Questions and Answers
Which chapters of the Bankruptcy Code provide for liquidation proceedings, reorganizations, and adjustments of debts for individuals with regular income?
What formally commences a Chapter 7 bankruptcy proceeding?
Filing of a petition in bankruptcy
In a Chapter 7 bankruptcy, the assets are turned over to a __.
trustee
The trustee separates out the __ assets and sells the __ assets.
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What happens to any remaining debt after asset distribution in a Chapter 7 bankruptcy?
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What must be included when a petition in bankruptcy is filed?
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What may occur if a debtor files a Chapter 7 petition but has a median income higher than their state's median income?
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Under what circumstances might a court dismiss a Chapter 7 filing?
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If a debtor challenges an involuntary petition for bankruptcy, a court will automatically stay the petition for 45 days.
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What is an Order for relief?
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What does the automatic stay prohibit?
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What is an Involuntary Petition?
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What does the bankruptcy estate not include?
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What is Strong-arm Power?
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What is Power of Avoidance?
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What is Preference in bankruptcy terms?
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Which exemptions allow certain property to be exempt from the bankruptcy estate?
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The trustee will distribute property first to secured creditors and then proportionately to unsecured creditors.
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What may happen if creditors object to the discharge of debt?
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Which of the following is NOT required in reaffirmation agreements?
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Study Notes
Bankruptcy Code Overview
- The Bankruptcy Code comprises several chapters: Chapter 7 for liquidation, Chapter 11 for reorganizations, and Chapter 13 for individual debt adjustments with regular income.
Chapter 7 Bankruptcy
- Initiated by filing a Chapter 7 petition; overseen by a court-appointed trustee.
- Trustee manages assets, separating exempt from non-exempt assets; non-exempt assets are sold to repay creditors.
- Remaining debt may be discharged by the court, barring specific exceptions.
Filing Requirements
- Upon filing, debtors must submit schedules detailing both secured and unsecured creditors, financial affairs, owned assets (including exempt property), and a statement of current income and expenses.
- Gained proof of creditors and payment received within 60 days prior to bankruptcy filing is required.
- A signed statement of monthly income and a federal income tax return from the prior year must be provided.
Means Test and Abuse
- If a debtor's median income exceeds their state’s median, it suggests potential abuse and may lead to dismissal or conversion to Chapter 13.
Court Dismissal Scenarios
- Courts can dismiss Chapter 7 filings if the debtor has been convicted of a violent or drug-related crime, or if they fail to meet domestic support obligations post-filing.
Legal Concepts in Bankruptcy
- "Order for relief" refers to the court's approval of a proper bankruptcy petition.
- The "automatic stay" immediately prohibits creditors from collecting debts upon filing.
- An "involuntary petition" is a legal mechanism to initiate bankruptcy proceedings against a non-consenting debtor.
Bankruptcy Estate
- The bankruptcy estate excludes property sold by the debtor three years before filing.
- "Strong-arm" power allows trustees to reclaim debtor property held by others.
- "Power of avoidance" enables trustees to nullify certain property transfers to include them in the bankruptcy estate.
Preferences in Bankruptcy
- Defined as a property transfer to a creditor that favors that creditor over others in the bankruptcy scenario.
Exempt Property
- Certain assets can be exempt from bankruptcy, including:
- Homestead exemption for residence and burial plots.
- Specific dollar amounts for vehicles and household goods.
- Tools of trade and health aids, such as wheelchairs or glasses.
Distribution of Assets
- Property distribution follows a hierarchy, prioritizing secured creditors first, then proportionately to unsecured creditors.
Discharge Denial Conditions
- Creditors may contest discharge if:
- Debtor engages in deceptive conduct, such as hiding or destroying property.
- Financial records are concealed or required education courses aren't completed.
- Debtor is involved in felony proceedings or previously discharged debts within eight years.
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Description
Dive into the essentials of Chapter 7 of the Bankruptcy Code with this set of flashcards. Learn the key definitions and proceedings associated with liquidation processes. Perfect for students and professionals looking to understand bankruptcy laws better.
