Bankruptcy Flashcards
What are the types of bankruptcy?
Chapter 7 - Liquidation (voluntary and involuntary)
Chapter 11 - Business Reorganization (voluntary and involuntary)
Chapter 13 - Debt Adjustment Plan (voluntary)
What are characteristics of Chapter 7 bankruptcy?
Do not need to be insolvent
Trustee appointed to satisfy claims
Anyone can file except insurance companies, S/L, banks, credit unions, railroads
What is necessary for an involuntary bankruptcy?
> =12 creditors - 3 signatures and claims of $15,775 in the aggregate
<12 creditors - 1 signature and claims of $15,775 in the aggregate
If debtor contests, only have to show debtor is not paying debts as they come due
What property is not exempt if received within 180 days?
Inheritances
Life insurance proceeds
Divorce property settlements
Interest income
Based on date the debtor gains the right, not date received
What transfers can a trustee avoid in bankruptcy?
FLAP
Fraudulent transfers by debtor within 2 years
Liens by statute - new liens after bankruptcy filing
After filing bankruptcy, transfer made by debtor during involuntary gap
Preferential transfer of property
What is considered a preferential transfer of property?
Must meet all: I WAIT Insolvent debtor at time of transfer Within 90 days of filing bankruptcy Antecedent debt - new value ok Improves creditor position Time increased to 1 year for insider (officer or close relative of debtor)
What is not considered a preferential transfer of property?
C CONAC Charity Consumer debt Ordinary course of business Alimony and child support Continuation of installment payments
What is order of distribution among creditors?
Secured creditors
Priority creditors - STOP IT Drunk driver
Support and alimony payments
Trustee, attorney, accountant admin expenses
Owed in involuntary gap
Payroll and benefits up to $12,850
Individual consumer deposits up to $2,850
Tax claims within 3 years
Drunk driver claims
Unsecured creditors
Who does debtor still owe if a discharge is granted?
A Credit Card SLUT Alimony and child support Credit Card purchases for luxury goods >$675 Student loans Loans obtained by fraud Unlisted debt Tax claims
When is a discharge denied?
Inadequate books and records Refusing to explain missing assets Withholding records Refusing to obey court order Being discharged within 8 years Fraudulent transfer of property with 1 year of filing Material misstatements on petition
What are characteristics of Chapter 11 bankruptcy?
Usually for p-ships and corporations, not available for insurance companies, S/L, banks, stockbrokers
Usually no trustee - debtor submits plan
Committee of unsecured creditors formed
Plan requires approval of 2/3 of $ amount of all claims and 1/2 number of claims before submitted to court
What are characteristics of Chapter 13 bankruptcy?
Trustee appointed
Courts confirm or deny plan without approval of unsecured creditors
What are other types of bankruptcy?
Chapter 9 - municipalities
Chapter 12 - family farmers
Chapter 15 - cross border insolvency
