R7 Bankruptcy 1 (S) Flashcards

0
Q

Chapter 13 Adjustments of Debts of Individuals with Regular Income

A

The debtor repays all or a portion ofhis debts over a three-year period to a maximum of a five-year period

Not liquidation

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1
Q

Chapter 7 Liquidation

A

A trustee is appointed

The trustee colects the debtor’s assets, liquidates them, and uses the proceeds to pay off creditors to the extent possible

If the debtor is an individual, the debtor’s debts are then discharged

An artificial entity is dissolved

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2
Q

Chapter 11 Reorganization

A

No liquidation and trustee is not appointed

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3
Q

Dismissal or Conversion of a Chapter 7 Case

A

A chapter 7 case by an individual consumer debtor may be dismissed or converted to a chapter 13 case upon a finding that granting relief under Chapter 7 would constitute abuse

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4
Q

Calculation of Debtor’s Income

A

Current Monthly Income: Average of 6 months preceding filing

If equal to or less than state median income chapter 7 is permitted

Otherwise means test is applied

Deductions

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5
Q

Means Test

A

Current monthly income divided by 60

If less than $7,475 - Chapter 7 Permitted

If $12,745 or more - Presumption of Abuse

If less than $12,745 but more than $12,745 - Abuse only if 25% of nonpriority claims

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6
Q

Allowable Deductions for Means Test

A

Living expenses
Health and Disability insurance
Care of elderly, disabled, or chronically ill

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7
Q

Rebutting the Presumption of Abuse

A

Serious illness or call to active military duty

Chapter 7 may not be dismissed or converted based on means testing if the debtor is a disabled veteran whose indebtedness occurred primarily while he as on active duty or performing homeland defense activities

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8
Q

General Abuse Test

A

Bad Faith

Only be raised by court, trustee, or bankruptcy administrator

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9
Q

Who may be a debtor for chapter 7 (RIBS)

A

Individuals, partnerships, and corporations

No 
Railroads 
Insurance companies 
Banks 
Savings institutions
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10
Q

Who is a debtor under chapter 11

A
Individuals, partnership, and corporations 
No 
Insurance companies 
Banks 
Savings Institutions
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11
Q

Credit Counseling if Debtor is an Individual

A

Must occur no more than 180 days before filing bankruptcy petition

Debtors filing under Chapter 7 and 13 must complete a financial management course before their debts are discharged

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12
Q

Duties of Debt Relief Agencies

A

Agencies that are paid compensation to assist consumer debtors in filing bankruptcy petitions must enter into a written contract with debtor and may not advise a person to incur more debt in anticipation of bankruptcy filing

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13
Q

Automatic Stay

A

When a bankruptcy petition is filed in either a voluntary or involuntary case, an automatic stay becomes effective against most creditors Stops almost all collection efforts Does not apply to criminal prosecutions, paternity suits, and child support cases

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14
Q

Duties of Debtor

A

After a petition is filed a debtor must file

list of all creditors and their addresses
schedule of assets and liabilities (FMV)
schedule of current income and expenditures
Copies of pay stubs
Statement of monthly net income
Copies of Federal tax returns

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15
Q

Voluntary Cases

A

Debtor files for order of relief

Debtor need not be insolvent - but must pass income tests

Spouses may file jointly

Constitutes an automatic order for relief