Debtor - Creditor Relationships - Bankruptcy - Prebankruptcy Options

Question 1

What is a chapter 7 bankruptcy?

Answer 1

Straight Bankruptcy or Liquidation.

Question 2

Define attachment.

Answer 2

Action by a creditor for a court-ordered seizure for the taking into custody the debtor’s nonexempt property prior to the creditor getting a judgment.

Question 3

Define artisan’s lien.

Answer 3

Lien on personal property for repair, improvement, alteration.

Question 4

What is a chapter 13 bankruptcy?

Answer 4

Adjustment of Debts of an Individual with Regular Income.

Question 5

What are the requirements for filing voluntary bankruptcy?

Answer 5

Any individual, partnership, corporation can file. Consumers must undergo credit counseling with nonprofit within 180 days of filing. Need not be insolvent - there are tests for determining eligibility for bankruptcy but insolvency is not required.

Question 6

List the different types of liens.

Answer 6

1. Mortgages;
2. Secured transactions;
3. Mechanic’s liens;
4. Worker’s liens;
5. Judgment liens;
6. Artisan’s liens.

Question 7

Define mechanic’s lien.

Answer 7

Lien for work or materials provided on real property.

Question 8

What are the requirements for involuntary petition?

Answer 8

If there are 12 or more creditors, then 3 creditors with aggregated unsecured debt owed of $15,325 must file (April 2013 figure - changes every three years).
If less than 12 creditors, then any creditor owed $15,325 may file.

Question 9

Describe how a lienholder can collect on the amount owed.

Answer 9

Through foreclosure of the lien.

Question 10

What is a chapter 12 bankruptcy?

Answer 10

Adjustment of Debts of a Family Farmer and Fisherman.

Question 11

How often are the amounts on filing requirements and exemptions for bankruptcies changed?

Answer 11

The amounts on filing requirements, exemptions etc. are set to automatically increase every three years.

Question 12

Define garnishment.

Answer 12

Right of judgment creditor to garnish (take a portion of) debtor’s wages through direct filing with employer- federal law limits amount that can be garnished to 25% of take-home pay.

Question 13

What is a chapter 11 bankruptcy?

Answer 13

Reorganization.

Question 14

List the types of property that can be attached.

Answer 14

Real and personal property as well as accounts and receivables.

Question 15

List the five types (or chapters) of bankruptcy.

Answer 15

1. Chapter 7;
2. Chapter 9;
3. Chapter 11;
4. Chapter 12;
5. Chapter 13.

Question 16

List the types of bankruptcy permitting involuntary petitions.

Answer 16

1. Chapter 7;

2. Chapter 11.

Question 17

What can a creditor garnish in order to satisfy a judgment?

Answer 17

Wages of the debtor.

Question 18

List the types of bankruptcy permitting voluntary petitions.

Answer 18

1. Chapter 7;
2. Chapter 9;
3. Chapter 11;
4. Chapter 12;
5. Chapter 13.

Question 19

What is a chapter 9 bankruptcy?

Answer 19

Adjustment of Debts of a Municipality.

Question 20

What is the federal limit for garnishment of wages?

Answer 20

25% of debtor’s wages.

Question 21

Describe the differences between the various chapters of bankruptcy.

Answer 21

Voluntary 7, 9, 11, 12, 13.
Involuntary 7, 11.
Trustee required 7, 12, 13.

Question 22

What governs bankruptcy laws?

Answer 22

Federal law administered by bankruptcy courts.

Question 23

What entities are not allowed to file voluntary bankruptcy?

Answer 23

1. Banks;
2. Savings (buildings) and loans;
3. Credit unions;
4. Railroads;
5. Insurance companies;
6. Governmental units;
7. Small businesses under SBA. (Their bankruptcies are handled via other sections of the code or by receiverships.)

Question 24

Define “order for relief.”

Answer 24

Court order issued pending hearing on involuntary petition.