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Bankruptcy > Bankruptcy > Flashcards

Bankruptcy Flashcards

1
Q

What is the lookback period for general creditors?

A

90 days

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2
Q

What is the lookback period for insiders

A

One Year

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3
Q

What is the $ threshold for general creditor consumer debt?

A

More than $600 within 90 days of filing

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4
Q

What is the $ threshold for general creditor business debt?

A

More than $6,825 within 90 days of filing

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5
Q

What is the general exception to preferential transfer rules?

A

Transfer isn’t preferential if debtor was solvent at the time

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6
Q

What is the lookback period for fraudulent transfers?

A

Two Years

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7
Q

Actual Fraud (Elements)

A
  1. Transfer was made within 2 years of filing AND
  2. Transfer was made within intent to defraud creditor AND
  3. Transfer rendered debtor insolvent OR debtor was already insolvent at the time
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8
Q

Constructive Fraud (Elements)

A
  1. Transfer was made within two years of filing AND
  2. Debtor received less than reasonably equivalent value AND
  3. Debtor was insolvent at the time of the transfer OR became insolvent because of the transfer
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9
Q

Preferential Transfer (Elements)

A
  1. Transfer of an interest of the debtor in property
  2. To or for the benefit of the creditor
  3. Made within the applicable look back period
  4. By an insolvent debtor
  5. On an antecedent debt
  6. Creditor received more than they would have in chapter 7
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10
Q

Preferential Transfer (Statutory Defenses)

A
  1. Contemporaneous Exchange
  2. Ordinary Course of Business
  3. Subsequent New Value
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11
Q

Preferential Transfer (Non-Statutory Defenses)

A
  1. Ear Marking
  2. Constructive Trusts
  3. “Mere Conduit”
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12
Q

Contemporaneous Exchange 547(c)(1)

A
  1. Intended by creditor AND debtor to be a contemporaneous exchange for new value AND
  2. Exchange was in-fact contemporaneous AND
  3. New Value was in fact given
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13
Q

Ordinary Course of Business 547(c)(2)

(General Elements)

A
  1. Debt was incurred in ordinary course of business +
  2. Payment made in the ordinary course of business +
  3. Payment made according to ordinary business terms
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14
Q

Subsequent New Value 547(c)(4)

A
  1. After transfer creditor gave new value to/for benefit of debtor
  2. NOT secured by an otherwise avoidable interest +
  3. Debtor did not make another payment in response
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15
Q

Ordinary Course of Dealing (Factors)

A
  1. Length of time parties have engaged
  2. Was payment for more than normal?
  3. Was the manner of payment abnormal?
  4. Did the creditor due anything to gain advantage?
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16
Q

Antecedent Requirement

A

Transfer must be for an antecedent debt to be avoidable

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17
Q

Insolvency Requirement

A

Debtor must have been insolvent at the time of transfer for a transfer to be avoidable

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18
Q

Insolvency Presumption

A

Section 547 (preferences) presumes that a debtor is insolvent for the 90 day period preceding the filing

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19
Q

Utility Companies (11 U.S.C. §366)

A
  1. Automatic stay prevents utilities for stopping service for 20 days
  2. Debtor MUST provide provide ‘adequate assurance’ within 20 days
  3. Be sure to list utility debt on schedule
  4. Payments are arguably made in the ordinary course
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20
Q

Luxury Item (Elements for Presumption of Fraud)

A
  1. Purchase from one creditor
  2. Made by a credit card
  3. Within 90 days of filing
  4. For $725 or more
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21
Q

Burden of Proof (Without Presumption of Fraud)

A

Trustee must prove that the debtor didn’t intend to repay the debt at the time the purchase was made

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22
Q

Recent Cash Advances

A

No discharge if debtor received a cash advance(s):

  1. Totaling more than $1,000
  2. From a single creditor
  3. For a consumer purchase
  4. Within 70 days of filing
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23
Q

