R6 M1 - Bankruptcy: Part I

Question 1

Under Bankruptcy if you don’t qualify for chapter 7 but 13 what will that look like?

Answer 1

Choice “D” is correct. If 60 times a debtor’s average monthly income (less allowable expenses) is $15,150 or more, the debtor cannot file for Chapter 7 but may file for Chapter 13. Thus, I is correct.

II is an incorrect statement. If 60 times a debtor’s average monthly disposable income (after allowable expenses) is at least $9,075 but less than $15,150 and the debtor is only able to pay 10 percent of unsecured claims, the debtor can file for Chapter 7. It is only debtors within these financial figures who are able to pay 25 percent or more of unsecured, nonpriority debts that are subject to conversion or dismissal for abuse.

The only option that states I is correct and II is incorrect is choice “D”.

Question 2

What is a trustee?

Answer 2

A person or institution that manages someone asset or property for a 3rd party.

Question 3

What are the four basic types of bankruptcy cases?

Answer 3

1. Chapter 7: liquidation (individual or corporation)

An individual that files for chapter 7 will be discharged of his debt if approved, and a corporation will be dissolved of his debt.

2. Chapter 11: Reorganization (No liquidation or trustee required)

This often applies to businesses and sometimes individuals. The debt is scheduled for another time instead of it being due today.

3. Chapter 13: Adjustment of debt of individual

This is when the debtor agrees to pay a portion of the debt to have the remaining debt discharged.

4. Chapter 15: Ancillary (supplemental / Supporting role) and Cross-border cases

U.S adopting insolvency law (cases) in different country promoted by the United Nations

Question 4

What type of bankruptcy requires a trustee?

Answer 4

Chapter 7 (liquidation) and Chapter 11 (Reorganization)

• A voluntary or involuntary petition may be filed under chapter 7 or 11

Question 5

Rights and Duties of Debtor and Creditor under Chapter 7 or 11

• When there is a voluntary or involuntary filing for bankruptcy there is an automatic stop in what creditor can go after (lawsuit or going after the debtor goods).
• This automatic stop cannot prevent criminal persecution, fraudulently hiding property when you file for bankruptcy, alimony payment, child support or taxes owed to the federal government