bankruptcy Flashcards
Chapter 7
Under Chapter 7, a discharge discharges most debts of a debtor, whether or not there is a bankruptcy estate from which to pay the debts
Various chapters of bankrupcy
Chapter 9 is for municipal debt adjustment; a family farmer cannot seek relief under this chapter.
Chapter 7 provides for liquidation of a debtor’s estate. A family farmer withnregular income may seek relief under Chapter 7.
Chapter 11 is for debt reorganization and is available to family farmers withregular income.
. Chapter 13 is for adjustment of debts of individuals with regular income and is available to a family farmer with regular income.
chapter 7
The bankruptcy estate includes property the debtor receives from a bequest,
devise, inheritance, property settlement, divorce decree or beneficial interest in a life insurance policy or
death benefit plan within 180 days after the filing of the petition. In addition, the estate includes any
income generated by estate property (rents, interest and dividends) after the petition is filed. Earned
income after the case commences is generally excluded.
Chapter 7
Not all debts are discharged by a bankruptcy. For example, alimony is not
discharged, and neither are debts arising from fraud.
After a Chapter 7 bankruptcy, the debtor may not obtain another bankruptcy for
eight years.
There is no limitation on the types of businesses a debtor may own after
bankruptcy.
filing of a petition
The filing of a petition in bankruptcy invokes an automatic stay against all
attempts to collect on most debts of the debtor. The filing does not terminate liens, but merely stays them
(i.e., temporarily prevents their enforcement).The filing does not prevent the debtor from incurring new
debts.
involuntary petition
An involuntary petition for bankruptcy can be filed if a debtor owes more than
$15,775 in unsecured debt and is not paying its debts as they become due.
voluntary petition under Chapter 7 conditions
A debtor need not be insolvent to file a voluntary petition under Chapter 7.
Although the debtor’s income may not exceed certain specified levels, insolvency is not a requirement.
Additionally, there is no requirement of 3 creditors in a voluntary petition. An involuntary petition requires
at least 3 creditors to file if the debtor has 12 or more creditors
chapter 11 reorg
There is no requirement of liquidation in a reorganization.
In a reorganization a plan of reorganization must be filed.
In a reorganization the plan of reorganization must be approved by the court.
In a reorganization each class of claimants has an opportunity to accept the plan
(although it need not be accepted by all classes, such as unimpaired classes of security holders).
chapter 11
Under Bankruptcy Code Section 303, creditors may petition a debtor involuntarily
into a Chapter 11 bankruptcy reorganization proceeding
Trustee
A trustee in bankruptcy is treated as a hypothetical lien creditor on all of the
debtor’s property as of the date the bankruptcy petition is filed. The trustee is subordinate to all prior
perfected security interests, including statutory liens that were effective prior to the filing of the
bankruptcy petition.
