Chapter 28

Question 1

The goal of federal bankruptcy law to grant a debtor relief from some burdensome debts while protecting creditors by requiring the debtor to pay more of the debts than would otherwise have been required prior to the 2005 act.

Answer 1

fresh start

Question 2

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.

Answer 2

Bankruptcy Reform Act of 1978

Question 3

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.

Answer 3

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

Question 4

The name given to federal bankruptcy law, as amended

Answer 4

Bankruptcy Code

Question 5

Special federal courts that hear and decide bankruptcy cases

Answer 5

U.S. bankruptcy courts

Question 6

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

Answer 6

U.S. Trustee

Question 7

Individuals filing for bankruptcy must receive _______________ within 180 days prior to filing a petition for bankruptcy.

Answer 7

prepetition counseling

Question 8

Personal financial counseling that a debtor must receive before he or she receives a discharge in a Chapter 7 or Chapter 13 bankruptcy

Answer 8

postpetition counseling

Question 9

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

Answer 9

petition for bankruptcy

Question 10

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

Answer 10

voluntary petition

Question 11

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

Answer 11

involuntary petition

Question 12

Documents filed by a debtor upon filing a voluntary petition for bankruptcy that name secured and unsecured creditors and that describe property owned by the debtor, the debtor’s income, and other financial information.

Answer 12

schedules

Question 13

A certification that an attorney who represents a client in bankruptcy must file certifying the accuracy of the information contained in the bankruptcy petition and the debtor’s schedules, under penalty of perjury.

Answer 13

attorney certification

Question 14

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

Answer 14

order for relief

Question 15

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

Answer 15

meeting of the creditors (first meeting of the creditors)

Question 16

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

Answer 16

proof of claim

Question 17

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

Answer 17

proof of interest

Question 18

A legal representative of the debtor’s estate

Answer 18

bankruptcy trustee

Question 19

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

Answer 19

automatic stay

Question 20

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

Answer 20

discharge in bankruptcy

Question 21

An agreement entered into by a debtor with a creditor prior to discharge whereby 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.

Answer 21

reaffirmation agreement

Question 22

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

Answer 22

bankruptcy estate

Question 23

A transfer of a debtor’s property or an obligation incurred by a debtor within two years of the filing of a petition, where (1) the debtor had actual intent to hinder, delay, or defraud a creditor or (2) the debtor received less than a reasonable equivalent in value.

Answer 23

fraudulent transfer

Question 24

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

Answer 24

exempt property

Question 25

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

Answer 25

homestead exemption

Question 26

A bankruptcy rule that stipulates that a debtor may not exempt more than a specified dollar amount as a homestead exemption

Answer 26

abusive homestead exemption

Question 27

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

Answer 27

Liquidation (straight bankruptcy)

Question 28

A bankruptcy rule that states that if a debtor’s median family income is at or below the state’s median family income for a family the same size as the debtor’s family, the debtor can receive Chapter 7 relief.

Answer 28

median income test

Question 29

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

Answer 29

state median income

Question 30

A bankruptcy rule that applies to a debtor who has a median family income that exceeds the state’s median family income for families the same size as the debtor’s family. A debtor in this category qualifies for Chapter 7 bankruptcy if the debtor has disposable income below an amount determined by bankruptcy law but does not qualify for Chapter 7 bankruptcy if he or she has disposable income above an amount determined by bankruptcy law.

Answer 30

means test

Question 31

For bankruptcy purposes, income that is determined by taking the debtor’s actual income and subtracting expenses for a typical family the same size as the debtor’s family, as determined by government tables.

Answer 31

disposable income

Question 32

Property of a debtor that is not exempt from the bankruptcy estate that is distributed to the debtor’s secured and unsecured creditors pursuant to statutory priority established by the Bankruptcy Code.

Answer 32

nonexempt property

Question 33

A secured creditor in a bankruptcy proceeding where the value of the collateral securing the secured loan exceeds the creditor’s secured interest.

Answer 33

oversecured creditor

Question 34

A secured creditor in a bankruptcy proceeding where the value of the collateral securing the secured loan is less than the creditor’s secured interest.

Answer 34

undersecured creditor

Question 35

A rule of bankruptcy law that stipulates the priority of unsecured claims that are to be satisfied out of the bankruptcy estate.

Answer 35

statutory priority of unsecured claims

Question 36

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

Answer 36

Chapter 7 discharge

Question 37

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.

Answer 37

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

Question 38

An individual whose income is sufficiently stable and regular to enable the individual to make payments under a Chapter 13 plan.

Answer 38

individual with regular income

Question 39

Provides a longer period of time for the debtor to pay his or her debts.

Answer 39

extension

Question 40

provides for the reduction of a debtor’s debts

Answer 40

composition

Question 41

A plan that lays out a debtor’s plan for paying his or her disposable income to prepetition creditors during a Chapter 13 plan period.

Answer 41

Chapter 13 plan of payment

Question 42

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 five years).

Answer 42

Chapter 13 discharge

Question 43

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

Answer 43

Chapter 11-Reorganization

Question 44

A form of bankruptcy in which a debtor reorganizes its capital structure, receives a partial discharge of unpaid debts, and takes other actions to emerge from bankruptcy as a viable concern

Answer 44

reorganization bankruptcy

Question 45

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

Answer 45

debtor-in-possession

Question 46

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

Answer 46

creditors’ committee

Question 47

A contract or lease that has not been fully performed

Answer 47

executory contract or unexpired lease

Question 48

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

Answer 48

Chapter 11 plan of reorganization

Question 49

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

Answer 49

confirmation of a Chapter 11 plan of reorganization

Question 50

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

Answer 50

acceptance method

Question 51

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

Answer 51

cram-down provision