Debts Not Dischargeable Under Any Circumstance

A
  1. DSOs
  2. Fines, penalties, restitution
  3. Taxes that weren’t filed or filed fraudulently
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24
Q

Discharging Property Taxes

A
  • Debtor can discharge property taxes that were payable (without penalty) more than one year before the filing
  • Lien will remain on property
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25
Q

Property Tax as Administrative Claim

A

Property taxes assessed during a bankruptcy are treated as administrative claims

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26
Q

Property Taxes (Chapter 13)

A

Plan must offer to pay 100% of property taxes that were last payable within one-year before case is filed

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27
Q

Debt Incurred to Pay Non-Dischargeable Taxes

A
  • Not dischargeable in chapter 7 (though a credit card company might not screen/identify the charge and thus fail to object)
  • Can be discharged under chapter 13
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28
Q

Discharging Income Taxes (Elements)

A
  1. Debtor filed return(s) for the year(s) in question
  2. Return(s) were filed at least 2 years prior to filing bankruptcy
  3. Return(s) were due at least 3 years prior to filing bankruptcy
  4. Liability assessed at least 8 months prior to filing bankruptcy
  5. Debtor did not attempt to willfully evade tax
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29
Q

Prior Non-Dischargeable Debts

A

Debtor cannot discharge debt that was listed in a previous bankruptcy dismissed for fraud or malfeasance

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30
Q

Discharging Income Taxes (Tolling)

A
  • IRS doesn’t necessarily assess liability when taxes are filed
  • 240 day period can be extended/tolled by IRS OR if debtor made an offer of compromise
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31
Q

“Late” Income Tax Return (and discharge)

A
  1. “Late” return does not satisfy the requirement of filing taxes for relevant year in regard to discharging income taxes
  2. Late = all extensions have expired and IRS filed a “substitute return” without debtor’s assistance
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32
Q

Debts Discharged in 13 But Not 7

A
  1. Marital debts created in a divorce or settlement agreement
  2. Debts incurred to pay non-dischargeable debt
  3. Court fees
  4. Debt’s that couldn’t be discharged in a prior bankruptcy
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33
Q

Co-signor Debt in Chapter 7

A
  1. Joint debtor will owe entire amount
  2. Can be addressed via reaffirmation agreement
  3. Better for the debtor to make separate agreement to reimburse co-signor (though co-signor credit will take a hit)
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34
Q

Co-Signor Debt in Chapter 13

A

Creditor can still go after co-signor for balance after plan is done

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35
Q

When Can Exempt Property Still Be Taken?

A

When Debtor owes money for:

  1. DSOs
  2. Back taxes
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36
Q

Tenancy by the entirety (general)

A
  • Permits spouses to jointly own property as a separate legal entity
  • Each spouse has an equal/undivided property interest
  • Creditors cannot enforce a lien on any property that falls under a tenancy by the entirety if only one spouse owns the debt
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37
Q

Tax Liens and Chapter 7

A
  • Tax liens are not discharged in chapter 7

- Trustee is unlikely to liquidate property if proceeds would simply go towards paying off liens

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38
Q

Tax Lien and Personal Property

A

Tax liens can attach to personal property

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39
Q

Avoiding Transfers and Homestead Exemption (Penalty)

A

Any transfer made for purpose of putting property beyond reach of creditors for TEN YEARS preceding bankruptcy can deprive debtor of homestead exemption altogether.

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40
Q

Ways to Reduce Home Equity and/or keep home

A
  1. Refinance mortgage for more than debtor currently owes
  2. Offer to pay cash for difference between value and exemption
  3. File for Chapter 13
  4. Reverse Mortgage
    - But see penalty of losing homestead exemption for transfers intended to put property beyond the reach of creditors
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41
Q

Keeping House in Chapter 7 (When Behind on Mortgage Payments)

A
  • Lender will ask court to lift the stay (court will likely do it)
  • GOAL: stave off foreclosure for length of bankruptcy case. Debtor may have an easier time repaying mortgage once other debts are wiped out.
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42
Q

Credit Counseling Requirement (Time Prior to Filing)

A

180 days prior to filing

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43
Q

Credit Counseling Certificate of Completion (timeframe for filing)

A

No later than 15 days after filing date

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44
Q

Credit Counseling Plan (Requirements and Non-Requirements)

A
  • Doesn’t have to be followed

- DOES have to be filed w/ petition

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45
Q

Means Test (Median Income)

A

Debtor does not have to take means test if income is below state median income given household size

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46
Q

When Doesn’t Debtor Have to Pass Means Tests?

