Business Law- Chapter 28

Question 1

Fresh Start

Answer 1

The goal of federal bankruptcy law, to grant and debtor relief from some of her burdensome debts, while protecting creditors by requiring the debtor to pay more of his or her debts that would otherwise have been required prior to the 2005 act.

Question 2

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

Answer 2

A federal act that substantially amended federal bankruptcy law. This act makes it more difficult for debtors to file for bankruptcy and have their unpaid debts discharged.

Question 3

Bankruptcy Code

Answer 3

The name given to federal bankruptcy law, as amended.

Question 4

Bankruptcy Reform Act of 1978

Answer 4

A federal act that substantially changed federal bankruptcy law. The act made it easier for debtors to file for bankruptcy and have their unpaid debts discharged. This act was considered debtor friendly.

Question 5

Bankruptcy Courts

Answer 5

Special federal courts that hear and and decide bankruptcy cases.

Question 6

U.S. Trustee

Answer 6

A federal government official who is responsible for handling and supervising many of the administrative tasks of a bankruptcy case.

Question 7

Petition

Answer 7

A document filed with a bankruptcy court that starts a bankruptcy proceeding.

Question 8

Voluntary Petition

Answer 8

A petition filed by a debtor that states that the debtor has debts.

Question 9

Involuntary Petition

Answer 9

A petition filed by creditors of a debtor that alleges that the debtor is not paying her debts as they become due.

Question 10

Order for Relief

Answer 10

An order that occurs upon the filing of either a voluntry petition of an unchallenged involuntary petition or an order that is granted after a trial of a challenged involuntary petition.

Question 11

Meeting of the Creditors

Answer 11

A meeting of the creditors in a bankruptcy case that must occur within a reasonable time after an order for relief. The debtor must appear at this meeting.

Question 12

Proof of Claim

Answer 12

A document required to be filed by a creditor that states the amount of her claim against the debtor.

Question 13

Proof of Interest

Answer 13

A document required to be filed by an equity security holder that states the amount of her interest against the debtor.

Question 14

Trustee

Answer 14

A legal representative of the debtor’s estate.

Question 15

Automatic Stay

Answer 15

The suspension of certain legal actions by creditors against a debtor or the debtor’s property.

Question 16

Discharge

Answer 16

A court order that relieves a debtor of the legal liability to pay her debs that were not paid in the bankruptcy proceeding.

Question 17

Reaffirmation Agreement

Answer 17

An agreement entered into by a debtor with a creditor prior to discharge, where by the debtor agrees to pay the creditor a debt that would otherwise be discharged in bankruptcy. Certain requirements must be met for a reaffirmation agreement to be enforced.

Question 18

Bankruptcy Estate

Answer 18

The debtor’s property and earnings that comprise the estate of a bankruptcy proceeding.

Question 19

Exempt Property

Answer 19

Property that may be retained by the debtor pursuant to federal or state lay that does not become part of the bankruptcy estate.

Question 20

Homestead Exemption

Answer 20

Equity in a debtor’s home that the debtor is permitted to retain.

Question 21

Fraudulent Transfer

Answer 21

A transfer of a debtor’s property or an obligation incurred by a debtor within 2 years for the filing of a petition where the debtor has actual intent to hinder, delay, or defraud a creditor or the debtor received less than a reasonable equivalent in value, and the debtor was insolvent or unable to pay at the time the transfer was made or the obligation was incurred.

Question 22

Chapter 7-Liquidation

Answer 22

A form of bankruptcy in which the debtor’s nonexempt property is sold for cash, the case is distributed to the creditors and any unpaid debts are discharged.

Question 23

Abusive Filing

Answer 23

A chapter 7 filing that is found to be an abuse of Chapter 7 liquidation bankruptcy. In such a case, the court can dismiss the case or convert the case to a Chapter 13 or Chapter 11 proceeding, with the debtor’s consent.

Question 24

State Median Income

Answer 24

For any size family, income for which half of the state’s families of this size have incomes above this figure and half of the state’s families of this size have incomes less than this figure.

Question 25

Mean Test

Answer 25

A new test added by the 2005 act that applies to debtors who have family incomes that exceed the state’s median income for families of the same size.

Question 26

Chapter 7 Discharge

Answer 26

The termination of the legal duty of an individual debtor to pay unsecured debts that remain unpaid upon the completion of a Chapter 7 proceeding.

Question 27

Chapter 13- Adjustment of Debts of an Individual with Regular Income

Answer 27

A rehabilitation form of bankruptcy that permits bankruptcy courts to supervise the debtor’s plan for the payment of unpaid debts in installments over the plan period.

Question 28

Chapter 13 Discharge

Answer 28

A discharge in a Chapter 13 case that is granted to the debtor after the debtor’s plan of payment is completed (which could be up to three or up to 5 years).

Question 29

Chapter 11- reorganization

Answer 29

A bankruptcy method that allows the reorganization of the debtor’s financial affairs under the supervision of the bankruptcy court.

Question 30

Debtor-in-possession

Answer 30

A debtor who is left in place to operate the business during the reorganization proceeding.

Question 31

Creditors’ Committee

Answer 31

A committee of unsecured creditors that is appointed by the court to represent the class of unsecured claims. The court also appoint committees for secured creditors and for equity holders.

Question 32

Executory Contract or Unexpired Lease

Answer 32

A contract or lease that has not been fully performed. With the bankruptcy court’s approval, a debtor may reject executory contracts and unexpired leases in bankruptcy.

Question 33

Plan of Reorganization

Answer 33

A plan that sets forth a proposed new capital structure for a debtor to assume when it emerges from Chapter 11 reorganization bankruptcy.

Question 34

Confirmation

Answer 34

The bankruptcy court’s approval of a plan of reorganization.

Question 35

Acceptance Method

Answer 35

A method whereby the court confirms a plan of reorganization if the creditors accept the plan and if other requirements are met.

Question 36

Cram-down Provision

Answer 36

A provision whereby the court confirms a plan of reorganization over an objecting class of creditors if certain requirements are met.

Question 37

Chapter 12- adjustment of debts of a family farmer or fisherman with regular income.

Answer 37

A form of bankruptcy reorganization permitted to be used by family farmers and family fisherman.

Question 38

Family Farmer

Answer 38

An individual, a corporation, or a partnership that engages in farming operations and meets the requirements for filing for a Chapter 12 proceeding.

Question 39

Family Fisherman

Answer 39

An individual, a corporation, or a partnership that engages in commercial fishing operations and meets the requirements for filing for a Chapter 12 proceeding.

Question 40

Chapter 12 Discharge

Answer 40

A discharge in a Chapter 12 case that is granted to a family farmer or a family fisherman debtor after the debtor’s plan of payment is completed.