7.3 BANKRUPTCY: DECLARATION, PROCESSES, DISTRIBUTION, AND DISCHARGE Flashcards
WHAT IS CH 7?
- STRAIGHT OR LIQUIDATION BANKRUPTCY.
- DOES THE DEBTOR HAVE THE ABILITY TO PAY DEBTS AS THEY COME DUE?
- TRUSTEE IS APPOINTED
- NONPROFIT, FARMERS, AND STOCK BROKERAGE FIRMS ARE EXCLUDED NOT ELGIBLE UNDER CH 7
- BOTH VOLUNATRY AND INVOLUNTARY PETITIONS (SEE REQUIREMENTS FOR INVOLUNTARY)
-DEBTOR WHO PREVIOUSLY RECEIVED A DISCHARGE IN BANKRUPTCY WN 8 YEARS WILL DENIED A GENERAL DISCHARGE.
WHAT IS CH 9?
ADJUSTMENT OF DEBTS BY INSOLVENT MUNICIPALITIES, ONLY VOLUNTARY PETITIONS
WHAT IS CH 11?
REORGANIZATION - SEE SCREENSHOT
*IN ADDITION A CREDITORS COMMITTEE IS FORMED, AND THE COMMITTEE CONSIST EXCLUSIVELY OF UNSECURED CREDITORS
WHAT IS CH 12?
ADJUSTMENT OF DEBTS OF A FAMILY FARMER AND FAMILY FISHERMAN, ONLY VOLUNTARY PETITIONS.
WHAT IS CH 13?
WAGE EARNERS PLAN - SEE SCREENSHOT
WHAT IS THE BANKRUPTCY PROCESS?
SEE SCREENSHOT
IT IS NECESSARY TO FILE A PROOF OF CLAIMS AGAINST THE DEBTORS ESTATE. ESSENTIALLY ONCE THE ESTATE COLLECTS ALL ASSETS, ANYONE WHO IS OWED MUST FILE A CLAIM, INCLUDING LEGAL.
WHAT PROPERTY IS EXEMPT FROM BANKRUPTCY’S ESTATE?
THE DEBTORS BANKRUPTCY ESTATE INCLUDES PROPERTY OWNED BY THE DEBTOR WHEN THE BANKRUPTCY PETITION IS FILED, IT ALSO INCLUDES PROPERTY OWED TO THE DEBTOR AS OF THE FILING, IN ADDITION PROPERTY RECEIVED BY THE DEBTOR WITHIN 180 DAYS AFTER THE PETITION IS FILED IS PART OF THE ESTATE IF IT RECEIVED BY INHERITANCE, BEQUEST, LIFE INSURANCE, DIVORCE,
- - 189,050 HOMESTEAD EQUITY IF AQUIRED WITHIN 3 1/2 YEARS PRECEDING THE DATE OF FILING, AND DEBTOR MUST HAVE BEEN DOMICILED IN THE STATE FOR TWO YEARS.
-GOVERNMENT BENEFITS (SOCIAL SECURITY) UNEMPLOYMENT
-IRA - UP TO 1,512,350
-ALIMONY, CHILD SUPPORT, PENSION, DISABILITY
WHAT IS A VOIDABLE PREFERENCE?
A PAYMENT FOR VALUE RECEIVED WHEN PAID RATHER THAN FOR A PRE-EXISTING DEBT IS NEVER CONSIDERED PREFERENTIAL.
DEBTORS ATTEMPT TO CONCEAL PROPERTY THROUGH TRANSFERS. THESE TRANSFERS MUST BE RETURNED TO THE TRUSTEE. A TRUSTEE MUST PROVE THAT THE TRANSFER ALLOWED THE CREDITOR TO RECEIVE MORE THAN SHE/HE WOULD HAVE UNDER A CHAPTER 7 LIQUIDATION PROCEEDING.