A
  1. Debts are not primarily consumer debts
  2. Disabled veteran + incurred debt primarily during active duty
  3. Income is below the state median OR
  4. Debt is primarily NON-consumer debt
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47
Q

Methods of Protecting Cash

A

-Spend cash on necessary items (food, needed clothing, utilities, rent, car repairs) + Keep receipts

Use exemptions ($1,325 wildcard and $12,575 spillover = $13,900 total)

(Clients with cash are a red flag)

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48
Q

Protecting Cash (Balance of Account)

A

Exemption amount will be based on balance of the date of filing (not account for any pending payments)

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49
Q

Setoff in Chapter 7

A

Banks/Credit Unions can take money out of debtor’s account to “set-off” any $ debtor owes creditor (bank)

-Must request lifting of automatic stay

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50
Q

Frozen Bank Account in Chapter 7

A

Bank might freeze debtor’s account EVEN IF debtor doesn’t owe bank any $

  • Bank argues that account is property of the estate and they are protecting it for the trustee
  • Contact trustee to instruct bank to release exempt funds
  • OR file a motion in court
  • Debtor should open an account at a new bank BEFORE filing
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51
Q

Bank Account in Chapter 7 (Balance)

A

-Make sure that checks have cleared before filing
-Otherwise balance may be higher than amount stated
(listed $5k on account but only have $4k after checks clear = you owe the trustee $1k to make up for the difference).

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52
Q

Federal Wildcard Exemption

A

$1,325

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53
Q

Federal Homestead “Spillover” Exemption

A

$12,575

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54
Q

Getting a Bank Account After Chapter 7

A

It might be easier to get one than before because the bank will know that your debts have been discharged

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55
Q

Methods of Protecting Cash (What NOT To Do)

A
  • Don’t buy gift cards
  • Don’t withdraw cash
  • Don’t buy luxury goods
  • Don’t buy anything out of line with normal spending patterns
  • Don’t make preferential payments
  • Don’t use a credit card
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56
Q

Tax Refund (Estimate When Amount is Unknown)

A

-If debtor has had no major life changes (marriage, having kids, buying house, new job) use prior years as an estimate

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57
Q

Tax Refund (Estimate When Amount is Unknown)

A
  • If debtor has had no major life changes (marriage, having kids, buying house, new job) use prior years as an estimate
  • If debtor HAS had major life changes = find a free tax refund calculator
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58
Q

Why Do I Have To List My Refund When I Won’t Get It Until Next Year?

A
  • Assets are everything you own or have an interest in

- Since you’re paying taxes now you have an interest now

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59
Q

Tax Refunds Seized Pro-Rata

A
  • Trustee can only take portion of tax-return that can be traced back to pre-petition efforts
  • Trustee can take 100% of refund if debtor files in January (or at any point prior to receiving the refund)
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60
Q

Cross Collateralization

A

Practice of credit unions to secure loans/credit cards with any collateral purchased with funds obtained from the credit union (like a car)

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61
Q

Credit Union/Bank Account Pre-Filing Work (When Debtor Owes a Balance to the Bank)

A
  1. Pull money out
  2. Stop direct deposit
  3. Get a year’s worth of statements (especially if closing account)
  4. Make sure all checks have cleared
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62
Q

Annulment of Stay

A

Court can annul a previously issued stay in cases where debtor abuses the system

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63
Q

Automatic Stay and Delinquent DSO

§362(b)(2)(B)

