Bankruptcy Flashcards
When must a court dismiss a Chapter 13 proceeding or convert it to a Chapter 7 proceeding?
The debtor fails to file her tax returns for the previous four years.
What is true of a Trustee in a Chapter 7 Bankruptcy proceeding?
The trustee acts as the representative of the bankruptcy estate, not the debtor. As such, in a Chapter 7 liquidation case, the trustee collects, sells, and reduces to cash the assets of the estate; temporarily continues to operate the debtor’s business with court approval; and makes a final report. In addition, when an individual files a case under Chapter 7, the trustee must review the file and, within 10 days after the first creditors’ meeting, file a statement as to whether there is a presumption of abuse.
When does an unpaid seller have the right to recover against an insolvent buyer?
Under Section 2-702 of the UCC, an unpaid seller has the right to reclaim goods sold to an insolvent buyer subject to the following four rules: (i) The debtor must have received the goods within 45 days before commencement of the bankruptcy case, (ii) the seller must make a written demand for reclamation within 45 days after the debtor receives the goods, or within 20 days after commencement of the case if the 45 day period expires after the commencement, (iii) the debtor still has possession of the goods, and (iv) the goods are not subject to the prior rights of another with a security interest in the goods.
Which of the following is true 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 becomes part of the bankruptcy estate.
What debts are not dischargable under chapter 7?
Certain debts are nondischargeable in Chapter 7 cases. One such debt is the purchase of luxury goods or services if the debts aggregate over $650 to a single creditor, and this aggregate amount of debt is incurred within 90 days of the order for relief. A creditor who has extended more than $650 in this 90-day period must file a timely complaint with the bankruptcy court. In the absence of a timely filed complaint, the debt will be discharged.
What happens when a debtor voluntarily files bankruptcy?
An automatic stay arises, and enjoins any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case.
Which type of bankruptcy can creditors impose on debtors involuntarily?
Chapter 7 or Chapter 11.
What does Chapter 13 do?
Chapter 13 allows individuals (not businesses) to keep their assets by paying off their debts in accordance with a plan approved by the court. Once all plan payments are made, the debtor receives a discharge of his remaining debt. Chapter 13 is available to individuals who have regular income (wages, etc.) with which to pay debts in accordance with the plan.
What is Chapter 11 for?
Debtors often want to avoid liquidation so that they may continue in business. Chapter 11 is designed to help the debtor rehabilitate his failing business by extending, reducing or adjusting debts and reorganizing the business. In a Chapter 11 case, the debtor usually remains in possession of his assets, thus avoiding liquidation and enabling the business to operate. In addition to business debtors, Chapter 11 is also available to individuals.
Describe all three types of bankruptcy
In a Chapter 7 case, the individual debtor usually gets a “fresh start” by receiving a discharge of debts. In a Chapter 11 case, confirmation of the plan binds the debtor and creditors to its terms and discharges all debts dischargeable under the Code. In a Chapter 13 case, the individual debtor is eligible for discharge after all payments have been made under the plan. A discharge (i) relieves a debtor of personal liability and (ii) serves as a permanent injunction against creditors, prohibiting them from taking any action to recover a discharged debt from the debtor.
