Reg Flashcards - Chapter 7

Question 1

Negotiablity requirements for notes

Answer 1

1. Be in writing
2. Signed by the maker (note) or drawer (draft)
3. Contain an unconditional promise (note) or order (draft) to pay
4. Fixed amount
5. Payable on demand or at a specific time
6. Payable to order or to bearer
7. Contain no additional undertaking or instruction not authorized by the UCC

Question 2

Special endorcement

Answer 2

Names a specific person as the endorsee

Question 3

Blank endorcement

Answer 3

Does not name a special endorsee

Question 4

Qualified endorcement

Answer 4

“without recourse” = no guarantee of payment by the endorser

Question 5

Restrictive endorcement

Answer 5

“only”, “for deposit”, “for collection”

Question 6

Holder in Due Course requirements

Answer 6

Take the paper:

1. For value
2. In good faith
3. Without notice of any defenses to or claims of ownership on the instrument
4. Negotiable (front only)

Question 7

Shelter Doctrine

Answer 7

Even though the transferee himself might not qualify as an HDC, he can claim the rights of an HDC who held the commercial paper before him

Question 8

Real defenses for Holder in Due Course Rule

Answer 8

FAIDS:

1. Fraud in the execution
2. Forgery
3. Adjudicated insanity
4. Material Alteration
5. Infancy
6. Illegality
7. Duress
8. Discharge in bankruptcy
9. Suretyship defenses
10. Statute of limiations

Question 9

PMSI

Answer 9

Purchase Money Security Interest
Arises when
1. Creditor sells the collatoral to the debtor on credit, retaining a security interest for the purchase price
2. Creditor advances funds used by the debtor to purchase the collateral
Ask, “Did the debtor receive the collatoral with the creditor’s money?”

Question 10

Requirements for Attachment

Answer 10

1. Parties must have an agreement creating the security interest
2. Value must be given by the secured party in exchange for the security interest
3. Debtor must have rights to the collateral

Question 11

5 methods of perfection

Answer 11

1. Filing (financing statement effective for 5 years)
2. Taking possession of the collateral
3. Control
4. Automatic perfection
5. Temporary perfection

Question 12

Order of priority to collateral

Answer 12

1. Buyer in ordinary course of business
2. Holder of perfectly perfected PMSI
3. Holder of a perfected security interest
4. Unperfected security interest
5. Debtor

Question 13

Chapter 7 bankruptcy

Answer 13

Liquidation
Trustee is appointed
Indivudals, partnerships, and corporations

Question 14

Chapter 9

Answer 14

Municipal debt adjustment

Question 15

Chapter 11

Answer 15

Reorganization
No liquidation
Trustee not required
Individuals, partnerships, and corporations

Question 16

Chapter 12

Answer 16

Family farmers with regular income

Question 17

Chapter 13

Answer 17

Adjustment of debts of individuals with regular income
Individuals only
Pay back over a 3 year period to a maximum 5 years
Voluntary only

Question 18

Chapter 15

Answer 18

Ancillary and other cross-border cases

Question 19

Dismissal or conversion of a Chapter 7 case

Answer 19

Individual consumer debtor may be dismissed (or converted to Chapter 13) if Chapter 7 would constitute abuse
1. Calculation of debtor’s income = average of 6 months preceding filing
If debtor income less than state median - Chapter 7 permitted
If debtor income exceeds state median income - means test applied

Question 20

Means test

Answer 20

Used to determine whether the debtor has sufficient income to repay debts usinga Chapter 13 plan

1. Current monthly income * 60 [(average mo income - exp) * 60]
2. Less than $7,475 = Chapter 7 permitted
3. $12,475 or more = presumption of abuse
4. Less than $12,475 but more than $7,475 = Abuse only if amount equals 25% of nonpriority claims

Question 21

May not file under Chapter 7

Answer 21

RIBS
Railroads
Insurance companies
Banks
Savings institutions and Small businesses

Question 22

Automatic stay

Answer 22

Stops collection efforts

Question 23

Section 341 Meeting

Answer 23

Creditors’ Meeting
Ordinarily within 20-40 days after the order for relief
Debtor must attend = creditors have an opportunity to examine the debtor

Question 24

Things exempt from debtor’s estate

Answer 24

1. Homestead (up to $22,975)
2. Motor vehicle (up to $3,675)
3. Household goods (up to $575/ item; $12,250 in total)
4. Unmatured life insurance contracts
5. Tools of trade or professional books (up to $2,300)
6. Health aids
7. Government benefits

Question 25

Reaffirmation of discharged debts

Answer 25

Debtor may not want a particular debt discharged in bankruptcy

1. Agreement must occur before the granting of the discharge
2. Agreement contains a clear provision that the debtor has a right to rescind the agreement
3. Reaffirmation is not required by law

Question 26

Priorities for distribution of debtor’s estate

Answer 26

1. Secured claimants
SAG WEG CTI
2. Support obligations
3. Administrative expenses
4. Involuntary case Gap claims
5. Wage claims up to $12,475
6. Employee benefit plans up to $12,475
7. Grain farmers and fisherman up to $6,150
8. Consumer deposits up to $2,775
9. Tax claims
10. Personal Injury resulting from Intoxicated driving

11. Non-secured claimants

Question 27

Case gap

Answer 27

Claims that accrue in the ordinary course of business ater and involuntary petition is filed but before the order for relief or appointment of a trustee