VOIDABLE PREFERENCES CAN ALSO OCCUR WHEN CREDITORS ARE GIVEN A HIGHER STATUS THAN THEY WOULD HAVE HAD IN BANKRUPTCY (E.G., GIVING A SECURITY AGREEMENT COVERING A PREVIOUS DEBT WITHIN 90 DAYS
A PAYEMENT IN THE ORDINARY COURSE OF BUSINESS IS NOT A VP
THERE ARE TWO TYPES OF VOIDABLE PREFERENCE
1) TRANSFERS FROM THE DEBTOR TO THE CREDITOR
2) TRANSFERS BY THE DEBTOR TO INSIDERS OF A BUSINESS
WHAT ARE THE EXCEPMTIONS TO VOIDABLE PREFERENCES?
1) CHARITY
2) EMPLOYEE RETENTION BONUSES
3) CONSUMER DEBTOR’S PAYMENT OF UP TO $7,575 IN CONSUMER DEBT
4) PATERNITY, ALIMONY, MAINTENANCE, AND CHILD SUPPORT
WHAT IS THE ORDER OF PRIORITIES FOR DISTRIBUTION OF THE DEBTOR’S ESTATE DUE TO BANKRUPTCY? SEVENTH DAY ADVENTIST CAN EXCEL FOR CHRIST TODAY PERIOD.
1) SECURED PARTIES - PERFECTED SECURED PARTIES, THEN SECURED PARTIES
2) DOMESTIC SUPPORT - E.G., ALIMONY, CHILD SUPPORT
3) ADMINISTRATIVE COST - EXPENSES OF THE BANKRUPTCY
4) CLAIMS ARISING IN THE ORDINARY COURSE OF BUSINESS
5) EMPLOYEE WAGES - LIMITED TO THOSE EARNED WITHIN 180 DAYS OF FILLING FOR BANKRUPTCY UP TO $15,150.
6) EMPLOYEE BENEFIT PLAN - SAME APPLICATION AS EMPLOYEE WAGES HOWEVER, EMPLOYEE WAGES IS SUBTRACTED FROM WHAT IS OWED FROM THE EMPLOYEE BENEFIT PLAN. (WAGES - BENEFIT PLAN)
7) FARM PRODUCERS AND FISHERMAN (UP TO 7,475)
8) CONSUMER CREDITORS - UP TO 3,350 (GOODS OR SERVICES FOR PERSONAL USE)
9) GOVERNMENT TAX - FEDERAL TAXES LESS THAN 3 YEARS - FYI SOCIAL SECURITY TAX IS NEVER DISCHARGED
10) CLAIMS FOR DEATH OR PERSONAL INJURY
11) ALL GENERAL UNSECURED CREDITORS WHO TIMELY FILLED (PRORATION MAY BE NEEDED) (ONCE A DIVIDEND IS DECLARED, THE SHAREHOLDERS ARE CONSIDERED UNSECURED CREDITORS FOR THAT AMOUNT.)
WHAT WILL RESULT IN THE COURT NOT ORDERING DISCHARGE?
- NO DEBTOR WHO HAS HAD A DISCHARGE IN BANKRUPTCY WITHIN EIGHT YEARS OF THE FILING OF THE PETITION FOR THE CURRENT BANKRUPTCY CAN BE GIVEN A DISCHARGE.
- CONDUCT OF THE DEBTOR (E.G., CONCELAMENT, REFUSAL TO FURNISH DOCUMENTS.
WHAT SPECIFIC TYPES OF DEBTS WILL NOT BE DISCHARGED?
SEE SCREEN SHOT
THE MAIN ONES ARE ASSOCIATED WITH THEFT, EMBEZZLENMENT, AND COMMITTING FRAUD ABOUT ONE’S FINANCIAL CONDITION.
FYI: DEBTS DUE TO ORDINARY NEGLIGIENCE OR FROM BREACH OF CONTRACT WHETHER INTENTIONAL OR NOT) ARE DISCHARGEABLE.
WHAT ARE THE DAMGES FOR IMPROPERLY FILING AN INVOLUNTARY BANKRUPTCY PETITION?
