Bankruptcy Flashcards
What happens if the debtor fails to file her tax returns for the previous 4 years?
Court must dismiss a Chapter 13 proceeding or convert it to a Chapter 7 proceeding.
T/F: court may dismiss or convert a case based on unreasonable delay that prejudices creditors, failure to file a timely plan, or failure to make timely payments.
True.
Of the unsecured claims, a(n) ____________________ claim receives first priority and is entitled to be paid before other unsecured claims.
domestic support obligation.
Certain kinds of unsecured claims are entitled to be paid before other unsecured claims. The 10 classes, in descending order of priority are: domestic support obligations, administrative expenses, involuntary gap claims, wage claims, contributions to employee benefit plans, claims against operators of grain or fish storage facilities, consumer deposits, tax claims, capital requirements of insured depository institution, and personal injury claims resulting from intoxicated operation of a vehicle.
T/F: The trustee acts as the representative of the bankruptcy estate, not the debtor.
True.
An upaid seller has the right to reclaim goods sold to an insolvent buyer if what 4 conditions are met?
(i) debtor received the goods within 45 days before commencement of the bankruptcy case,
(ii) seller made 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) debtor still has possession of the goods, and
(iv) goods are not subject to the prior rights of another with a security interest in the goods.
Fraudulent transfers are voidable by the trustee if made within two years before the date of the filing of the petition. What are the characteristics of these transfers?
Transfers made in exchange for “less than a reasonably equivalent value (REV),” are fraudulent transfers if any of the following also occurred:
(i) debtor was insolvent or became insolvent as a result of the transfer;
(ii) debtor was engaged in business or was about to engage in business with an unreasonably small amount of capital;
(iii) debtor intended to incur debts that would be beyond the debtor’s ability to pay as the debts matured; or
(iv) the debtor made such transfer to or for the benefit of an insider, or incurred such obligation to or for the benefit of an insider, under an employment contract and not in the ordinary course of business.
Generally, property acquired by the debtor after the petition is filed does not become part of the bankruptcy estate. What are the 5 exceptions?
The following property does become a part of the bankruptcy estate: (i) property interests and earnings acquired by an individual debtor after filing a Chapter 13 or Chapter 11 petition but before the case is closed, dismissed or converted to another chapter;
(ii) proceeds of property of the estate, even if they come into the estate after the petition is filed;
(iii) any property that the debtor becomes entitled to by bequest, devise, or inheritance within 180 days after the petition is filed,
(iv) the proceeds of a life insurance policy or death plan of which the debtor is a beneficiary, provided the debtor becomes entitled to such proceeds within 180 days after the petition is filed, and
(v) property the debtor is entitled to as a result of a property settlement with a spouse or a divorce decree within 180 days after the bankruptcy petition is filed.
80 days prior to filing a Chapter 7 case, debtor purchases a Rolex watch for $3,000 using his Mastercard to pay. He also puts a $200 bottle of wine on his Visa. Which of the following is true regarding these transactions?
Only the $200 debt can be discharged.
Although a bankruptcy proceeding may result in a discharge of a debtor’s debts, certain debts are nondischargeable in Chapter 7 cases. One such debt is the purchase of luxury goods or services if the debts aggregate over $725 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 $725 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. Here, the $3,000 debt survives bankruptcy while the $200 debt is discharged.
A landlord files an eviction proceeding against a tenant for illegal use of controlled substances on the property. If the tenant files bankruptcy shortly thereafter, what are the landlord’s rights?
When a debtor files a bankruptcy claim, an automatic stay arises and prevents creditors from pursuing remedies against the debtor or his assets. However, the automatic stay does not apply to certain actions. One such action is an eviction proceeding based on endangerment or illegal use of controlled substances on the property, or the continuance of an eviction proceeding in which a landlord obtained a judgment of possession before the filing of the bankruptcy petition. Here, the landlord evicted the tenant for the illegal use of controlled substances on the property, therefore the landlord may proceed with his action against the tenant despite the automatic stay.
T/F: Once a debtor commences a bankruptcy case, 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.
True.
Under certain circumstances, creditors may commence ____________________ case against a debtor.
Chapter 7 or 11
