Review 5 - BANKRUPTCY

Question 1

Chapter 11 deals with what type of Bankruptcy?

Answer 1

Reorganizations

Question 2

Are Chapter 11 bankruptcies voluntary or involuntary?

Answer 2

Both - creditors can force an an individual or company into involuntary bankruptcy

Question 3

Who operates the business while Chapter 11 is going on?

Answer 3

Normally, the owner, although a trustee can be appointed by the creditor’s committee

Question 4

What type of bankruptcy claim is not dischargeable in bankruptcy court?

Answer 4

One based on illegalities, such as obtaining drecit or money through fraud or false representation.

Question 5

Certain properties acquired AFTER a Chapter 7 is filed can become a part of the bankruptcy estate. Is Social Security one of them? How about wages earned after the filing?

Answer 5

Social Security is not on the list.

Wages earned after filing are not because they are part of a “new” estate, and the bankruptcy deals with an “old” estate.

Question 6

What is the time limite after a Chapter 7 filing that certain monies can be attached to bankruptcy estate?

Answer 6

180 days

Question 8

What time limit is involved for creditors to file against a debtor in bankruptcy court, and what establishes the beginning of the time limit?

Answer 8

6 months from the FIRST creditors meeting

Question 9

Does a bankruptcy filing put a stay on collection of all debts? if not, what debts are exempted?

Answer 9

Most, but not all.

Alimony, child support, or other matters relating to domestic disputes.

Question 10

How is it determined which creditors claims are accepted and which are rejected?

Answer 10

The trustee decides which claims are accepted and rejected, pending approval of the bankruptcy court.

Question 11

What types of debts cannot be discharged through bankruptcy?

Answer 11

1. Educational loans
2. Government taxes and fines incurred 3 years prior to the filing.
3. Debts arising out of false pretenses.

Question 12

What is the order of bankruptcy claims in order of preference?

Answer 12

1. Bankruptcy administration fees
2. Secured creditors
3. Back taxes
4. Unsecured creditors

Question 13

Can involuntary bankruptcy be filed against any debtor?

Answer 13

No. There are exceptions.

1. Farmers
2. charitable organizations
3. railroads
4. banks
5. insurance companies

Question 14

The debtors against whom invountary bankruptcy cannot be filed, is this the same list of debtors that cannot file or voluntary bankruptcy?

Answer 14

Partially. Those debtors that CANNOT FILE voluntary bankruptcy include:

1. banks
2. insurance companies
3. savings and loans

Question 15

What is the order of distribution among creditors claims in bankruptcy?

Answer 15

1. Secured creditors

• Fully secured-collateral worth more than debt
• Partially secured - collateral worth less than debt

2. Priority claims - STOP-IT - Drunk Driver

• Support and Alimony
• Trustee, attorney, accountant, administrative expenses
• Owed between filing and approval dates
• Payroll (90 days) Benefits (180 days) up to $12,475 per employee
• Individual consumer deposits ($2775 each)
• Tax claims 3 prior years
• **Drunk Driver ** injury claims

3. General/Unsecured
   * All remaining non-priority claims or claims exceding above limits.

Question 16

What does “discharge” mean in bankruptcy?

Answer 16

To “discharge” a debt in bankruptcy means to release the debtor from repayment.

Question 17

What does “set aside” mean in regards to bankruptcy?

Answer 17

Setting a debt aside means that the trustee can reverse previous payment, roll that into the bankruptcy estate, and demand payment back of said anount of money,