A

Act to collect delinquent DSO from property that is NOT part of the estate is NOT a violation of the stay

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64
Q

Creditor’s Duty to Surrender

A

Creditor must immediately surrender property that is either property of the estate or could be claimed as exempt by the debtor

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65
Q

Single Serial Filer

one previous case pending within 1 year

A

Stay expires after 30 days

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66
Q

Multiple Serial Filer

more than one prior case within 1 year

A

Stay never goes into effect unless court orders it

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67
Q

Single Serial Filer (Motion to Extend Stay)

A

Motion to extend the stay must be concluded within 30 days (notice must be provided to creditors)

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68
Q

Grounds for Relief from Stay

A
  • Lack of adequate protection
  • Debtor has no equity in property and property is not necessary for effective reorganization
  • Debtor filed w/ intent to delay/hinder/etc
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69
Q

Lack of Adequate Protection (response)

A
  1. Show that equity cushion is sufficient to cover claim without additional risk of loss to creditor OR
  2. Offer additional protection
  • Get collateral insured
  • Provide cash deposit
  • Get co-signor
  • Offer additional assets as collateral
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70
Q

Relief from Stay (30 days)

A

Relief from stay is granted AUTOMATICALLY 30 days after the first hearing on the motion

  • Either get a hearing scheduled less than 30 days out OR
  • Get a stipulation on the record that stay will remain in effect until matter is heard
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71
Q

Relief from Stay (30 days)

A

Relief from stay is granted AUTOMATICALLY 30 days after the first hearing on the motion

  • Either get a hearing scheduled less than 30 days out OR
  • Get a stipulation on the record that stay will remain in effect until matter is heard
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72
Q

Reinstating the Stay

A

Relief from stay is granted AUTOMATICALLY 30 days after the first hearing on the motion

  • Either get a hearing scheduled less than 30 days out OR
  • Get a stipulation on the record that stay will remain in effect until matter is heard
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73
Q

Violations of the Stay (types)

A
  1. Continuing attempts to collect on debt

2. Refusing to turn over property of the estate

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74
Q

Violations of Stay and Incorrect Notice Sent to Creditors

A

Failure to use address provided to the court by creditors results in creditor not owing monetary sanctions for a violation of the stay

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75
Q

Statement of Intentions (deadline to act)

A

45 days from the date statement is filed

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76
Q

Statement of Intentions (Creditors right when debtor intends to surrender property)

A

Creditor cannot move forward with repossession until stay has lifted (even if debtor intends to surrender)

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77
Q

Statement of Intention (Deadline to File)

A

30 days within filing of petition OR the first 341 (whichever is earlier)

78
Q

Supplemental Property Schedule (Deadline)

A

Debtor must file a supplemental property schedule within 10 days of receipt of new property

79
Q

Small Business Property (and estate)

A
  • Debtor technically has a duty to surrender business property to the trustee (even if exempt)
  • Debtor cannot sell/transfer property until trustee files a notice of abandonment of the property
80
Q

Post-Petition Transfer of Property (Debtor’s Rights)

A

Debtor may NOT transfer any estate property after filing the petition WITHOUT the consent of the trustee

81
Q

Security Deposits (and Property of the Estate)

A

Security Deposits are considered property of the estate

82
Q

Appreciation of Exempt Assets

A
  • Appreciation in an exempt asset is also exempt, except where the appreciation causes the value to exceed the threshold for an exemption
  • Pay attention to appreciation caused by market forces v debtor’s post-petition work
83
Q

Tax refund and the estate

A

Whether a tax refund is property of the estate depends on the extent to which it was generated by prepetition income

84
Q

Strong Arm Power

A

Power of the trustee to reverse transactions or liens filed before the bankruptcy case

85
Q

Marshalling (General)

A

Requires a senior creditor to satisfy its claim first from property or a fund in which a junior lien holder has no interest

86
Q

Time Limit to Reopen a Case

87
Q

Voluntary Transfers (Loss of Exemption)

