Bankruptcy - 20

Question 1

When can a antecedent debt be voided

Answer 1

a trustee of a bank can set aside a secured interest if it is considered a preferential transfer.

One of the factors that would make it preferential is if it was made within 90 days. If so the preference can be rolled back

Question 2

Who can’t file chapter 11

Answer 2

banks, savings and loans, and insurance

Question 3

Who can file chapter 11

Answer 3

individuals, partnerships, and corporations

Question 4

When is paying a debt not considered preferential

Answer 4

It you pay someone for value received as opposed to pre-existing debt then it is NOT considered preferential.

The payment would therefore not be voidable

It is a contemporaneous exchange

Question 5

Under chapter 7 - when can a voluntary petition be filed

Answer 5

• it can be done by joint spouses - as long as its not an abuse
• no need to be insolvent
• you can be an individual, a corp, or partnership - no banks, savings and loans, or credit unions or railroads

Question 6

When is solvency important

Answer 6

When filing chapter 7 - certain transactions can be reversed or voided is they are considered preferential

I - the debtor was insolvent at the time the payment was made ( not when the loan was made)

W - payment made within 90 days of filing

A - i was against antecedent debt (new debt is ok)

I- if it improves the creditor’s position

T - if payment was make in the preceding year if the creditor is an insider

Question 7

How do you involuntarily petition a debtor into bankruptcy - chapter 11

Answer 7

• you can if they are unable to pay their debts as they come due.

If 12+ creditors - they need at least 3 to co sign

If less than 12 - only 1 signature required to file a involuntary petition

Question 8

What happens when an involuntary bankruptcy petition is filed

Answer 8

It stops all attempts by individual creditors to enforce claims using assets in the bankruptcy estate

Question 9

In chapter 11 - who can belong to a creditor’s committee

Answer 9

only unsecured creditors

The secured creditors already have collateral securing their loans so they are already protected

Question 10

Do you need to meet a certain threshold amount to file chapter 7

Answer 10

No - any individual with outstanding debts can file voluntarily under chapter 7

Question 11

What is the order of payment under Chapter 7

Answer 11

1 - Secured Creditors

2 - Priority of claims
S - support and alimony
T - trustee and Administrators fees
O - Owed after petition dates
P - Payroll - for last 90 days and benefits last 180 days
I - individual consumer deposits
T - Taxes - 3 years
D - Drunk Driver charges 

3-general - un secured creditors

Question 12

What happens once a valid petition in bankruptcy has been filed

Answer 12

A trustee will first be appointed

then a stay against creditor collection procedures will go into effect

Question 13

Under what condition can a a debtor seeking a voluntary chapter 7 be denied

Answer 13

If they refuse to explain a loss of assets

This would be a failure to correctly answer material questions on the bankruptcy petition

Question 14

What are some of the powers of a trustee

Answer 14

A trustee may prevail against a creditor with an unperfected security interest since the lack of perfection allows other claims to take priority if perfected earlier.

The trustee is responsible for making certain that the debtor’s property is preserved and available for the payment of creditors, which gives the trustee the power to require holders of the property to deliver it to the trustee.

Any claims of the debtor become the claims of the bankruptcy estate and, therefore, the trustee, giving the trustee the right to use whatever means that are available to the debtor to retrieve property.

Question 15

What happens after a discharge under chapter 7

Answer 15

The debtor is relieved of any personal liability to a judgement creditor

Question 16

What is a judgement creditor

Answer 16

This is the party a money judgment is issued to and is entitled to the enforcement of the judgement through liens, execution , and levy

they are the person who received the money in a judgement ruling

Question 17

Once you voluntarily declare bankruptcy what happens

Answer 17

a stay is executed against most creditor lawsuits against the debtor

Question 18

What is the rule with monetary incentives offered to insider employees

Answer 18

It can be no more that 10X the amount pay to average non management employees

Question 19

What are exempt from being included in the bankruptcy estate

Answer 19

- reasonable alimony and child support
social security
-veteran and disability payments
-unemployment compensation
- most wages earned after filing

property received within 180 days of the petition are included in the estate including - inheritance, lief insurance proceeds, divorce settlements

Question 20

Under the Fair debt Collection Practices Act what can a debt collector do or not when represented by an attorney

Answer 20

They can’t communicate with a debtor who is represented by an attorney

they can contact a third party to get the location of a debtor

can commence a lawsuit to get a loan

Question 21

What is subrogation

Answer 21

This allows the purity to obtain the creditors rights against the debtor

This helps the surety to collect from the debtor after the creditor has been satisfied

Question 22

What is contribution

Answer 22

This is the right of a co-surity to obtain a recovery from other co-surities

Question 23

What is exoneration

Answer 23

This is a suit by a surity to compel the debtor pay the creditor

Question 24

What is attachment by surety

Answer 24

This is when you obtain a security interests from the principle debtor directly

Question 25

What is the right of reimbursement

Answer 25

this refers to repayment from the debtor - it is available to both sureties and co-sureties

Question 26

When can a purity avoid liability

Answer 26

If the surety can demonstrate creditor misconduct that injured the surety - that can be released from liability

Question 27

Do suretyship need to be in writing

Answer 27

yes - they fall in the stature of frauds

Question 28

What are defenses that a surety has to minimize liability

Answer 28

incapacity of the surety - like if they were a minor

Question 29

IS a defense such as a personal defense of the primary debtor against the creditor available to a surety

Answer 29

no

Question 30

Is a defense such as the incapacity of the primary debtor available to the surety

Answer 30

No

Question 31

Does a partial surrender of the principle debtor’s collateral release the surety from liability to the creditor

Answer 31

Yes - if a creditor acts in a way that materially affects the surety’s rights against debtor

Question 32

when is a surety released from its obligations

Answer 32

A surety will be released from liability if the creditor does something affecting the surety’s liability such as failing to disclose negative information about the debtor to the surety; releasing collateral that secured the debt; refusing tender of payment from the debtor; or making an agreement with the debtor that increases the surety’s risk of loss.

Question 33

What is a surety’s liability

Answer 33

A surety is primarily liable for the debt along with the principal debtor, so the creditor can demand payment from the surety without first proceeding against the debtor or the collateral.

Question 34

What happens in a surety if the debtor is discharged in bankruptcy

Answer 34

The surety is still on the hook

Question 35

What is a composition agreement

Answer 35

This releases the debtor from its debts in exchange for the settlement included in eh agreement

Question 36

What is an assignment for the benefit of the creditors

Answer 36

This transfers assets to a trustee for the purpose of liquidation and satisfaction of debts

It will offer no release if the sales proceeds are in adequate to pay all amounts owed

Question 37

What is a types of surety bond

Answer 37

an official bond

this is where the surety guarantees that the officials will faithfully execute their duties