Insurance, Secured Transactions and Bankruptcy
1. Tom is a family farmer with less than $3 million in debt. He wants to know if there are any chapters in the bankruptcy code specifically geared to debtors such as him. You would recommend to him Chapter
2. Charlie files Chapter 11 bankruptcy. __________ creditors have the right to vote on the plan.
3. Tom’s life insurance has no cash surrender value. It must be
4. Tom is a consumer with regular income who’s able to pay more than 25% of his debt over the next three years but probably can’t pay it all. If he qualifies, the best chapter in bankruptcy for Tom is chapter
5. Terry parks his car outside the restaurant and goes inside to eat. When he returns, his car has been damaged by vandalism. Terry’s insurance company will pay for the repairs if Terry has __________ insurance
6. Billy borrowed money from First Bank, and he entered an agreement listing his scooter as collateral. First Bank took all necessary steps to properly perfect its security in the scooter on the day of the loan. The next day, Billy borrowed money from Second Bank, and he entered an agreement listing the same scooter as collateral. Second Bank also took all necessary steps to properly perfect its security in the scooter on the day of the loan. Billy defaults on both loans, defaulting on Second Bank and then on First Bank. Which of the following statements regarding this set of facts is true?
7. Tom gave a mortgage to Big Bank. Big Bank failed to record the mortgage. Then Tom gave a mortgage to Second Bank. Second Bank recorded the mortgage and didn’t know about the mortgage to Big Bank. After Second Bank recorded, Big Bank recorded its mortgage. After both mortgages are recorded, Tom defaults on both debts. Which of the following statements is true?
8. Sally is laid off from work and is concerned that she won’t be able to continue her group insurance coverage. You tell her she will probably be able to continue it for a period of time by paying her own premiums under protections provided by
9. Candy purchase a life insurance policy. Six months later, Candy falls into a severe depression and kills herself. Which of the following statements is true?
10. Sammy took out a home insurance policy on the home of his neighbor, Ed. Three months later, Ed’s home mysteriously burned down. Sammy attempted to collect on the policy he purchased earlier. Which of the following is true regarding this set of facts?
11. Carl gave Ted a mortgage. Which is the following is most likely collateral for the mortgage? Liza borrows money from First Finance Company for miscellaneous expenses. Liza and First Finance agree that Liza’s diamond ring shall serve as collateral for the loan. Two weeks later, Liza takes a loan from Second Finance Company listing the same diamond ring as collateral. Neither First Finance nor Second Finance takes any additional steps. Liza defaults on both loans. Second Finance demands possession of the diamond ring and Liza gives it to them. Which of the following statements regarding this set of facts is true?
12. Bob forgot to make his premium payment this month. The policy lapses,
13. Sally and Carl have received a foreclosure notice. The foreclosure sale is set to take place in seven days. They contact a bankruptcy attorney. The attorney tells them the foreclosure proceedings will be halted, at least temporarily, if they file bankruptcy, due to the
14. Zeke has purchased insurance with a double-indemnity benefit. This means _________
15. What type of life insurance would most likely be used to cover the outstanding balance of a home mortgage?
16. Tom contacts an attorney about filing bankruptcy. The attorney says that Tom will have to pass a means test. This suggests the attorney is planning to file Tom’s bankruptcy under
17. Carl is in a car accident caused by Frank. Carl was able to collect damages and medical expenses from his own insurance company even though fault had yet to be determined. Carl probably lives in a state that requires __________ insurance.
18. Tom purchases a life insurance policy and then joins the military. Tom is deployed in a combat zone and killed by enemy soldiers. Tom’s wife applies for the insurance proceeds. Which of the following is most likely?
19. Tom has fire insurance to protect his house. There’s a fire. Fire damages the property. When firefighters spray water on the fire to put it out, the water causes damage. In addition, to keep the fire from spreading to neighboring houses, the firemen destroy part of the house. Which of the following damage typically would be covered under a fire insurance policy?