few assets. She makes a regular salary that's only slightly above the poverty level. Jody will likely use:

Question 7 7. Jonathan bought a car and offered it as collateral to the bank for a loan. Choose the statement that is TRUE after Jonathan's loan has been disbursed.

Question 8 8. Let's say I buy a building to house my new business. I'll take out a mortgage on the building. A mortgage is a type of loan because it's guaranteed by the piece of property for which the debtor obtains the loan. If I fail to make my mortgage payments, the bank will likely foreclose on my building.

Question 9 9. Rick loses his job and is unable to make house payments for several months. His bank moves to seize the house by _____.

Question 10 10. After , the secured party should the interest by filing a financing statement.

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Question 11 11. Paul borrows money from a leasing company in order to buy a truck for his business. In exchange, he gives the lender a legal claim to the truck. This scenario is an example of a:

Question 12 12. Anne borrows money from the bank in order to buy a tractor for her farm. In exchange, she gives the bank a legal claim to the tractor. This legal claim is called a:

Question 13 13. What is a secured loan, in which a real property is given as collateral, called?

Question 14 14. Greg wants to file bankruptcy. He wants to keep all of his assets, though his house is in foreclosure. He owes $200,000 on his house and $100,000 in unsecured debt, but has a regular salary of almost $30,000 a year. Which chapter of bankruptcy is Greg likely use?

Question 15 15. When the security agreement is complete and valid, the collateral becomes a part of the agreement. This is known as:

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Question 16 16. In a secured transaction, the creditor is also known as the:

Question 17 17.

Suzie's Superstores, Inc. wants to file bankruptcy. They are insolvent and want to re-organize their debt, but stay in business.

Which type of Bankruptcy proceeding will Suzie's Superstores most likely to use?

Question 18 18. Richard and Susan are buying appliances for their new house. The appliances served as collateral for the loan, which is called _____.

Question 19 19. Maria wants to file bankruptcy for her business, Maria's Manicures. She's closing the business completely and wants to completely liquidate the assets. She doesn't plan to re-open. Maria will use _____ bankruptcy.

Question 20 20. Sometimes the creditor can legally take the collateral in an attempt to cover the debtor's loan. This is known as:

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Question 21 21. Jack borrows money from his friend Jill in order to buy a laptop. Jill is a:

Question 22 22. In a secured transaction, the creditor's right to the collateral is also known as the:

Question 23 23.

True or false:

1. A business can sometimes use Chapter 7.

2. Discharge of debts applies to individuals.

3. Discharge of debts applies to businesses.

Question 24 24. Kevin wants to file bankruptcy. He's the married father of three college-aged children. Kevin's family owns several assets including three cars and two houses. Between Kevin and his wife, the family makes an income of approximately $300,000. Their overall debt is over $1 million, with more than half of that in unsecured debt like credit cards and medical bills. Kevin will likely use _____ while filing for bankruptcy.

Question 25 25. The bank sells John's house at an auction. Unfortunately the selling price is less than what he still owes on the house, so John is forced to pay the difference through a _____.

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Question 26 26. If I decide to file bankruptcy as a business, then I'll consider a _ proceeding. This type is a reorganization of debt for businesses.

Question 27 27. Celine wants to buy a brand new house and borrows money from the National Commercial Bank. In exchange, she gives the bank a legal claim to the house. What is true about the house?

Question 28 28.

The collateral attaches once the security agreement meets these requirements. It must:

1. Contain an express agreement between the debtor and the secured party

2. Be in writing

3. Be signed by both parties

Question 29 29. Many times, the item being purchased is used as the _ for the secured loan. When I buy my building, I'll use the building as _ for my mortgage loan. When I buy my van, I'll use the van as for my car loan.

Question 30 30.

When I purchase my business van, I'm going to purchase it using a car loan from my bank. My bank is the creditor, and I'm the debtor. The van will serve as collateral for my secured loan. I'll make monthly loan payments on the van. Though I have the right to possess and use the van, the van doesn't fully belong to me until I've completely paid for it. In the meantime, the bank holds a lien on my van and will possess the title to my van.

If I fail to make my monthly payments, it's known as a , and the bank then has the legal right to my van.

Creditors' Rights Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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