Bankruptcy Types and Relief Quiz

Study Notes

Types of Relief for Debtors

Chapter 7 (Liquidation): Most common bankruptcy type, applicable to individuals and businesses; involves selling debtor's assets to pay creditors.
Chapter 11 (Reorganization): Primarily for businesses, allows retention of assets to generate earnings while restructuring debts and extending payment plans.
Chapter 13 (Reorganization for Individuals): Designed for individuals with regular income; enables debtors to keep assets while paying creditors through a structured plan.

Policies of the Bankruptcy Code

Equality of Distribution: Ensures fair treatment of all creditors in the distribution of debtor’s assets.
Adequate Protection: Protects creditors' interests in their property during bankruptcy proceedings.
Fresh Start for Debtor: Aims to provide debtors with a new beginning, freeing them from overwhelming debts.

Discharge Entitlements

Chapter 7: Individuals can receive a discharge; corporations (not sole proprietorships) cannot. Discharge may be denied if misconduct occurs.
Chapter 11: Discharge granted upon plan confirmation; payments not always required from corporations, but necessary for individuals.
Chapter 13: Individual debtors receive a discharge after plan confirmation and payment completion, plus a completion of a financial management course.

Non-Dischargeable Debts

Includes tax claims, debts from fraud, luxury goods/services, debts from prior bankruptcies, domestic support obligations, debts arising from willful or malicious injury, intoxicated motor vehicle incidents, governmental fines, and student loans unless undue hardship is proven.

Property of the Estate

Encompasses all legal or equitable interests of the debtor held at the case commencement, defined as the filing of the bankruptcy petition; includes both tangible and intangible property.
Property acquired after filing is generally excluded but may include certain assets received within 180 days from inheritance or divorce settlements.

Exemptions to Property of the Estate

Exempt property allows individual debtors to retain certain assets beyond the reach of creditors; this property is not available for creditor claims.
Federal exemptions under Section 522(d) allow for specific items to be retained, such as jewelry, vehicles under $2,400, and residences under $15,000.
In Texas, debtors can choose between federal and state exemptions exclusively, with no mixing allowed.

Description

Test your knowledge on the different types of relief available to debtors in bankruptcy, focusing on Chapter 7 and Chapter 11. This quiz covers key definitions and concepts related to bankruptcy processes and their implications for individuals and businesses.