11. Bob grows wheat for a living. Wheat farming constitutes 100% of Bob’s gross income. Bob formed a closely held corporation to conduct his farming business, and he owns 100% of the corporation. Unfortunately, Bob has fallen into debt, with 85% of his debts due to his farming business. Bob’s total debts are approximately $1 million. Which type of bankruptcy would be best for Bob?
A. Chapter 7
C. Chapter 13
B. Chapter 11 D. Chapter 12
12. Middle Bank failed to loan Farmer Ted money to see him through until his crop is harvested. Farmer Ted agrees that in exchange for the loan, Middle Bank may have a security interest in his crop. Middle Bank files a form with the proper state or local official listing Farmer Ted’s name, and stating that he owes Middle Bank $5,000. Which of the following is true regarding this set of facts?
A. Middle Bank failed to properly perfect a security interest because the financing statement has no signature, address, or proper description of collateral.
B. Middle Bank failed to properly perfect a security interest because the financing statement has no proper description of collateral.
C. Middle Bank properly perfected a security interest because the financing statement filed listed all of the relevant information.
D. Middle Bank didn’t need to file anything with the appropriate state or local official because Middle Bank made a farm loan to Farmer Ted.
13. Kellen loans Kaitlyn $5,000. Kellen and Kaitlyn agree that if Kaitlyn fails to pay Kellen back within 2 years, Kellen may take possession
of Kaitlyn’s automobile. Kellen takes all of the necessary steps to ensure that his interest in the automobile are protected by the agreement. Which of the following is true regarding this set of facts?
A. Kaitlyn is the secured party in this agreement.
B. Kellen is the debtor in this agreement.
C. Kellen possesses a security interest in the automobile.
D. Kaitlyn possesses a security interest in the automobile.
14. Liza borrows money form 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 take any additional steps. Liza defaults on both loans. Second Finance attaches (seeks to enforce an item’s security interest) the diamond ring. One day later, First Finance seeks attachment of the diamond ring. Which of the following is true about this set of facts?
A. First Finance Company possesses the priority claim because it loaned the money to Liza before Second Finance.
B. Second Finance Company possesses the priority claim because it attached the diamond ring first.
C. Neither finance company possesses a valid security interest in the diamond ring, and neither possesses any remedy due to the failure to file a security interest.
D. Both First Finance and Second Finance possess equal rights in the diamond ring and must equally divide any proceeds from the sale of the ring.
15. Jan is filing for Chapter 7 bankruptcy protection
. Jan owns her own home, which is worth $75,000, and upon which Jan also a $20,000 diamond ring, which was given to her by her ex-husband. Which of the following is true about Jan’s bankruptcy?
A. Jan may exempt her equity
in the home, but she shouldn’t be able to exempt the full value of the diamond ring.
B. Jan may not exempt the full value of the equity in the home or the full value of the diamond ring.
C. Jan may exempt a portion of the value of the diamond ring, but she may not exempt the full value of her equity in the home.
D. Jan may exempt the full value of the equity in her home and the full value of the diamond ring.
16. Larry borrowed $10,000 from Jack. At the time of the loan, Larry signed a agreement promising to pay back the $10,000 in full within one year. After two years, Larry still hasn’t paid Jack back. To seek repayment of the debt, Jack should first seek a/an
A. artisan’s lien. C. writ of execution.
B. mechanic’s lien D. judicial lien
17.Dana borrowed money from Jennifer. Dana signs a security agreement giving Jennifer a security interest in Dana’s father’s stereo system to secure the loan. Which of the following statements is true about this set of facts?
A. A security interest in Jennifer’s favor was created because all of the requirements were met.
B. A security interest wasn’t created in Jennifer’s favor because the debtor must have rights in the collateral.
C. A security interest in Jennifer’s favor was created because Jennifer loaned money to Dana, and the two formed an oral agreement.
D. A security interest wasn’t created in Jennifer’s favor because the secured party must give value.