A
  • No exemption for property that was voluntarily transferred preferentially or fraudulently
  • Property that was involuntarily transferred away from debtor by a creditor and recovered by a trustee can be claimed as exempt
88
Q

Liquidation Value

A
  • Amount of $ left for trustee after selling an item
  • Value to be used in the evaluation stage of a chapter 7
  • Subtract auction/house-sale fee, taxes, reduction for distress sale and trustee fee
89
Q

Federal “Spillover” Amount

90
Q

Federal Wildcard Amount

91
Q

Federal Homestead Exemption

92
Q

Tools of the Trade Amount (exemption amount)

93
Q

Tools of the Trade (Requirements)

A
  • Must relate to debtor’s trade or profession at the time of filing the petition
  • Debtor must be self-employed in most jurisdictions
94
Q

Child Support as Exempt Property

A

Child support received is exempt from trustee

95
Q

Objection to Exemption (timeframe)

A

Objection must be within 30 days of:

  1. 341 OR
  2. Any amendments/supplements to the schedule
96
Q

Homestead Exemption for Couples (trap)

A

-Verify that the debtor’s are legally married

97
Q

Response to Objection to Exemption

A

-Debtor attorney must request a hearing pursuant to 4003(c) and Rule 9014

98
Q

Priority Claims

A
  • Generally unsecured
  • Generally non-dischargeable
  • Have priority in order of distribution from estate
  • Must be paid in full before non-priority unsecured debtors receive anything
  • Ensure that claims are filed on behalf of priority creditors so they get paid (non-dischargeable!)
99
Q

Filing on Behalf of Creditor

A

-Be sure that priority claims get filed so $ goes to them (as they are non-dischargeable)

100
Q

Administrative Claims

A
  • Typically occurs post-petition
  • Deemed necessary to preserve bankruptcy estate
  • Paid before unsecured claims
  • Trustee fees, post-petition taxes, cost of storage/valuation/etc
101
Q

Calculation for Keeping House (Factors to Consider)

A
  • Remember trustee would first have to pay:
    1. Debtor exemption amount
    2. Mortgage
    3. Administrative expenses
102
Q

Utility Service Claims (caution)

A

-Debtor must post a bond within 20 days of filing if they list an ongoing-provider on the schedule

103
Q

Order of Priority

A
  1. DSOs owed to (ex) family members
  2. DSOs owed to government unit
  3. Administrative Expenses
  4. Priority unsecured claims
  5. General unsecured claims
104
Q

When is an unsecured claim NOT dischargeable?

A

When they are based on fraud or intentional tort

105
Q

How is an under-secured claim “scheduled”?

A

Bifurcated between secured and unsecured portions

106
Q

Debtor collateral to family (red-flag)

A

Press client on the validity of the arrangement

107
Q

Levy (as opposed to lien)

A
  • Levy forces the debtor to relinquish their property

- Lien is a mere security interest. It provides notice of third-parties of imperfect title

108
Q

Value of Collateral (for exemptions)

A

Liquidation Value (includes cost of sale, taxes, etc)

109
Q

Redemption (Required Elements)

A
  • Debt is dischargeable
  • Debt is a consumer debt
  • Property is tangible personal property
  • Property is exempt/abandoned
  • Property is intended primarily for personal, family, or household use
110
Q

Value of Collateral (for redemption)

A

FMV less liquidation costs, out of pocket expenses (storage, appraisal, towing, etc)

111
Q

Debtor options for secured property in chapter 7

A
  • Redeem (and discharge balance if any)
  • Reaffirm (and keep property if exempt)
  • Surrender collateral
  • Continue paying on original contract without reaffirming and keep the property
112
Q

Statement of intention (amendment)

A

Debtor may amend their statement of intention after initially filing

113
Q

Order of Abandonment

A

-Potential option if property is of nominal value to the estate but the trustee won’t abandon it

114
Q

Redemption (procedural/court requirements)

