Bankruptcy Flashcards - Section 7

Bankruptcy Overview

• Bankruptcy is under federal jurisdiction, as per Article 1 of the Constitution, administered via bankruptcy courts adjacent to district courts.
• Bankruptcy judges serve limited terms of eight years.

Bankruptcy Process

• Full completion of the bankruptcy petition is crucial; incomplete petitions can lead to case dismissal.
• The term "debtor" refers to the individual or entity seeking bankruptcy protection, sometimes labeled as "the consumer."

Essential Documents

• A "petition" initiates the bankruptcy proceedings, comprising necessary legal documents submitted to the court.

Parties Involved

• Creditor: Entities owed money by the bankrupt individual or organization.
• Trustee: An appointed overseer, often an attorney or CPA, responsible for managing the bankruptcy case.

Bankruptcy Estate

• Defines the bankrupt's "estate" which includes all assets and liabilities owned.

Assets and Liquidation

• "Assets" encompass all valuable items owned by the bankrupt, including money, real estate, and debts owed.
• "Liquidation" refers to converting the bankrupt's assets into cash to pay off creditors.

Protections and Exemptions

• An "automatic stay" comes into effect upon filing, preventing creditors from collecting pre-petition debts and protects the debtor from making such payments without court permission.
• Exempt Property: The bankruptcy code allows debtors to keep certain assets, defined state-by-state, providing some protective rights during bankruptcy.
• Under the BAPCPA, debtors must have resided in a state for two years to claim its exemptions and limits property exemptions for homes acquired recently.

Transfer Regulations

• Voidable Preferences: Transfers made shortly before filing can be voided if they meet specific criteria related to creditor payments.
• Fraudulent Transfers: Transfers made within a year of filing designed to hinder creditors can be invalidated, except for ordinary business payments.

Bankruptcy Trends

• Rising bankruptcy cases correlate with increased credit card usage and escalating medical costs.

Legal Framework

• Chapters 1, 3, and 5 of the Bankruptcy Code encompass administrative rules for all bankruptcy types.
• Chapters 7, 9, 11, 12, and 13 outline substantive rules focusing on either rehabilitation or liquidation goals for specific bankruptcy cases.
• Chapter 7 permits liquidation when debtors cannot formulate a viable rehabilitation plan.

Specialized Bankruptcy Types

• Chapters 9 and 12 cater to unique debtor types which are not included in standard texts concerning bankruptcy.

Test your knowledge on bankruptcy with these flashcards covering key concepts and legal details. Learn about the federal jurisdiction related to bankruptcy, the importance of filling out the bankruptcy petition completely, and other essential terms. Perfect for students and professionals looking to strengthen their understanding of bankruptcy law.