Bankruptcy Flashcards
What are the different chapters of bankruptcies for individuals/farmers/businesses/government?
Chapter 7 - start over, all others - restructure Ch 9 - government restructure Ch 11 - business restructure Ch 12 - farmers restructure Ch 13 - individual restructure
What percentage of bankruptcy is voluntary?
99% of bankruptcy is voluntary (we are not tested on involuntary)
What is the Means Test?
- If you have the ability to repay, you must repay
- Intent to prevent bankruptcy abuse
- location important
- complex schedules
What are serial filers?
Those who file for bankruptcy very often
What must you do before you file for bankruptcy?
- You must see a credit counselor and you have to pay them
What are bankruptcy claim priorities?
- employee benefit plans
- consumer deposits
- alimony/child support
- taxes
What are debtor’s exemptions in bankruptcy (what do they get to keep)?
- health aids
- unemployment compensation
- alimony/child support
- retirement plans
- lawsuit awards
- home equity
- auto equity
- household furnishings
- jewelry
- books
- life insurance
Can you take both federal and state law exemptions?
No, you must pick either federal or state law exemptions
What is the Federal Homestead Exemptions?
If debtor chooses state exemptions, they may not exempt a residence acquired within 3 years and 4 months before filing $125,000+
What are examples of non-dischargeable debts?
- certain taxes and customs duties
- obtaining money on false pretenses
- damage awards for intentional torts
- alimony/ child support
- unscheduled debt
- embezzlements
- consumer debts for luxury goods
- fines, forfeitures
- student loans
What are examples of things you CAN wipe out?
- credit card debt
- utility debts
- home loans
What is reorganization?
- Proceedings
- Plan
- Confirmation
- Effect
Essence: Put plan together to reduce debt and add time, court approves plan, plan goes into effect
What are the steps of bankruptcy in federal law?
- All start with petition
- Automatic “stay”
- Trustee Appointed
- Assets Applied to creditors
In liquidation, debtor gets discharged and keeps exempt property
In restructuring, follow the plan, confirmation, honor plan
What is the different between federal and state bankruptcy?
Federal bankruptcy is mandatory and compels all creditors to participate and get paid.
State bankruptcy is voluntary for creditors, and is much cheaper.
What is garnishment?
- Go to employer and say to pay you part of debtor’s paycheck.
