Bankruptcy- Section 20 Flashcards
Bankruptcy
Legal process whereby the debtor is relieved of his debts and adapters creditors are given satisfaction in the fairest way possible
Chapter 7
Liquidation
Assets are turned over to a trustee who sells them and tries to satisfy creditor claims with remaining claims discharged
Chapter 11
Business reorganization
That there continues to operate the business while the creditors need to restructure the debts. No trustee is usually involved
Chapter 13
Debt adjustment plan
Debtor and a trustee work out a plan to restructure the tats without the involvement of the creditors, only available two individual debtors and small businesses
Voluntary
All chapters
Chapter files the petition for relief in the court enters immediate order for relief to stop individual collection efforts by creditors
Doesn’t need to be in solvent in the “equity sense” and spouses may file jointly to avoid duplicative fees
Any person partnership or corporation can file. But not insurance companies, savings and loans, banks, credit unions and railroads
Involuntary
Chapters 7 and 11
Creditors are being paid so they forced to tactor into involuntary bankruptcy. The hearing is scheduled to determine if the conditions are satisfied. Courts assign temporary trustee. Within 20-40 Days a credit or meeting is held. Section 341 meeting. Creditors have six months to prove their claims by filing a proof of claim form
Farmers and non profits can’t be pushed to involuntary
12 or more creditors, 3 sigs and 15775 in claims or more
Fewer than 12, 1 sig sand unsecured claims of 15774 or more in the aggregate .
Automatic stay
Becomes effective against most creditors of the debtor
To freeze the doctors assets so the courts can take an account team. Certain actions are exempt like criminal proceedings, if fiction proceedings, alimony and child support. Secured creditors interest must be protected or the courts will grant a relief from the automatic stay
Filing for involuntary without requirements
Creditors will be liable for court costs, compensatory damages, punitive damages
Involuntary gap
Time period between the filing of the petition and the order of relief
Filed a petition requirements
That there must’ve made a list of creditors, a schedule of assets and liabilities, income and expenditures, copies of tax returns, payroll stubs, a list of amounts in a Q-tip and educational Ira, and a certificate from the credit counseling agency
Trustee
Once approved by the court a trustee has appointed to take control of the doctors property. Trustee will obtain all the non-exempt interest of the debtor as of the filing date of the bankruptcy petition
Given power to maximize the property included and debtor estate.
Exemption rules
Limited equity in my home 23,675 - homestead exemption
Limited equity in a motor vehicle 3775
Right to reasonable alimony and child support payments
Household goods furnishings clothing appliances books not to exceed $600 per item
Jewelry upto $1600
Books and tools of trade 2375
Social Security, veterans, and disability
benefits and employment compensation
Payments from pension, profit-sharing and I knew it he plans, up to 1,283,025 in tax exempt retirement account Iras
Educational Irs 529 plans exempt, unless deposited between 120 and 365 days prior to filing, then exempt up to $6425
Property to tactor after claim
Trusty can claim property after filing bankruptcy petition if Dr. received it within a 180 days and it comes from inheritances, life insurance proceeds, divorce property settlement
Dealing with outstanding contracts
Assume the contract and perform the duties on behalf of the bankruptcy estate
Assume contract an assigned the benefits to a third-party in exchange for a payment to the estate
Reject - breach- the contract
If trustee doesn’t assumed the contract within 60 days of the order of relief it will automatically be rejected
FLAP
Fraudulent transfers by the doctor within two years of the filing of the petition
Liens by statute – not liens that were affected before the bankruptcy petition was filed
After filing the petition a transfer was made by the debtor
Preferential transfer of property space I WAIT
IWAIT
That there was insolvent when the transfer was made
Preferential transfer
Within 90 days of the filing of the petition
For an antecedent debt– pre-existing debt, no value is OK
Improves the creditors position – creditor that’s more money than I would have gotten into bankruptcy
Time is increased from 90 days to one year for an insider – officer or close relative of the debtor
C CONAC
Charity, consumer debt less than $675 , ordinary course of business – current utility bill/lease payment, new value, alimony and child support, continuation of installment payments
Fraudulent transfers
For two transfers made within two years before the filing of the petition that were made with intent to hinder, delay, or defraud predators, or a transfer made to prevent creditors from gaining access to property that would have been included in the bankruptcy estate, when the transfer with secret, or the doctor retain possession or beneficial right in the property after it’s conveyance to a third-party
Preferential transfers
Most common that may be avoided by the trustee, referred to excessive payments made to one credit or at the expense of the others
Insider
First your credit or with a special relationship to that debtor that would enable them to know about the debtor insolvency before others found out about it
Antecedent Debt
Refers to a debt created previously And excludes from preferential transfers payment in exchange for a value Received at the same time and charitable contributions
Insolvent
One who is liabilities exceed their assets. I Soum to be in solvent and then 90 days prior to the date of the position
Order of distribution of assets I’m on creditors
Secured creditors: Fully secured or partially secured
Priority claims – STOP IT space drunk driver
General/unsecured creditors: All remaining on priority timely filed claims or claims exceeding amounts above in STOP IT
STOP IT - drunk driver ** on exam
Priority claims paid in this order
Support and alimony payments
Trustee expenses
Old after filing date; creditors with claims arising after the petition date but prior to the order of relief are given special priority.In voluntary petition
Payroll costs up to 12,850: claims by employees for payroll and related benefit costs within a 180 days have priority up to the dollar limit. Remaining are non-priority. Green farmers and fishermen up to 6325 against storage facility
Individual consumer deposits up to 2850
Tax claims within three years
Drunk driver injury claims
Exceptions
Doesn’t know anyone except these people. Assuming a general discharge is granted that there may still not be discharge from certain specific types of debts including:
Alimony or child support
Credit card purchases for luxury goods a 675 or more within 90 days of filing in cash advances of my $150 or more with and 70 days of filing. Auto Loans is with in three years of filing
Student loans: during the period that payments are not yet owed
Loans obtained by fraud or false representations
Unscheduled/unlisted debt
Tax claims within three years of the filing of the petition: same debts qualifying as priority claims and distribution of assets
Other items STD
Any debt from a securities law violation under the Sarbanes Oxley act
Debts incurred to pay taxes
Drunk driver injuries or death judgments
Denial
Owes everyone
Net disposable monthly income
Monthly income - living expenses
Adjusted income under this formula is multiPLIED by 60 . Called disposable income DI
IF SI IS LESS THAN 7770 ch 7 allowed
If less than 12850 need to determine if sufficient to pay at least 25% of debtors insecured debt . If not , ch 7 allowed
Chapter 9
Municipalities
Chapter 12
Farmers
Simplified reorg
Chapter 15
Cross border insolvency cases
Means test
If income minus allowablevinf expenses exceeds certain levels a ch 7 filing will be dismissed , with the debtors permission , converted to ch 13
