East Mississippi Community College

ECON 2123

Chapter 35-BANKRUPTCY

TRUE/FALSE

1)Jurisdiction over bankruptcy proceedings is vested in the federal district courts.

2. In a liquidation proceeding, the debtor's nonexempt assets are collected by the trustee representing the creditors.

3. A court can dismiss an individual debtor’s petition if the debtor does not satisfy the means test.

4. A bank may file a voluntary petition with the bankruptcy court.

5. An involuntary bankruptcy case is commenced by creditors filing a petition with a bankruptcy court.

6. The holder of a claim that is the subject of a bona fide dispute may be counted as a petitioning creditor.

7. Nonprofit corporations are exempt from involuntary proceedings.

8. An order for relief will be granted in an uncontested involuntary case if, within 120 days before the date of the filing of the petition, a custodian has been appointed for the debtor's property.

9. The filing of an involuntary case petition automatically constitutes an order for relief if the debtor fails to contest the petition within the time specified by the Bankruptcy Code.

10. If the debtor is generally not paying debts as they become due, the debtor may be subject to an involuntary bankruptcy petition.

11. The filing of a voluntary, but not an involuntary, petition operates as an automatic stay.

12. A debtor may recover damages against any creditor who filed a bankruptcy petition in bad faith.

13. If a trustee is not elected by creditors, an interim trustee will be appointed by the court.

14. By operation of law, the trustee automatically becomes the owner of all of the debtor’s property in excess of the property to which the debtor is entitled under exemption laws.

15. The trustee in bankruptcy is selected by the debtor.

16. The trustee may void any fraudulent transfer made by the debtor within two (2) years of bankruptcy when the debtor’s actual intent was to hinder, delay, or defraud creditors by engaging in the transfer.

17. To be set aside as a preference, a transfer must be fraudulent.

18. A payment by a debtor in the ordinary course of business, such as the payment of a utility bill, will not be set aside by the bankruptcy trustee.

19. A debtor is presumed to be insolvent in the 180 days prior to declaration of bankruptcy.

20. Bankruptcy law does not regulate the manner in which the assets of the debtor are distributed; instead, distribution of the debtor’s assets is solely within the discretion of the trustee.

21. A proof of claim is not required for a creditor to participate in the distribution of the proceeds of the liquidation of the debtor's estate.

22. Creditors who hold security for payment, such as a lien or a mortgage on the debtor’s property, are not affected by the debtor's bankruptcy.