Debtor-Creditor Relationships: Bankruptcy

Question 1

The 2005 Bankruptcy Reform Act has imposed on the clerks of the bankruptcy court

Answer 1

the responsibility to provide written notice of the benefits, costs, and types of bankruptcy filings

Question 2

A “fraudulent transfer”

Answer 2

is a transfer made by a debtor within two years prior to the date of bankruptcy in which the debtor did not receive fair value for the asset

Question 3

What rights and power does the trustee have?

Answer 3

1) strong-arm power, or priority over an unperfected secured party
2) the power to require persons holding the debtor’s property at the time the petition is filed to deliver the property
3) specific powers of avoidance, or the ability to set aside a sale or transfer to take the debtor’s property back
4) the ability to use any grounds available to the debtor to insure the return of the debtor’s property.

Question 4

Definition of Insolvent

Answer 4

Liabilities exceed Fair Value of Assets

Question 5

Listed creditors will receive notification from the bankruptcy court and are required

Answer 5

file their claims within six months of the first creditors’ meeting

Question 6

A failure to file in a timely fashion

Answer 6

will forfeit your rights

Question 7

The 2005 Bankruptcy Reform Act revised Chapter 13 of the Bankruptcy Code, which deals with personal reorganizations (similar to Chapter 11) for individuals. The changes included

Answer 7

1) The repayment period cannot exceed five years (computed family income)
2) The confirmation of the plan must result in a hearing no sooner than 20 days or more than 45 days after the meeting with the creditors.
3) When considering disposable income of the debtor, the Bankruptcy Code excludes up to 15% of the debtor’s gross income for charitable contributions
4) Reasonable costs of health insurance for the debtor and the debtor’s family may be considered

Question 8

What is included in the bankruptcy estate?

Answer 8

1) inheritances
2) divorce settlements
3) life insurance proceeds
4) gifts to the bankrupt party

Question 9

Under the Bankruptcy Reform Act of 2005, and taking into account the indexing of exempt property provisions, a debtor

Answer 9

is entitled to a homestead exemption in the amount of $22,975 although it’s not effective against a secured creditor. It’s good as long as the property appraisal is more than the mortgage

Question 10

before the debtor may file a petition

Answer 10

they must receive credit counseling

Question 11

Changes made by the 2005 Bankruptcy Reform Act to Chapter 7 of the Bankruptcy Code include the following

Answer 11

1) Cash advances totaling more than $925 from a credit card obtained within 70 days of the order may not be discharged, subject to a rebuttable presumption.
2) An unsecured claim for death resulting from the operation of a motor vehicle while the debtor was under drug or alcohol influence is a newly added item related to unsecured creditors

Question 12

Chapter 9 of the Bankruptcy Code

Answer 12

deals with the debts of a municipality

Question 13

Chapter 13 of the Bankruptcy Code

Answer 13

deals with adjustment of debts (repayment)