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REG Law > Bankruptcy > Flashcards

Bankruptcy Flashcards

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1
Q

This is a document that discharges the debtor from having to pay certain debts

A

an Order of Relief

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2
Q

This is the date that you file a petition for bankruptcy

A

Filing Date

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3
Q

What date is the order of relief effective?

A

The same date as the filing date

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4
Q

T/F

You can voluntarily file for Chapter 7 bankruptcy as long as you are insolvent

A

FALSE

You can voluntarily file for Chapter 7 bankruptcy even if solvent, you just need debts of any amount

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5
Q

Chapter 7 Bankruptcy relates to ______

A

liquidation

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6
Q

In both a voluntary and an involuntary chapter 7 liquidation bankruptcy, a ______ is appointed

A

Trustee

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7
Q

This is when your assets are greater than your liabilities

A

Solvency

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8
Q

If there are 12 or more secured or unsecured creditors trying to force a chapter 7 liquidation bankruptcy, there needs to be ___ or more creditors to file who are owed ____ in _____ claims

A

3
$15,325
Unsecured

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9
Q

If there are less than 12 secured or unsecured creditors trying to force a chapter 7 liquidation bankruptcy, there needs to be ___ or more creditors to file who are owed ____ in _____ claims

A

1
$15,325
Unsecured

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10
Q

T/F

A debtor can contest an involuntary chapter 7 liquidation

A

TRUE

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11
Q

If the involuntary chapter 7 liquidation is uncontested, when is the order of relief effective?

A

The same date as the filing date

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12
Q

If the involuntary chapter 7 liquidation is contested, when is the order of relief effective?

A

After a hearing has determined Equitable Insolvency

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13
Q

This is when a debtor is not paying their debts when due, it doesn’t necessarily mean that their debts are greater than their assets

A

Equitable Insolvency

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14
Q

T/F

Farmers & Charities are exempt from Chapter 7 involuntary liquidation

A

TRUE

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15
Q

If creditors improperly file a chapter 7 involuntary liquidation, the debtor may collect what types of damages?

A

Compensatory Damages, Court Costs, Attorney’s Fees, and Punitive Damages

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16
Q

In Chapter 7 liquidation, failure to list a creditor in a petition filing will result in what?

A

The debtor being denied discharge of that debt

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17
Q

In Chapter 7 liquidation, failure to explain loss of assets will result in what?

A

The debtor being denied discharge of all debts

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18
Q

How is Chapter 7 bankruptcy different from Chapter 11 bankruptcy?

A

Chapter 7 is liquidation

Chapter 11 is reorganization

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19
Q

In this type of bankruptcy, the debtor submits a plan to restructure their debt for the purpose of allowing the debtor’s business to continue

A

Chapter 11 Reorganization

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20
Q

Who is the Chapter 11 reorganization plan submitted to? How long do they have exclusive rights to this?

A

an Unsecured Creditor’s Committee

120 Days

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21
Q

Who must approve the Chapter 11 Reorganization Plan?

A

at least 1 impaired class of creditors

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22
Q

T/F

Like in Chapter 7 Liquidation Bankruptcy, Chapter 11 Reorganization Bankruptcy has trustees

A

FALSE

The debtor usually acts as their own trustee

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23
Q

T/F

Unlike a Chapter 7 Liquidation Bankruptcy, a Chapter 11 Reorganization cannot be involuntary, it can only be voluntary

A

FALSE

Chapter 11 Reorganization can be both voluntary and involuntary

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24
Q

T/F

Chapter 11 Reorganization Plans must be approved as soon as possible

A

FALSE

They won’t be confirmed until full payment of administrative costs

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25
Q

Who cannot file under Chapter 7? (RIBS)

A

Railroads
Insurance companies
Banks
Savings & Loans

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26
Q

Filing under Chapter 7 or 11 acts as an ______ which ______

A

Automatic Stay

Stops all Collection Efforts

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27
Q

T/F

Filing under Chapter 7 or 11 acts as an automatic stay which stops all collection efforts, therefore the debtor will temporarily/indefinitely be relieved from payments such as alimony, child support payments, and other debts

A

FALSE

An Automatic Stay doesn’t stop alimony and child support payments.

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28
Q

What items are exempt from being sent to the trustee for creditors as of the filing date?

A

1) Social Security & Disability Benefits

2) Things necessary to live (house, car, furniture)

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29
Q

Debtors keep most property that they gain after filing. What are 3 exceptions to this that go to the trustee?

A

Property gained within 180 days after filing of petition for bankruptcy by:

1) Divorce
2) Inheritance
3) Insurance

30
Q

T/F

Trustee can get items/money back that was given away by the debtor before the filing

A

TRUE

31
Q

To disaffirm a prior payment, what 5 tests must be met (TANIM)

A

T - must have a Transfer of property that benefits a creditor
A - transfer must have been for an Antecedent debt (existing, overdue debt)
N - transfer must have been made within Ninety days of the filing date
I - transfer must have been made while debtor was Insolvent
M - creditor received More than they would have received in bankruptcy

32
Q

T/F

Converting unsecured debt to secured debt within 90 days is a preferential treatment

A

TRUE

33
Q

This is an existing, overdue debt

A

Antecedent Debt

34
Q

T/F

New debts are antecedent debts

A

FALSE

New dates, by definition are a contemporaneous exchange for NEW value, not an existing or overdue debt.

35
Q

T/F

You can make a transfer to prepay a secured debt without it being considered a preferential transfer

A

FALSE

Secured debts are not considered antecedent debts, you can’t prepay them.

