Bankruptcy Pt. 1 Flashcards
What are the 6 basic types of bankruptcy cases?
Chapter 7 - liquidation
Chapter 9 - municipal debt adjustment
Chapter 11 - reorganization
Chapter 12 - family farmers with regular income
Chapter 13 - adjustment of debts of individuals with regular income
Chapter 15 - ancillary and other cross-boarder cases
What is Chapter 7 bankruptcy?
it is trustee appointed where the trustee collects the debtor’s assets and liquidates them and uses the proceeds to pay off creditors to the extent possible
if the debtor is an individual, the debts are discharged; if the debtor is a corporation, the company is dissolved (both result in debts being wiped out)
What is Chapter 13 bankruptcy?
it is trustee appointed where the trustee oversees the handling of the proceeding; the debtor repays all or a portion of the debts over a 3-5yr period; any remaining debt is then discharged
What is Chapter 11 bankruptcy?
it is a reorganization (usually used by businesses) where a trustee is usually not required but can be appointed by a court; the debtor remains in possession of assets and a plan of reorganization is adopted; creditors are paid to the extent possible and the business continues
Who may not file under Chapter 7?
railroads, savings institutions, insurance companies, banks, and small business investment companies
T/F: when a bankruptcy petition is filed in either a voluntary/involuntary case, an automatic stay becomes effective against most creditors
True; the stay stops almost all collection efforts but it does not apply to criminal prosecutions, paternity suits, and cases brought to establish or collect spousal/child support obligations
T/F: a debtor need not be insolvent to file bankruptcy
True; however a Chapter 7 case may be dismissed if the debtor has too much income and converted to Chapter 13
T/F: unsecured creditors may petition a debtor involuntarily into bankruptcy proceedings under Chapter 7 or Chapter 11
True; creditors must show that the debtor generally is not paying debts as they become due (farmers and nonprofit charitable organizations cannot be petitioned involuntarily into bankruptcy)
only creditors who are owed, individually or in aggregate, at least $18,600 in unsecured, undisputed debt may petition a debtor involuntarily into bankruptcy (fewer than 12 creditors = one or more owed $18,600 | 12 or more creditors = three owed $18,600)
What are some items that the bankruptcy estate can include?
all of the debtor’s real and personal property, income generated from estate property received within 180 days after the filing of the petition for relief and any property the debtor receives from divorce, inheritance, or insurance within 180 days after the filing of the petition
What is a fraudulent transfer?
any transfer made with intent to hinder, delay, or defraud creditors or any transfer in which the debtor received less than equivalent value while the debtor was insolvent (the trustee has power to set aside fraudulent transfers made within 2yrs of the filing date)
What is a preferential payment?
a transfer made to or for the benefit of a creditor on account of an antecedent debt (already existing) of the debtor; it is made within 90 days prior to the filing of the petition made while the debtor was insolvent and results in the creditor receiving more than they would have under the Bankruptcy Code