A
  • Redemption agreement must be approved by the court
  • Requires a notice and hearing
  • Requires at least some evidence of value
115
Q

Surrendering Used Property (strategy)

A

Call the creditor’s bluff and see if they want to spend time/money picking up shitty property

116
Q

Reaffirmation (leverage against creditors)

A
  • Creditors are often willing to negotiate amount owed

- Creditors would rather have $$ than used goods

117
Q

Defaulting on Reaffirmation

A
  • Debtor is responsible for entire amount under the original contract
  • Reaffirmation negates the bankruptcy as to the reaffirmed obligation
118
Q

-Call the creditor’s bluff and see if they want to spend time/money picking up shitty property

A

-Call the creditor’s bluff and see if they want to spend time/money picking up shitty property

119
Q

Rescinding Reaffirmation

A
  • Debtor may rescind the reaffirmation agreement 60 days from the later of:
    1. The date the agreement was filed OR
    2. The date of the discharge
120
Q

Ipso Facto Clause

A
  • A clause which allows termination of a contract due to insolvency or bankruptcy
  • Generally unenforceable
121
Q

Unavoidable Lien May be Invalid

A

-Remember to examine whether or not an otherwise unavoidable lien is invalid

122
Q

Avoiding a Judgement Lien (What Survives)

A

An avoided judgement liens survives only on the non-exempt portion of debtor’s property

123
Q

Liens that Attached Prior to Ownership

A

A debtor may not avoid a lien that attached to property before the debtor obtained an interest in the property

124
Q

Filing proof of claim on behalf of debtor

A
  • Non-exempt assets + non-dischargeable debts

- Debtor has 30 days to file on behalf of the creditor if necessary

125
Q

What Does the Stay Protect?

A
  1. Debtor
  2. Property of the debtor
  3. Property of the estate
126
Q

Tax Liens/Levies and the Stay

A

The stay prevents:

  1. Tax liens
  2. Tax levies
  3. Consummation/completion of tax levies
127
Q

What is NOT stayed

A
  1. Setoffs (stay made need to be lifted)
  2. Debt acquired AFTER filing
  3. Criminal/family law
  4. Taxes
128
Q

Time needed before filing again (chapter 7)

A

8 years (if discharge was granted)

129
Q

Time needed for filing again (chapter 13 before 7)

A

6 years (if discharge was granted)

  • unless debtors were paid in full OR
  • debtor paid 70% of debts in good faith
130
Q

Consumer Debts

A

Incurred by an individual primarily for a personal, family, or household purpose

131
Q

Business Debts

A

Business debts are debts that you incurred to obtain

money for a business or investment or through the operation of the business or investment.

132
Q

Preference Avoidance (Third Parties)

A

Payments made by third-parties are not preferential (preference is predicated on the transfer being property belonging to the debtor)

133
Q

Debtor Avoiding Preferential Transfers

A

Debtor can avoid preferential transfers if:

  1. The property could be exempted AND
  2. The transfer wasn’t voluntary`
134
Q

Paying Off One Credit Card w/ Another

A

Likely to be viewed as a preference payment

135
Q

Exempting Fraudulently Transferred Assets

A

Debtor may not exempt fraudulently transferred assets that are subsequently recovered by the trustee

136
Q

Subordination of Liens

A

Trustee can subordinate tax liens in order to satisfy other categories of claims

137
Q

When The Stay Might Be Lifted (Examples)

A
  1. Mortgage lender will lose $ waiting for foreclosure
  2. Debtor doesn’t plan to reaffirm/redeem car
  3. Eviction started but no eviction order/judgment
  4. Creditor alleging fraud
138
Q

Recovering Garnished Wages

A
  1. Garnishment transfer must qualify as a preference (90 days)
  2. Garnished funds must be exemptable
  3. Put the creditor on blast!
139
Q

Current Monthly Income (CMI)

A
  1. Average monthly income
  2. From all sources
  3. That the debtor (and spouse) receive
  4. From the preceding 6 month period
140
Q

