REG17 Flashcards
What is an extension agreement?
An extension agreement is a variation of the composition agreement with creditors. Rather than agree to the reduced but immediate payment of debts, the creditors and debtor agree that payments will be made over an extended period. The key characteristic of an extension agreement is the extended payment period.
What assets are included in a debtor’s bankruptcy estate?
It includes most of the legal or equitable interests as of the commencement of the case. Most interests are included whether or not the property is exempt from creditor claims. However, such items as subsequent earnings, after-acquired property, and certain contributions (e.g., to retirement plans and educational accounts) are excluded.
Is an official bond an obligation of a surety?
Yes, an official bond is a type of surety bond. A statute may require public officers to provide bonds to secure the appropriate performance of their duties. The surety is obligated for losses caused by the negligence or nonperformance of the official.
Can an unsecured creditor obtain a judgment and execution against the debtor’s property after the order for relief in a formal judicial declaration that the debtor is insolvent is issued?
No, the order for relief results in an automatic stay of most legal proceedings or other collection efforts by creditors of the debtor. Creditors, whether or not secured, also may not take action to gain possession of the debtor’s property or to create, perfect, or enforce a lien on it.
Does a tax lien or a first mortgage have priority?
Tax Lien. The general rule of priority under common law is that the first in time is the first in right. However, statutes typically provide that liens for taxes have priority over otherwise superior liens.
Who are ineligible debtors under Chapter 11?
Shareholders, commodities and stock brokers, insurers, banks, credit unions, and savings and loan associations.
Can a corporation or a partnership have a general discharge in a bankruptcy?
No, a general discharge of most debts is provided a person under Chapter 7, except for municipalities, railroads, insurance companies, banks, credit unions, and savings and loan associations. Partnerships and corporations do not receive a general discharge under Chapter 7. They are merely liquidated.
What does a statutory right of redemption provide the mortgagor with?
It provides the mortgagor with the opportunity to repurchase the property after the foreclosure sale, for a certain statutorily specified period generally not exceeding 1 year, by payment of the auction sale price.
What is a fraudulent conveyance?
It is one made with actual intent to hinder, delay, or defraud creditors. A conveyance is also fraudulent if it results in insolvency or if the debtor receives less than a reasonable value while (s)he is insolvent. Fraudulent conveyances are voidable if the transfers are made within 2 years before the petition is filed.
Does a seller remain liable on a mortgage assumed by a buyer?
Yes, when a buyer of real estate assumes an existing mortgage, the seller remains liable because a novation has not occurred. Between the seller and buyer, the buyer has become the primary debtor, and the seller is a surety.
If an oral contract takes two years to complete but is fully executed is it enforceable?
Under the statute of frauds, if it is not possible to complete performance of an oral contract within 1 year, the contract is not enforceable at law. A fully executed contract, however, is enforceable without regard to the statute of frauds. Also enforceable in most states is a contract fully performed by one party.
How do you distribute the cash in a bankruptcy?
Cash received on the sale of an asset goes to creditor with interest first, any remaining debt owed becomes a general debt. Remaining cash left is allocated based om the % of total debt due to all general creditors.
If a cosurety’s obligation is discharged in bankruptcy, Is their agreed-upon share considered in determining the pro rata share of the remaining cosureties?
No, not considered. So subtract their portion of surety when calculating the % each Cosurety owes.
Is a deposit on undelivered consumer goods an unsecured creditor?
Yes, All secured creditors’ claims must first be satisfied in full, then admin costs are paid (the trustee will receive and the attorney). A claim for pre-petition deposits of money for undelivered consumer goods are paid in full to the extent of available cash.
What is the allowable rental loss deduction for an active participant and is there a reduction for AGI over a certain threshold?
Yes, up to $25K of loss if AGI is $100K or less. The $25,000 is reduced by 50% (AGI - $100,000) × 50%] - $25K.
