Bankruptcy - 20 Flashcards
When can a antecedent debt be voided
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
Who can’t file chapter 11
banks, savings and loans, and insurance
Who can file chapter 11
individuals, partnerships, and corporations
When is paying a debt not considered preferential
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
Under chapter 7 - when can a voluntary petition be filed
- 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
When is solvency important
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
How do you involuntarily petition a debtor into bankruptcy - chapter 11
- 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
What happens when an involuntary bankruptcy petition is filed
It stops all attempts by individual creditors to enforce claims using assets in the bankruptcy estate
In chapter 11 - who can belong to a creditor’s committee
only unsecured creditors
The secured creditors already have collateral securing their loans so they are already protected
Do you need to meet a certain threshold amount to file chapter 7
No - any individual with outstanding debts can file voluntarily under chapter 7
What is the order of payment under Chapter 7
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
What happens once a valid petition in bankruptcy has been filed
A trustee will first be appointed
then a stay against creditor collection procedures will go into effect
Under what condition can a a debtor seeking a voluntary chapter 7 be denied
If they refuse to explain a loss of assets
This would be a failure to correctly answer material questions on the bankruptcy petition
What are some of the powers of a trustee
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.
What happens after a discharge under chapter 7
The debtor is relieved of any personal liability to a judgement creditor
What is a judgement creditor
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
Once you voluntarily declare bankruptcy what happens
a stay is executed against most creditor lawsuits against the debtor
What is the rule with monetary incentives offered to insider employees
It can be no more that 10X the amount pay to average non management employees
What are exempt from being included in the bankruptcy estate
- 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
Under the Fair debt Collection Practices Act what can a debt collector do or not when represented by an attorney
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
What is subrogation
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
What is contribution
This is the right of a co-surity to obtain a recovery from other co-surities
What is exoneration
This is a suit by a surity to compel the debtor pay the creditor
What is attachment by surety
This is when you obtain a security interests from the principle debtor directly
What is the right of reimbursement
this refers to repayment from the debtor - it is available to both sureties and co-sureties
When can a purity avoid liability
If the surety can demonstrate creditor misconduct that injured the surety - that can be released from liability
Do suretyship need to be in writing
yes - they fall in the stature of frauds
What are defenses that a surety has to minimize liability
incapacity of the surety - like if they were a minor
IS a defense such as a personal defense of the primary debtor against the creditor available to a surety
no
Is a defense such as the incapacity of the primary debtor available to the surety
No
Does a partial surrender of the principle debtor’s collateral release the surety from liability to the creditor
Yes - if a creditor acts in a way that materially affects the surety’s rights against debtor
when is a surety released from its obligations
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.
What is a surety’s liability
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.
What happens in a surety if the debtor is discharged in bankruptcy
The surety is still on the hook
What is a composition agreement
This releases the debtor from its debts in exchange for the settlement included in eh agreement
What is an assignment for the benefit of the creditors
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
What is a types of surety bond
an official bond
this is where the surety guarantees that the officials will faithfully execute their duties
