Chapter 7 Bankruptcy Liquidation Quiz

12 Questions

What is the primary responsibility of a Chapter 7 Trustee in a bankruptcy action?

Collect and liquidate the assets of the debtor, then distribute the assets to creditors

In Chapter 13 bankruptcy, how are payments made to creditors?

Based off of a calculation of future income

What is the role of a Chapter 11 debtor in possession?

To stay in possession of assets and continue to run the business

What is the duration of the whole bankruptcy process in Chapter 13?

3-5 years

What is the primary difference between an adversary proceeding and a contested matter in bankruptcy court?

An adversary proceeding is an actual lawsuit in the bankruptcy court, while a contested matter involves filing a motion with the court.

Under what circumstances would a bankruptcy case be considered a contested matter rather than an adversary proceeding?

If the issue does not fall within the provisions listed in the 7001 Rules.

What should a bankruptcy attorney pay attention to in addition to the bankruptcy code and rules?

Local court rules.

In a chapter 7 bankruptcy, what percentage of cases are no-asset cases that provide no distribution to unsecured creditors?

Over 90%

In a chapter 7 distribution, if $30,000 goes to one creditor, how much would $50,000 go to?

$25,000

What does it mean when the trustee abandons property in a bankruptcy case?

The estate decides not to take any action regarding the property.

What should be done when trying to convince the trustee to abandon property in a bankruptcy case?

Pull out all the exemptions and make a case for abandonment.

In a bankruptcy case, what is the primary purpose of electronic filing?

To streamline and standardize the filing process.

Study Notes

Bankruptcy Proceedings

The primary responsibility of a Chapter 7 Trustee is to administer the debtor's estate and distribute proceeds to creditors.

Payment to Creditors in Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, payments are made to creditors through a plan that outlines the payment schedule and amount.

Chapter 11 Debtor in Possession

A Chapter 11 debtor in possession has the same rights and powers as a trustee, and is responsible for managing the estate and proposing a plan of reorganization.

Duration of Chapter 13 Bankruptcy Process

The duration of the whole bankruptcy process in Chapter 13 can take 3-5 years.

Adversary Proceedings vs. Contested Matters

The primary difference between an adversary proceeding and a contested matter is that an adversary proceeding is a separate lawsuit within the bankruptcy case, whereas a contested matter is a dispute within the bankruptcy case.

Circumstances for Contested Matters

A bankruptcy case would be considered a contested matter rather than an adversary proceeding when there is a dispute within the bankruptcy case that does not require a separate lawsuit.

Important Considerations for Bankruptcy Attorneys

In addition to the bankruptcy code and rules, a bankruptcy attorney should pay attention to local rules, court decisions, and industry standards.

No-Asset Cases in Chapter 7 Bankruptcy

Approximately 90% of Chapter 7 cases are no-asset cases, which provide no distribution to unsecured creditors.

Distribution in Chapter 7 Bankruptcy

If $30,000 goes to one creditor in a Chapter 7 distribution, $50,000 would go to that creditor at a 60% distribution rate.

Abandonment of Property

When the trustee abandons property in a bankruptcy case, it means that the trustee has determined that the property is burdensome or of inconsequential value to the estate.

Convincing the Trustee to Abandon Property

When trying to convince the trustee to abandon property, it is essential to demonstrate that the property has no significant value to the estate or would be costly to administer.

Electronic Filing in Bankruptcy Cases

The primary purpose of electronic filing in bankruptcy cases is to improve the efficiency and accuracy of the filing process.