chap 7 liquidation

Question 1

liquidation involves

Answer 1

terminating the business of the debtor, distributing his nonexempt assets and usually discharging all of his dischargeable debts

Question 2

proceedings

Answer 2

proceedings under chap 7 apply to all debtors except railroads, insurance companies, banks, savings and loan associations, homestead associations, and credit unions

begins with an interim trustee, who can become permanent trustee if the creditors do not select someone else

trustee collects and sells property, investigates the debtors financial affairs, examines claims, decides whether to oppose a discharge of debts and makes reports

Question 3

a committee of 3-11

Answer 3

unsecured creditors makes recommendations to the trustee

Question 4

dismissal

Answer 4

the court is empowered to dismiss a case filed by an individual debtor whose debts are primarily consumer debts if it finds that granting relief would substantially abuse the provisions of chap 7

Question 5

distribution of the estate

Answer 5

assets of the estate are distributed in the following ordeR:

1. secured creditors on their security interest
2. creditors entitled to a priority, in the order provided
3. general (unsecured) creditors who filed their claims on time
4. general (unsecured) creditors who filed their claims late
5. claims for fines and multiple, exemplary, or punitive damages
6. interest at the legal rate from the date of the filing of the petition, to all of the above claimants
7. whatever property remains, to the debtor

Question 6

objections to dischargw

Answer 6

following distribution of the estate a debtor may receive a discharge except where the debtor
1 is not a natural person
2 has destroyed, falsified, concealed, or failed to keep records
3 has committed bankruptcy crime such as knowingly and fraudulently making a false oath, a false claim, giving or receiving a bribe, or withholding documents or records
4 delay, or defraud his creditors
5 has been granted a discharge within the previous eight years
6 has refused to obey a lawful court order or to answer approved questions
7 has not explained losses or deficiency of assets
8 has executed a written waiver of discharge approved by the court
9 during her own bankruptcy or within one year of filing her own petition, the debtor commits one of the above prohibited acts such as making a fraudulent conveyance, false oath etc in connection with another case involving an insider
10 fails to complete a financial management course

also, for up to one year after discharge, upon request of the trustee or creditors, the court may revoke a discharge the debtor obtained through fraud

Question 7

reaffirmation of discharged debts

Answer 7

prior to the bankruptcy reform act, any written promise to pay a discharged debt revived the obligation

unfortunately, debtors who reaffirmed debts sometimes were soon again unable to pay their debts

as a debtor protection measure, the reform act created strict requirements for the effective reaffirmation of discharged obligations

Question 8

some of the requirements include

Answer 8

1 to be enforceable, an agreement to reaffirm a debt must have been made before granting the discharge
2 the agreement must contain a clear and conspicuous provision that the debtor has the right to rescind a reaffirmation agreement any time prior to discharge or within 60 days after the agreement is filed with the court by giving notice of rescission to the claim holder
3 upon a discharge, the court must inform a debtor who is not represented by counsel that reaffirmation is not required by law and must advise the debtor of the legal effect of reaffirmation. if the debtor is represented by counsel, a hearing is not required - it is counsels obligation to so inform the debtor and counsel must file an affidavit with the court that such information has been given to the debtor