Bankruptcy Code Chapter 7 Flashcards

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Questions and Answers

Which chapters of the Bankruptcy Code provide for liquidation proceedings, reorganizations, and adjustments of debts for individuals with regular income?

5, 6, 7

9, 10, 14

1, 2, 3

7, 11, 13 (correct)

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.

exempt; non-exempt Signup and view all the answers

What happens to any remaining debt after asset distribution in a Chapter 7 bankruptcy?

The court will discharge the remaining debt. Signup and view all the answers

What must be included when a petition in bankruptcy is filed?

All of the above Signup and view all the answers

What may occur if a debtor files a Chapter 7 petition but has a median income higher than their state's median income?

Both A and B Signup and view all the answers

Under what circumstances might a court dismiss a Chapter 7 filing?

Both A and B Signup and view all the answers

If a debtor challenges an involuntary petition for bankruptcy, a court will automatically stay the petition for 45 days.

False Signup and view all the answers

What is an Order for relief?

It's when a proper petition for bankruptcy is filed and the court grants relief to the petitioner. Signup and view all the answers

What does the automatic stay prohibit?

It prohibits creditors from attempting to collect a debt. Signup and view all the answers

What is an Involuntary Petition?

A document forcing the debtor into bankruptcy proceedings. Signup and view all the answers

What does the bankruptcy estate not include?

Property that was sold three years ago by the debtor. Signup and view all the answers

What is Strong-arm Power?

The power of a trustee to force persons holding the debtor's property to deliver it to the trustee. Signup and view all the answers

What is Power of Avoidance?

The power of a trustee to set aside a sale or transfer of the debtor's property. Signup and view all the answers

What is Preference in bankruptcy terms?

A transfer of property to a creditor that favors that creditor over others. Signup and view all the answers

Which exemptions allow certain property to be exempt from the bankruptcy estate?

All of the above Signup and view all the answers

The trustee will distribute property first to secured creditors and then proportionately to unsecured creditors.

True Signup and view all the answers

What may happen if creditors object to the discharge of debt?

The court may deny the discharge Signup and view all the answers

Which of the following is NOT required in reaffirmation agreements?

A filing fee Signup and view all the answers

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.