Bankruptcy Flashcards
Chapter 7 Bankruptcy: effect on judgment creditor when there is NO bankruptcy estate?
The debtor is relieved of any personal liability to judgment creditor
Chapter 9 Bankruptcy is for..?
Municipal Debt Adjustments
What is included within the bankruptcy estate?
Income and inheritances that the debtor receives from bequests, devise, inheritance, property settlement, estate property (Capital Gains,) divorce settlement, beneficial life interest w/in 180 days of filing
What is Chapter 7 Bankruptcy? How does it work?
Liquidation of estate / relief of MOST debts
After petition is filed, trustee is appointed.. and stay against Creditor Collection Proceedings will go into effect
What happens if your claim (As a creditor against a debtor in bankruptcy) is NOT timely filed?
You get paid last or not at all.
Chapter 7: Creditor objections to discharge
This destroys the case for Chapter 7.
1) Debtor Not an Individual
2) Fraudulent transfers or concealment of property
3) Unjustifiable failure to keep books/records
4) Prior discharge w/in 8 years
5) Commision of Bankruptcy Claim (committed fraudulently in connection with the bankruptcy case) –
- false oath/account, presenting/using a false claim, giving/receiving a bribe, withholding records/documents
ALSO…
Failure to explain loss of assets, refusal to obey orders/submit to questioning, improper conduct in other bankruptcy case (inside case,) Waivers from the court, failure to complete a financial management course
Chapter 7: EXCEPTIONS to discharge
THESE DEBTS WILL SURVIVE BANKRUPTCY.
1) Taxes due w/in 3 years of filing
2) Debts incurred by Fraud
3) Luxury Goods
4) Open-Ended credit to Consumers
5) Undisclosed debts
6) Embezzlements and debts owed due to fraud
7) Alimony/child support / settlements from marital separations
8) Wilful and malicious injuries (NOT liabilities resulting from torts of negligence)
9) Operating a vehicle while Intoxicated
10) Fines / penalties from gov’t
11) Educational Loans (STUDENT LOANS)
12) Anything that was not discharged in a Bankruptcy 8 years or longer prior
13) Debts incurred for payment of taxes
14) Debts for violations on Securities Law
15) Condo, co-op, homeowner assoc. fees
16) Restitution for federal crimse
17) Prisoner court fees
18) Fines on federal election violation
19) Debt owe to pension or profit-sharing plan
Wage claims / employee benefit claims up to maximum for bankruptcy under Chap. 7?
$12,475
always within 180 days PRIOR to filing
9 Priority Creditors in Bankruptcy:
SAG-WEG-CTI
S - support obs. to spouse/children
A- Administrative expenses of bankruptcy proceeding
G- Gap creditors (claims that accrue in ordinary course of business but BEFORE appointment of trustee)
W- WAGES up to $12,475 per employee, if earned within 180 days PRIOR to filing
E- Empl. benefit plan contributions up to $12,475 per employee (Reduced by wage claims)
G- Grain farmers/ fishermen’s claims up to $6,150
C- Consumer deposits for goods paid for / not delivers up to $2,775
T- Taxes
I - Injury claims
Distribution of Debtor Estate
How to pay if insufficient funds?
1) Secured Claims
2) Priority Claims (SAG-WEG-CTI)
3) General (unsecured) creditors who filed claims on time.
If there is not enough on a particular LEVEL, creditors share the remaining funds PRO-RATA.
Who needs to confirm a Chap. 11 Corp. Reorganization plan?
2/3 of SHARES in total (held by however many shareholders)
Cram-down still available even if they don’t approve, if court and at least 1 impaired class approves
Chapter 11 – what is the “12 unsecured creditors” rule?
Less than 12 unsecured creditors: 1 or MORE creditor with debts to be paid in excess of $15,325 can file an involuntary petition against debtor
More than 12 unsecured creditors: 3 or MORE creds. with debts in excess of $15,325 can file involuntary petition
What happens when there is an involuntary filing of bankruptcy petition?
Creates an “automatic stay” against existing debtors
Means they need to stop tryna’ collect
Is insolvency a requirement of Chapter 7 bankruptcy?
No
What are preferential payments?
Payments Within 90 Days of Bankruptcy
If you make payments of over $600 in aggregate to a creditor in the 90-day period prior to your filing date while you are insolvent (meaning your debts exceed your assets) and that payment allows the creditor to receive more than it would otherwise have through your bankruptcy, it is a preferential debt payment. Also, keep in mind that bankruptcy law presumes you are insolvent during the 90-day period prior to bankruptcy. As a result, the trustee does not have to prove insolvency in most cases.
Payments to Insiders Within One Year of Bankruptcy
Any payments you make to insiders (such as your family, friends, or business partners) are also subject to the above rules. But the look back period is even greater. Payments to insiders are deemed preferential if made within one year of bankruptcy instead of just 90 days.
