BANKRUPTCY Flashcards
“Means Test”
determining whether the debtor can pay back their debts and used to determine “bankruptcy abuse”
if under chapter 7 and too high it transfers to chapter 13
lawyer and debtor can be held liable for the costs
What is chapter 7 bankruptcy & who does it apply to?
Involuntary or Voluntary
Liquidation bankruptcy
Does not need to be insolvent or have a certain number of creditors petition to file
Individuals, Partnerships and Corps
trustee is appointed
In Chapter 7 bankruptcy, what causes a debtor’s debts to fail being discharged.
- Business challenges petition but have no been paying bills as they have come due
- Debtor fails to attend a creditor’s meeting (unless excused)
- Debtor fails to reasonably explain a loss of assets
What is chapter 11 bankruptcy?
Voluntary or Involuntary
Reorganization of debt
Individuals, Partnerships, Corporations
trustee is NOT required
What is chapter 12 bankruptcy?
Farmer family
Voluntary only
What is chapter 13 bankruptcy?
Consumer Debt Arrangement Plan
Voluntary ONLY
3-5 year plan is made
Trustee is required
Garnishment
legal process of having sums deducted directly from a debtor’s paycheck to satisfy a debt
usually limited to 25% after taxes
Writ of attachment
Debtor’s property is seized so that, if a creditor wins a judgment, something will be available to pay the judgment
Does not need to be real property (land or house)
Usually personal property (Car or boat)
What are four remedies a creditor can seek?
- Composition - discharge debtor if performed
- Assignment
- Judgement/judgement lien
- Judgement execution - attachment, garnishment
Name the damages for wrongful involuntary filing
- Compensatory
- Punitive
- Attorney fees
- Court costs
What is included in debtor’s estate?
Tangible & intangibles
Income generated from property after the beginning of bankruptcy proceedings
- appreciation in value of property
- gifts received within 180 days of filing
- property from divorce
- life insurance proceeds
Alimony or social security are NOT included
What is an antecedent debt?
Debt that existed at the time of bankruptcy filing
What is a preferential payment?
Any payment or security interest made to a particular creditor within 90 days of declaring bankruptcy
A debtor who declares bankruptcy cannot give on creditor better treatment than the other
Distribution of debtor’s estate priority list
- perfected secured parties
- claims for domestic support (child support AND alimony)
- administration costs - attorney, accounting, appraisals and trustee fees from bankruptcy proceedings
- Employee wages - limited to within 90 days of filing $12,475
- Contributions to employee benefit plans within 180 days
- Claims of farm producers and fisherman
- Consumer creditors - up to $2,775 - any more above = general creditor
- Governmental units for taxes
- Death or personal injury cliams
- General unsecured creditors
- Anything left goes back to debtor
Items NOT discharged in bankruptcy
= items not let go of - not off the hook for
- alimony/child support
- student loans
- unpaid taxes - tax liens
- debt acquired through false representations
- debts undisclosed
- willful or malicious injury