36
Q

T/F

You can prepay current bills in the ordinary course of business

A

FALSE

Current bills are not considered antecedent debts, and you can’t prepay a current bill (like your utility bills) because that is considered a preferential transfer

37
Q

T/F

Consumer debts of $1000 or less are not considered antecedent debts

A

FALSE

Consumer debts of $650 or less are not antecedent debts

38
Q

To disaffirm a prior payment, the transfer must have been made within 90 days prior to the filing date. What is the exception?

A

If the creditor is an insider (close relative, partner) then the timing is extended to within 1 year prior to the filing date

39
Q

To disaffirm a prior payment, the transfer must have been made while the debtor was insolvent. How is insolvency determined in this case?

A

Insolvency is normally presumed if the transfer was made within the prior 90 days

40
Q

These are phony transfers by the debtor to hide property from creditors

A

Fraudulent Conveyances

41
Q

What is the mnemonic for the 11 categories of debts in the order of their priority?

A

SAG - WEG - CTO - AM

42
Q

What categories does SAG consist of?

A

S - Secured creditors (paid up to the value of the collateral)
A - Administrative costs of the bankruptcy proceedings and domestic support obligations (such as child support and alimony)
G - Gap creditors

43
Q

What happens if there is a deficiency when secured creditors are paid up to the value of the collateral? (Sag)

A

The deficiency is paid in the Miscellaneous unsecured debts category (aM)

44
Q

These are debts occurring after the filing but before the order of relief

A

Gap Creditors

45
Q

What categories does WEG consist of?

A

W - Wages unpaid
E - Employee Benefits Unpaid
G - Grain Producers & Fisherman Unpaid

46
Q

For Wages unpaid (Weg), what is the maximum priority?

A

$12,475 per employee

47
Q

For Wages unpaid (Weg), how recently must they have been earned?

A

Within 90 days prior to filing

48
Q

For Employee benefits unpaid (wEg), what is the maximum priority?

A

$12,475 per employee

49
Q

For Employee benefits unpaid (wEg), how recently must they have been earned?

A

Within 180 days prior to filing

50
Q

For Grain producers and fisherman unpaid (weG), what is the maxiumum priority?

A

$6,150 per individual

51
Q

What categories does CTO consist of?

A

C - Consumer deposits for goods/services not received
T - Taxes
O - Obligations to insured banks

52
Q

For Consumer deposits for goods/services not received (Cto), what is the maximum priority?

A

$2775 per

53
Q

What categories does AM consist of?

A

A - Accidents while under the influence of drugs/alcohol

M - Miscellaneous unsecured debts

54
Q

T/F

Upon bankruptcy completion, individuals, corporations, and partnerships are discharged of their debts

A

FALSE

Only individuals are discharged
Corporations and Partnerships are dissolved

55
Q

Receiving a previous discharge of debts within the last _____ year(s) of filing will preclude a debtor from receiving a discharge of their current debt

A

8

56
Q

T/F

Unjustifiably failing to keep adequate books and records is only a recommendation and will not result in a denial of discharge for a debtor

A

FALSE

This will preclude a debtor from any discharge

57
Q

Attempting to hide assets within ____ year(s) of filing will preclude a debtor from receiving a discharge of their current debt

A

1

58
Q

Refusal to do what two things will preclude a debtor from receiving a discharge of their current debt

A

1) Explain a loss of assets

2) Obey a court order

59
Q

Making a false oath or account on the petition for bankruptcy will have what result on the debtor?

A

This will preclude a debtor from receiving a discharge of their current debt

60
Q

What debts are non-dischargeable (WAFTED)

A

W - debts from causing Willful and malicious injury to others
A - debts concerning Alimony and child support
F - debts resulting from Fraud, theft, embezzlement
T - taxes owed within 3 years of filing
E - Educational loans
D - Debts unscheduled by the debtor, and creditor had no notice of bankruptcy

61
Q

T/F

In addition to the WAFTED non-dischargeable debts, any debt from the Sarbanes Oxley will not be discharged

A

TRUE

62
Q

T/F

Corporations and Partnerships can receive a discharge under Chapter 7 of the Federal Bankruptcy Code

A

FALSE

63
Q

T/F

If an individual, 10 months before the bankruptcy proceedings, obtained credit by using false information on the credit application they would not receive a general discharge in bankruptcy

A

FALSE

This would cause the specific debt to be non-dischargeable, but it would not prevent a general discharge of all debts

64
Q

T/F

A Chapter 11 Bankruptcy commencement can be voluntary or involuntary

A

TRUE

65
Q

T/F

Under a Chapter 11 Bankruptcy proceeding, a trustee must always be appointed

A

FALSE

66
Q

T/F

Under a Chapter 11 Bankruptcy proceeding, the debtor must be insolvent if the petition is filed voluntarily

A

FALSE

67
Q

T/F

Individuals, in general need not have regular income under Chapter 13 proceedings

A

FALSE

General income is required

68
Q

T/F

Under Chapter 13 proceedings creditors may not file involuntary petitions

A

TRUE

69
Q

T/F

Under Chapter 13 proceedings the debtor initiates the proceedings when they file a voluntary petition in a bankruptcy court

A

TRUE

70
Q

T/F

Under the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005, death caused while intoxicated when operating an aircraft is non-dischargeable in bankruptcy

A

TRUE

71
Q

T/F

Under the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005, injury caused while intoxicated when operating any motor vehicle is non-dischargeable in bankruptcy

A

TRUE

72
Q

T/F

Under the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005, debts for homeowner association fees is non-dischargeable in bankruptcy

A

TRUE

REG Law (12 decks)

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