Rodney (a fictional person) was self-employed, running asuccessful business, seemingly healthy, and never thought he wouldhave financial problems. Being self-employed, he lacked healthinsurance. One day on the job, Rodney suffered a heart attack andwas hospitalized for a week. As a result, he owed more than$100,000 in hospital and medical bills to the hospital. After theheart attack, Rodney could not work in his physically demandingline of work, and his business suffered dramatically. The bills andmortgage payments kept piling up, and Rodney was sinking fast. Ontop of the medical bills and mortgage, he owed thousands of dollarsto multiple companies and creditors. Rodney considered selling hishouse to get out of the financial crisis he was in, but the valueof the house had dropped significantly. After much consideration,Rodney decided to file for Chapter 7, bankruptcy. In the end, hedecided he would rather have a bankruptcy on his record instead ofdealing with a mountain of debt.

For each question, provide the correct answer and a completeexplanation of why it is the correct answer.

1. In Chapter 7 bankruptcy, ___________occurs when a debtorturns over all assets to a trustee, an individual who takes overadministration of the debtor's estate.

a. An order of relief

b. An automatic stay

c. Relief

d. Liquidation

e. Bankruptcy

2. Who is defined as a debtor for liquidation purposes underChapter 7? Can Rodney file for Chapter 7 bankruptcy?

a. Banks; Rodney cannot file.

b. Individuals; Rodney can file.

c. Health Maintenance Organizations; Rodney cannot file.

d. Partnerships: Rodney cannot file

e. Corporations; Rodney cannot file

3. Suppose that Rodney did not intend to file for voluntaryliquidation. Could he be forced into bankruptcy under Chapter7?

a. No, he must file the Chapter 7 bankruptcy himself.

b. Yes, because he has more than 12 creditors.

c. Yes, because he has a single creditor with a claim of morethan $14,425 in debt.

d. No, because people who are self-employed cannot be forcedinto filing for Chapter 7.

4. Rodney has a lot of creditors that are trying to sue him forthe debt he owes. One benefit of filing for Chapter 7 is that oncea petition is filed, the code provides for a(n) _______________foralmost all creditor litigation against the debtor.

a. Liquidation

b. Order of relief

c. Creditor’s meeting

d. Preferential payment

   e. Automatic stay

5. If the filing of Rodney's voluntary petition is proper, thepetition automatically becomes a(n)

a. Fraudulent transfer

b. Creditor’s meeting

c. Preferential payment

d. Discharged debt

   e. Order of relief.

6. Suppose Rodney fails to show up at hiscreditors' meeting with his creditors because he is scared to meetwith the hospital representatives. What is a possible consequenceof his failure to show?

a. His creditors will be allowed to sue him for failure toshow.

  b. The court may refuse to grant the bankruptcy

c. Rodney will be charged with a criminal offense.

d. There is no penalty for missing a creditor’s meeting.

e. His appointed trustee will be penalized, but Rodney willnot.