11. 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?
A. Second Bank possesses the priority claim because Billy defaulted on Second Bank first.
B. First Bank possesses the priority claim because it was the first to perfect its
C. Neither bank possesses a right to repossess the scooter because Billy listed it as collateral with both banks.
D. First Bank possesses the priority claim because it was the first bank to make the loan that listed the scooter as collateral.
12. Tom’s life insurance has no cash surrender value. It must be
A. limited-payment life insurance.
B. straight life.
D. term life insurance.
13. Tom is a consumer with a lot of credit card debt who wants to get a clean start and get rid of all of his debts. If he qualifies, the best chapter in bankruptcy for Tom is Chapter
14. Zeke has purchased insurance with a double-indemnity benefit. This means
A. if Zeke lives beyond an age specified in the policy, the amount of the insurance proceeds is doubled.
B. if Zeke dies from an accident, the amount of the insurance proceeds will be double the amount of the policy.
C. when Zeke dies, there will be two beneficiaries to the policy rather than one.
D. the policy is backed by a second insurance company who has reinsured the risk.
15. Terry has medical coverage under Medicare. From this fact alone, you can infer it’s likely that Terry is
A. in a long-term care facility.
B. age 65 or over.
16. Charlie files Chapter 11 bankruptcy. __________ creditors have the right to vote on the plan.
17. 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
A. state exemptions.
B. federal exemptions.
C. automatic stay.
D. means test.
18. Tom is injured in a car accident caused by Fred. Tom’s medical insurance pays Tom’s medical bills. Which of the following statements is true?
A. Fred is subrogated to Tom’s rights against the medical insurer.
B. Tom is subrogated to the medical insurer’s rights against Fred.
C. None of the parties have subrogation rights in this situation.
D. The medical insurer is subrogated to Tom’s rights against Fred.
19. 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?
A. Big Bank has a first mortgage.
B. Tom doesn’t owe the debt to Big Bank because Big Bank failed to record the mortgage promptly.
C. Second Bank has a first mortgage.
D. If these are the only two mortgages on the property, they’ll share the proceeds pro-rata based on the amount due each.
20. 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.