Bankruptcy

Question 1

of unsecured claims a _______ claim receives first priority and is entitled to be paid before other unsecured claims

Answer 1

domestic support obligation

Question 2

unsecured claims in descending order of priority

Answer 2

1) domestic support obligations 2) administrative expenses 3) involuntary gap claims 4) wage claims 5) contributions to employee benefit plans

Question 3

trustee’s duties in a chapter 7 case

Answer 3

• trustee continues to operate the debtor’s business
• trustee collects and sells the assets of the estate
• trustee determines whether there is a presumption of abuse

Question 4

unpaid seller has the right to reclaim goods sold to an insolvent buyer subject to…

Answer 4

1) the debtor must have received the goods within 45 days before commencement of the case
2) the seller must make a written demand for reclamation within 45 days after debtor receives goods or within 20 days after commencement of the case if the 45 day period expires after commencement
3) the debtor still has possession of the goods AND
4) the goods are not subject to the prior rights of another with a security interest in the goods

Question 5

transfers made in exchange for “less than a reasonably equivalent value,” regardless of whether the debtor had an intent to hinder, delay, or defraud, are fraudulent transfers if any of the following also occurred…

Answer 5

1) debtor was insolvent or became insolvent as a result of the transfer
2) debtor was engaged in business or was about to engage in business with an unreasonably small amount of capital
3) debtor intended to incur debts that would be beyond the debtor’s ability to pay as the debts matured OR
4) the debtor made or incurred such transfer to or for the benefit of an insider under an employment K and not in the ordinary course of business.

Question 6

regarding property acquired by the debtor after a bankruptcy petition is filed, any property that the debtor becomes entitled to by bequest, devise, or inheritance within 180 days after the petition is filed…

Answer 6

becomes part of the bankruptcy estate

Question 7

certain debts are nondischargeable in chapter 7 cases, including the purchase of luxury goods or services if the debts aggregate over…

Answer 7

$650 to a single creditor and this aggregate amount of debt is incurred within 90 days of the order for relief

Question 8

automatic stay

Answer 8

protects the debtor from harassment and financial pressures
- does not alter the substantive rights of creditors, just interrupts collection activities while the bankruptcy is pending

Question 9

once a debtor commences a bankruptcy case an automatic stay arises and…

Answer 9

enjoins any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case

Question 10

under certain circumstances, creditors may commence ____ cases against a debtor

Answer 10

chapter 7 or 11

Question 11

to be eligible to file a bankruptcy petition, a debtor who is an individual must have received…

Answer 11

post petition counseling within 180 days prior to filing the petition

Question 12

chapter 13 is an available option for…

Answer 12

individuals with regular income

Question 13

chapter 11 allows a debtor to…

Answer 13

rehabilitate a failing business by extending, reducing or adjusting debts and reorganizing the business

• debtor usually remains in possession of his assets, avoiding liquidation and enabling the business to operate
• also available to individuals

Question 14

chapters 7, 11, and 13 allow the debtor to…

Answer 14

receive a discharge of his debts

Question 15

discharge from debt

Answer 15

i) relieves a debtor of personal liability
ii) serves as a permanent injunction against creditors, prohibiting them from taking any action to recover a discharged debt from the debtor