Protecting Automobile

A
  1. Start by calculating equity (no equity = no value to the trustee)
  2. Apply $4,000 exemption
  3. Might be able to keep car without reaffirmation agreement if payments are still made
141
Q

Federal Automobile Exemption Amount

142
Q

Repeat Filer + Non-Repeat Filer Spouse

A

Stay operates “as normal” to the non-repeating filer

143
Q

Trustee and Leases

A
  • Trustee is highly unlikely to assume/reassign a lease (either because it has no value or because reassignment is prohibited by the lease itself)
  • Rights revert to the debtor once trustee abandons the lease
144
Q

Offer of Judgment

A
  1. Offer is made to settle civil suit

2. If party rejects offer and court decision is less favorable than offer = party that rejected offer is penalized

145
Q

Consent Judgment

A

A judgment issued by a judge based on an agreement between the parties to a lawsuit to settle the matter

146
Q

Order to Vacate

A

Order setting aside judgment from the court

147
Q

Ride Through

A

When creditor allows debtor to keep collateral by simply making payments without submitting a reaffirmation agreement

148
Q

Going to Jail for a Debt

A
  • Debtor must attend an exam (if ordered) or be in contempt of court
  • Creditor cannot threaten debtor with jail time (violation of FDCPA)
149
Q

Mini-Miranda and FRE 408

A

Settlement negotiations between debtor/creditor are not admissible in court

150
Q

Consequences of Chapter 7

A
  • Cant file chapter 7 again for 8 years
  • Remains on credit report for 10 years
  • Co-signors still liable
  • Doesn’t eliminate liens
  • Income limits (means test)
  • Loss of luxury items
151
Q

Chapter 7 Timeframe from Start to Finish

A

4-6 months

152
Q

Waiver of Bankruptcy Filing Fees

A
  • Income must be below 150% of federal poverty guideline

- Otherwise fee can be paid in up to 4 installments

153
Q

Priority Creditors (examples)

A
  • Back taxes
  • Child support/alimony
  • Employee wages/retirement plan contributions (if debtor is an employer)
154
Q

Ineligible for Chapter 13 Discharge (Prior Cases)

A
  • Received chapter 7 discharge in 4 years prior to 13 OR

- Received chapter 13 discharge in 2 years prior to 13

155
Q

Length of Chapter 13 Plan

A
  • If CMI equal/greater than median income = 5 years

- If CMI equal/less than median income = 3 years

156
Q

Debts paid in full via 13

A
  • Priority debts
  • Mortgage arrears
  • Bankruptcy fees
  • Secured debts
157
Q

Calculating Odds of Losing Home

A

Start with the fair market value of your home and subtract the following:

  • Homestead exemption
  • Trustee’s commission on the difference (25% of the first $5,000, 10% of the next $50,000, and 5% of the rest, up to one million)
  • Costs of sale (usually around 8% of FMV)
  • Mortgages
  • Liens secured by the home (such as a tax lien)
158
Q

Non-exempt property and chapter 13

A

-Debtor can keep non-exempt property but they have to pay for the value of the non-exempt assets

159
Q

Automatic Stay and DSOs

A

-Automatic stay does NOT apply to DSOs

160
Q

DSOs and Chapters 7 & 13

A
  • 7 = Doesn’t pay arrearages but $ from sold non-exempt property will go towards paying the DSO
  • 13 = monthly payments + arrears must be paid in full
161
Q

Filing 13 Without Discharge

A
  • Debtor still receives protection from the stay
  • Debtor still gets benefit of a payment plan
  • Debts must be paid 100% in full
  • No discharge
162
Q

Chapter 13 Payments (is interest charged?)

A
  • Secured debt (with interest)
  • Priority debts (without interest)
  • Percentage of unsecured debts (without interest)
  • Catch up on defaulted secured property
  • Administrative expenses
163
Q

How Long Does Chapter 7 Stay on Credit Report?

