Debtor - Creditor Relationships - Bankruptcy - Bankruptcy Process

Question 1

Describe the first creditors’ meeting.

Answer 1

Called by the U.S. Trustee on behalf of the Court.

Question 2

List the basic duties of a bankruptcy trustee.

Answer 2

1. Collect property and reduce it to money;
2. Be accountable for property and make a final report;
3. Investigate financial affairs of debtor and creditor’s claims;
4. Furnish information and reports to interested parties and domestic-support creditors;
5. Review all filings by debtor and a statement whether the filing is an abuse under the means income test.

Question 3

List the duties of the debtor.

Answer 3

1. List all creditors;
2. Schedule of assets;
3. Schedule of income;
4. Other required financial information.

Question 4

Define insider.

Answer 4

An individual or business which has a close relationship with the debtor.

Question 5

What is the role of debtor at creditor’s meeting?

Answer 5

Appear to testify about assets and debts.

Question 6

List the voidable preferences in bankruptcy.

Answer 6

1. Property transferred by fraud, duress, undue influence, mistake;
2. Fraudulent conveyances;
3. Transfers to insiders;
4. Transfer in the 90 days preceding the bankruptcy;
5. Transfers to creditors while insolvent (presumed insolvent for 90 days prior to filing). Also applies to security interests granted.

Question 7

What is the time limit for including inheritances in a bankrupt’s estate?

Answer 7

The bankrupt must have the right to receive the inheritance before the bankruptcy or within 180 days of declaration.

Question 8

Who can claim exemptions in a bankruptcy?

Answer 8

Only individuals, not partnerships or corporations, can claim exemptions.

Question 9

Define “automatic stay.”

Answer 9

Order issued by court that stops creditors from collecting debt once a petition is filed.

Question 10

List the actions not stayed by a bankruptcy petition.

Answer 10

1. Criminal prosecution of the debtor;
2. Collection of child support and/or alimony;
3. Tax audits;
4. HUD’s right to foreclose under National Housing Act;
5. Investigations by a securities regulatory agency.

Question 11

Define debtor’s estate.

Answer 11

All property held at commencement (and for 180 days after) plus appreciation (except employee benefit contributions) and property reacquired by trustee (voidable transfers).

Question 12

Describe the federal homestead exemption for bankruptcy.

Answer 12

1. $146,450;
2. Debtor must have domiciled in the state for two years;
3. Applies to property acquired within 3.5 years of filing for bankruptcy.

Question 13

What are the special responsibilities of consumers?

Answer 13

1. Must have had credit counseling;
2. Must meet the means test;
3. Dismissal of petition for abuse if consumer debtor has the means to pay according to code calculations of income.

Question 14

What are the end results of a creditor knowingly violating a stay?

Answer 14

1. Constitutes a Crime;

2. Creditor liable for costs, actual and possibly punitive damages, attorney fees.

Question 15

List the exceptions to voidable preferences.

Answer 15

1. Contemporaneous bills: utilities, rent;

2. Ordinary course payments: monthly installment payments (mortgages; vehicle payments).

Question 16

What are the time limits on voidable preferences?

Answer 16

1. 90 days prior to bankruptcy assumed insolvent and can be set aside if creditor gets priority it would not have in bankruptcy;
2. Insiders – one year prior to filing of the petition - presumed voidable.