Bankruptcy Flashcards
TYPES
Chapter 13
TYPES
Chapter 13
- Individuals only
- Trustee
- Small-time debt:
- $400k unsecured
- $1.2M secured
- Court approves plan, not CRs
- Best int of CR’s test
- Counseling
- Debts DISCHARGE
TYPES
Chapter 11
TYPES
Chapter 11
- Common for MEGACORPS
- Trustee or continued mgmt
- More than Ch 11 small-time debt
- CR’s approve plan
TYPES
Chapter 7
TYPES
Chapter 7
- Non-exempt assets liquidated
- Discharge for individual DR
- Rich DR with “means” to pay off his debts has to use Ch 11
AUTOMATIC STAY
Halts all “collection activities”
Willful violations—damages, atty fees, punitives
EXCEPTIONS:
LIFTING THE STAY:
AUTOMATIC STAY
EXCEPTIONS:
- Criminal actions
- Domestic support obligations
- Steps to MAINTAIN perfection
LIFTING THE STAY - CR not adequately protected
- Decline in value of the CL during BK proceedings
- DR doesn’t have any equity in the CL
EXEMPTIONS
PERSONAL PROPERTY =
EXEMPTIONS
PERSONAL PROPERTY = $60k ($30k for single person)
- Not protected against PERFECTED creditors
EXEMPTIONS
HOMESTEAD
EXEMPTIONS
HOMESTEAD = UNLIMITED
- Not protected against SECURED creditors—will sell the homestead to pay them off and you get any leftovers
- Bad acts = $155k
- NEW (3.3 years) HOMESTEAD = $155k (unless equity was transferred from an existing homestead)
EXEMPTIONS
Necessary stuff:
EXEMPTIONS
Necessary stuff:
- Wages after BK
- Alimony
- Health aids
- Ins benefits
- Pension
- Retirement funds (IRA)
EXEMPTIONS
BAD ACTS
EXEMPTIONS
BAD ACTS
- Debts from fraud, RICO, securities law violations, intentional tort or criminal act that caused serious bodily injury to someone
- Limits HOMESTEAD to $155k
POWERS OF TRUSTEE
TIB = Hypothetical judicial lien creditor
- TIB wins unless SP:
TIB = Hypothetical BFP of real estate
- TIB wins unless mortgagee:
POWERS OF TRUSTEE
TIB = Hypothetical judicial lien creditor
- TIB wins unless SP PERFECTED or FILED FS (even if that doesn’t actually “perfect” SI)
TIB = Hypothetical BFP of real estate
- TIB wins unless mortgagee RECORDED
FRAUDULENT TRANSFERS
Fraudulent transfer =
TIMING:
- Fraudulent intent
OR - Transfer for less than reasonable equivalent value IF ANY OF THE FOLLOWING:
- DR was insolvent or became insolvent as a result
- Incurred insurmountable debt as a result
- Transfered to an INSIDER (relative, partner, controlling SH)
TIMING:
- FED—within 2 years
- TX—within 4 years
PREFERENTIAL TRANSFERS
Preferential transfer =
EXCEPTIONS:
(1) To or for benefit of CR
(2) DR is insolvent (presumed during past 90 days)
(3) On account of an antecedent debt
- I.e. the debt arose BEFORE the transfer
- For SI, transfer happens at ATTACHMENT (unless perfected 30+ days after attachment—then transfer happened at PERFECTION)
(4) Within past 90 days (ONE YEAR FOR INSIDER TRANSFER)
(5) CR is better off
- New value given for the transfer, if perfected within 30 DAYS
- PMSI perfected within 20 DAYS
ORDER OF PMT
(1) Domestic support obligations
(2) BK admin expenses
(3) Involuntary gap claims
- After petition, but before DR is adjudicated BK and proceedings begin
…
…
(4) UNSECURED claims
- CR’s are paid on a pro rata basis
DISCHARGE
Individual DR’s get a “fresh start”
GLOBAL objections (total bar to discharge):
GLOBAL objections (total bar to discharge):
- DR is not an INDIVIDUAL
- Fraudulent transfers or concealment of property
- Prior discharge within the past 8 years
- Bad acts
DISCHARGE
EXCEPTIONS to discharge:
EXCEPTIONS to discharge:
- Tax obligations
- Debts incurred by fraud
- Luxury goods bought on credit w/in 90 days before BK
- Unscheduled debts (debts not disclosed in the petition)
- Student loans
- Domestic support
