Debtor/Creditor relationship

Question 1

What is the highest form of land ownership

Answer 1

Fee simple - gives the owner the right to sell, will, mortgage, and lien the property

Question 2

Easement by implication

Answer 2

provides a limited use and limited duration form of ownership. An easement is a right of use but does not include the right to transfer title to the land on which the easement is located.

Question 3

Life estate

Answer 3

A life estate lasts only for the length of the grantee’s life and ends automatically upon his or her death.

Question 4

Non free hold estate

Answer 4

lesser estate such as a lease or an interest that is limited in time.

Question 5

Can a joint tenant convey his or her interest without permission?

Answer 5

Yes, but they cannot be a joint tenant, only a tenant in common

Question 6

What must be contained in a deed?

Answer 6

a description of the deed, not the purchase price.

Question 7

what deed gives the best protection to a real property purchaser?

Answer 7

general warranty

Question 8

if you have real estate title insurance, what does that protect you against?

Answer 8

insured against all defects of record other than those excepted in the policy

Question 9

What are factors determining whether an item of personal property has become a fixture

Answer 9

The degree of affixation and the intent of the annexor

Question 10

who does a recorded mortgage have priority over?

Answer 10

all subsequent mortgages

Question 11

who does an unrecorded mortgage have priority over?

Answer 11

a subsequently recorded mortgage if the subsequent mortgagee knew of the unrecorded mortgage

Question 12

Artisans lien

Answer 12

a contract bailee who improves/repais bailed property. Failure of bailor to pay the contracted amount allows the bailee to place a possessory lien on the bailed property and the bailee with proper notice can sell the property to satisfy the lien. EX. car repair can sell the car and deduct the amt owed and give the rest to the person.

Question 13

What types of bankruptcy allow involuntary and voluntary petitions

Answer 13

Chapter 7 and 11

Question 14

garnishment

Answer 14

the legal process of having sums deducted from the debtors paycheck to satisfy a debt (limited to 25% that can be taken after tax)

Question 15

writ of attachemnt

Answer 15

a debtors assets are seized so if a creditor wins a judgment, something will be available to pay the judgment.

Question 16

writ of execution

Answer 16

only allows a judgment creditor to levy on nonexempt property “owned” by the debtor

Question 17

receivership

Answer 17

only permits a receiver to take and sometimes manage the property of the debtor

Question 18

artisans lien

Answer 18

amounts unpaid for work done on personal property

Question 19

mechanics lien

Answer 19

one based on improvement to REAL property that have not been paid

Question 20

unfair preference (voidable prefernce)

Answer 20

a person or company transfers assets or pays a debt to a creditor shortly before going into bankruptcy, that payment or transfer can be set aside on the application of the liquidator or trustee in bankruptcy as an unfair preference or simply a preference

Question 21

to set a transaction or payment aside as an unfair preference, the liquidator will need to show that

Answer 21

1. the person or company was insolvent at the time the payment was made
2. the person or company then went into bankruptcy within a specified time thereafter, usually referred to as the vulnerability period
3. the payment had the effect of putting the creditor in a better position than other unsecured creditors
4. in some jurisdictions, it is also necessary to show that the bankrupt intended to grant a preference

Question 22

For a trustee to set aside a transfer as a preference

Answer 22

the debtor’s transfer of property must be to a creditor for a preexisting debt, made while the debtor is insolvent, within 90 days of the filing of the petition, and the creditor must by this transfer receive more than he or she would receive in a Chapter 7 liquidation proceeding.

Question 23

The filing of an involuntary bankruptcy petition under the Federal Bankruptcy Code

Answer 23

Stops the enforcement of judgment liens against property in the bankruptcy estate. Once a bankruptcy petition is filed, the enforcement of any lien against this property is stopped pending a resolution through bankruptcy proceedings.

Question 24

stay

Answer 24

A stay against creditor collection is automatically issued upon filing of the involuntary petition, and will prohibit all creditors from commencing other legal actions to receive payments for debts owed.