164
Q

Time Between Chapter 7 Discharges

165
Q

Calculating Equity (Liens)

A

DONT include liens that can be discharged in bankruptcy when calculating equity

166
Q

Risk of Chapter 7 (Agreement)

A

When you file a Chapter 7 bankruptcy, you are agreeing that the bankruptcy trustee may sell all your non-exempt assets and distribute the proceeds among your creditors.

167
Q

Michigan Homestead Exemption

A

$38,225 of equity in your home (or $57,000 for people over age 65 or receiving social security)

168
Q

Debt and Social Media

A

Debtor collects/trustee WILL view social media for info on financial condition

169
Q

Sole Proprietor in Bankruptcy

A
  • Trustee will assume control of the business

- Liquidation unlikely if business has few assets

170
Q

Non-Filing Spouse’s Income

A

Must be counted to the extent the non-filing spouse regularly contributes to household expenses of debtor and debtor’s dependents

171
Q

Current Monthly Income (SSI)

A

SSI is NOT INCLUDED in CMI

172
Q

CMI Income (tax refunds)

A

Tax refunds are NOT considered income for CMI

173
Q

CMI (unemployment payments)

A

Unemployment is NOT included in CMI

174
Q

CMI (stimulus payments)

A

Stimulus payments are NOT included in CMI

175
Q

LBR 5005-2

A

Stricken document amended to correct defect w/in 14 days is considered filed on the date the original was submitted

176
Q

Nunc pro tunc

A

Used when court wants an order to be effective from an earlier date

177
Q

Recovering Payments

A

Debtor CAN recover involuntary payments made 90 days prior to filing

Debtor CANNOT recover voluntary payments

178
Q

Joint Debtor’s and Exemptions

A

Joint debtor’s may only use their own exemptions to protect individual property interests

179
Q

Garnishment Calculation

A

the maximum amount of disposable earnings that may be garnished is the lesser of 25% of the disposable earnings for that workweek or the amount by which disposable earnings for that week exceed 30 times the federal minimum hourly wage

180
Q

Eviction (pre-judgment)

A

Stay is in effect if landlord doesn’t already have a judgment for possession (though lifting of stay will likely be granted)

181
Q

Medical Bills as consumer debt

A

Medical bills are NOT considered consumer debt (thought might be if incurred for elective procedures)

182
Q

Rental Income as Property of the Estate

A
  • Rent is property of the estate 11 U.S.C. §541(a)(6)

- Some of the income may be subject to a security interest if there is an outstanding mortgage on the property 552(b)

183
Q

522(p)(1)

A

Debtor cannot exempt more than $125,000 in value in a primary residence that was acquired over the last 1,215 days

184
Q

Reaffirmation Agreements and 524(c)(1)

A
  • Agreements must be entered into prior to discharge

- Debtor must receive required disclosures

185
Q

IRS and social security benefits

A

IRS can offset Social Security benefits against debts owed to the federal government because its a “unitary creditor.”

186
Q

Lien Stripping and Chapter 7

A

Lien stripping a junior mortgage can only occur upon successful completion of chapter 13

187
Q

Trustee Powers relative to Debtor’s Powers

A

Trustee has no greater power to dispose of property than debtor’s themselves (say if debtor had a fractional interest in property)

188
Q

Aggregating Garnishment

A
  1. Bank garnishes less than $600 in cash (not recoverable) but ALSO garnishes vehicle/property worth more than $600
  2. Aggregate/add everything together and try to recover it all
189
Q

Reaffirmation Timeline

A

Within 60 days of 341 meeting OR before discharge is entered

190
Q

Michigan Homestead Exemption (doubling)

A

Homestead exemption cannot be doubled

191
Q

Judgment Lien v Property Tax Lien

A

Property tax liens always have priority over judgment liens

192
Q

Judgment Liens in Foreclosure

A

Judgement liens recorded after mortgage will be wiped out by the foreclosure

Bankruptcy (1 decks)

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