R7: BLAW 2

Question 1

Claims and defenses on an instrument (FAIDS)

Answer 1

Fraud in the inducement or execution
Adjudicated insane
Infancy, illegality
Duress, discharge in bankruptcy
Suretyship defenses, statute of limitations

Question 2

Three requirements for attachment (VAC)

Answer 2

Value must be given by secured party
Agreement (authenticated record or creditor takes possession)
Collateral - debtor has rights to the collateral

Question 3

Ways to perfect and interest and when.

Answer 3

Following or simultaneous with attachment
Filing a financing statement
Possession
Control (investment property)
Automatic perfection (PMSI, consumer in ordinary course; small scale assignment of accounts)

Question 4

Chapter 7 bankruptcy details

Answer 4

Liquidation of assets, trustee appointed, if business, operations cease. Individual must pass abuse or means test; if income too high, converted to 13

Question 5

Chapter 13 bankruptcy details

Answer 5

Debt adjustment - trustee appointed, 3-5 year repayment plan (generally) is created

Question 6

Chapter 11 bankruptcy details

Answer 6

Reorganization, no trustee required, debtor retains possession of assets, ,creditors are paid to extent possible, court must confirm plan, shareholders can “approve” plan

Question 7

Exemptions to discharge (WAFTED)

Answer 7

W - willful or malicious injury
A - alimony payments
F - fraud
T - taxes
E - educational loans
D - debts undisclosed @ bankruptcy proceedings

Question 8

Priority Claimants SAG WEG CTI

Answer 8

S - support obligations (to spouse/kids)
A - administrative expenses
G - gap claims

W - EE wage claims up to $12,475
E - EE benefit contributions up to $12,475
G - grain farmers, claims on facilities up to $6,150

C - consumer deposits up to $2,775
T - tax claims
I - injury (personal claims from drunk driving)

Question 9

Savings and loan corporations

Answer 9

May not participate in Ch. 7 or 11 proceedings (makes sense)

Question 10

Farming as a profession perks

Answer 10

Cannot be involuntarily petitioned into bankruptcy

Question 11

Examples of negotiable instruments

Answer 11

checks, drafts, promissory notes, certificates of deposit

Question 12

Details of automatic stay

Answer 12

Stops collection via wage garnishment; does not stop priority payments (alimony, child support, etc.)

Question 13

Items includable in bankruptcy estate w/in 180 days of filing petition:

Answer 13

Life insurance proceeds
Inheritances
Divorce settlements