Question 25

how are payments made to new creditors held?

Answer 25

Not preferential, because the payment was a contemporaneous exchange for new value. Transactions, or contemporaneous exchanges for new value, may be performed without giving preference. It is only payments made to “old” creditors that are preferential payments.

Question 26

antecedent debt

Answer 26

a debt that was incurred before the bankruptcy petition was filed.

Question 27

what is not relevant when determining whether a repayment of a loan is a voidable preferential transfer?

Answer 27

Solvency at the time the debt is incurred has nothing to do with whether payments made to Erly now are preferential. To be a preferential payment, the debt must only have been antecedent (incurred before the bankruptcy petition was filed), and insolvency of the debtor determined at time of payment.

Question 28

Preferential payemnt

Answer 28

Any payment or security interest made to a particular creditor within 90 days of declaring bankruptcy is a preferential payment if the payment is made on an antecedent debt.

Question 29

who can claim exemptions in bankruptcy

Answer 29

only individuals

Question 30

if a creditor has a perfected security interest when the debtor files for bankruptcy,

Answer 30

its rights are unaffected by the bankruptcy proceeding, and it retains the right to receive repayment of its debt without having the payments set aside.

Question 31

can the trustee avoid liens

Answer 31

although the trustee can avoid some statutory liens (such as landlord’s lien), the trustee cannot avoid all (key word is “any”) statutory or common law liens (such as certain warehouse liens).

Question 32

can consumer debts be paid without showing a preference?

Answer 32

Consumer debts of up to $5,475 may be made without showing a preference, as can alimony and child support payments.
If the payment were $5,475 or more, then the 90-day rule would make the payment preferential, because the credit card balance was an antecedent debt, or one that existed when the bankruptcy was filed.

Question 33

what happens to lawsuits against a debtor when the debtor files for bankruptcy?

Answer 33

Once a petition is filed, there is an automatic stay under both Chapter 7 and 11, which ends almost any proceeding against the debtor. The creditors will then have to seek relief from the bankruptcy court and not through independent legal action.

Question 34

what is included in a debtors estate when filing for bankruptcy?

Answer 34

A debtor’s estate in bankruptcy consists of all tangible and intangible property of the debtor held at the commencement of the bankruptcy proceedings. In addition, the estate consists of any after-acquired income from such property. Therefore, interest from municipal bonds (held as part of the estate) also becomes part of the estate. Any gifts received within 180 days of the filing the petition also become part of the estate. All other payments received after the filing of the petition are not considered income from the existing debtor’s (bankruptcy) estate.

Question 35

who generally has top priority in the distribution of a bankruptcy estate

Answer 35

a secured creditor with a perfected interest

Question 36

what is the order that unsecured creditors are paid distributions from an estate

Answer 36

administrative expenses
wages
tax lien

Question 37

how does a creditor perfect?

Answer 37

Stark is a perfected secured creditor, because it holds an executed security agreement and a financing statement was filed.

Question 38

how often can a debtor get a ch 7 discharge decree?

Answer 38

once every 8 years

Question 39

reaffirmation agreement

Answer 39

signed by a debtor and an unsecured creditor, and the agreement is filed with the bankruptcy court before a discharge decree is issued. The debtor is not represented by an attorney. For this agreement to be enforceable, court approval is required.

Question 40

what affect does a bankruptcy discharge have on a judgment creditor when there is no bankruptcy estate?

Answer 40

Unless the debtor has been denied a discharge decree owing either to an act of the debtor (such as fraud, intentional concealment of assets, and the like), or where, by statute, the debt is not discharged (such as in the case of unpaid taxes), the discharge decree releases the debtor from personal liability for debts owed to his or her creditors.

Question 41

in what circumstances will a debtor not be given a discharge

Answer 41

Unless the debtor has committed an act such as fraud, intentional concealment of assets, refusal to explain the loss of assets, and the like, is a partnership or corporation, or the debtor has received a discharge decree within eight years of the current filing petition, the discharge decree will be granted