Bankruptcy

Question 1

Can a family farmer voluntary petition for Chapter 9 bankruptsy and what is Chapter 9?

Answer 1

No. Chapter 9 is for municipal debt adjustment.

Question 2

How long after the first chapter 7 bankruptcy can a debtor own another bankruptcy?

Answer 2

8 years

Question 3

General Characteristics of a Chapter 7 Liquidation (Bankruptcy)

Answer 3

• A trustee is appointed- they collect debtors assets, liquidate, and use proceeds to pay off debts
• If debtor is individual= debts are discharged
• if debtor is entity= it is dissolved, debts are discharded to same effect but not called that

Question 4

General Characteristics of a Chapter 13

Answer 4

“Adjustment of Debts of Individuals with Regular Income”

• A trustee is appointed
• debtor repays all or portion of debt over 3 to 5 year period

Question 5

General Characteristics of a Chapter 11

Answer 5

“Reorganization”

• No liquidation
• Trustee not required
• debtor remains in possession of assets and a plan of reorganiztion is adopted
• creditors are paid to the extent possible and business continues

Question 6

Under which bankruptcy types is a trustee required?

Answer 6

Chapter 7 & 13

Question 7

Under Chapter 11 Bankruptcy, is a trustee required?

Answer 7

No. But the court can appoint one if needed

Question 8

What is Chapter 15 Bankruptcy for?

Answer 8

Adopted to promote a uniform and coordinated legal regime for cross-boarder insolvency cases
“Ancillary and Cross-Boarder Cases”

Question 9

When can a chapter 7 bankruptcy case for an individual be dismissed?

Answer 9

If upon finding that granting relif under Chapter 7 would constitute abuse (means test or general abuse test”
-Can also be converted to a chapter 13

Question 10

First step in determining whether Chapter 7 bankruptsy is okay

Answer 10

If income is lower than the state mean, it is okay. If it is higher, the court wont dismiss the case

Question 11

What is the Means Test for and the calculation for Bankruptcy cases?

Answer 11

• Used to determine if creditors would be better off under a Chapter 13 5 year reorganization
• 60 x the debtors average monthly income less allowable expenses
• if less than $7,700 = may continue as chapter 7
• if less than $12,850 or more= usually convert to Chapter 13

Question 12

Who may not file for bankruptcy in Chapter 7 Liquidations?

Answer 12

(RIBS)

• Railroads
• Insurance Companies
• Savings Institutions
• Banks
• Small business Investment Companies

Question 13

Who may not file for bankruptcy in Chapter 11 Reorganizations

Answer 13

(BIBS)

• Stock or commodity broker
• Insurance Companies
• Banks
• Small business investment companies

Question 14

Who may file for Chapter 11 bankruptcy that can’t for Chapter 7?

Answer 14

Railroads may be a debtor under Chapter 11

Question 15

True/False: Debtors may file jointly in Chapter 7 & 11 bankruptcy cases

Answer 15

True

Question 16

Who may not involuntarily be petitioned to bankruptcy?

Answer 16

Farmers and Charities

Question 17

What are the rules for how many creditors must involuntarily petition a person into bankruptcy

Answer 17

1) fewer than 12 creditors and any one or more creditor owed at least 15,775 in unsecured debt may file
2) 12 or more creditors owed same amount above at least in aggregate, 3 must.

Question 18

Property included in the Bankruptcy estate

Answer 18

• all debtors real n personal property at filing
• income generated from estate property received within 180 days after filing
• property received from divorce, inheritance, or insurance within 180 days after filing

Question 19

What does it mean when a trustee can disaffirm Preferences?

Answer 19

Payment is set aside, the payment is taken back from the creditor who received it and it becomes a part of the bankruptcy estate

Question 20

A preferential Payment is

Answer 20

-a transfer made to or for the benefit of a creditor
-on account of an antecedent debt (already existing) of the debtor
-made within 90 days prior to the filing (one year if creditor is an insider)
-made while the debtor was insolvent
and
-results in the creditor receiving more than the creditor would have received under the Bankruptcy Code

Question 21

Transfers that cannot be set aside by trustee in bankruptcy

Answer 21

1) Transfers in ordinary cause of business
2) PMSI Perfect w/i 30 days
3) Consumer payments under $600
4) Domestic Support Obligations

Question 22

3 basic categories claimants are paid in (order) during Bankruptc

Answer 22

1- Security claimants (payed in full to the extent of the value of the collateral securing their claims
THEN
2-Priority claimants (nine subcategories- left over pays these ppl. if money is left over goes to…)
THEN
3- general creditors who filed their claims on time

Question 23

The order of priority claimants

Answer 23

SAGWED

1) Support obligations to spouse n children
2) Administrative exps (to preserrve estate- trustee fees, filing fees, attorney n actountsnt
3) Involuntary Case Gao Claims (in ordinary business after involuntary petition is filed, but before entering the order of relief or appointment of a trustee)
4) Wage claims up to $12,850 per employee (anything in excess goes to nonpriority claim
5) employee benefit plans up to 12,850
6) grain farmers n fisherman up to 6,325
7) consumer deposits up to 2,850
8) tax xlaims
9) personal injury claims arising from intoxicated driving

Question 24

How are general unsecured creditors (nonpriority claims) paid in bankruptcy

Answer 24

If money left over after priority claimants, they are paid pro-rata (the ones who filed timely that is)