M1-Bankruptcy: Part 1 Flashcards
Under Chapter 7, a discharge discharges most debts of a debtor, whether or not there is a bankruptcy estate from which to pay the debts. (true or false)
true
Chapter 9 is for municipal debt adjustment; a family farmer cannot seek relief under this chapter. (true or false)
true
chapter 7 provides for liquidation of a debtor’s estate. A family farmer with regular income may seek relief under Chapter 7.
Chapter 11 is for debt reorganization and is available to family farmers with regular income.
Chapter 13 is for adjustment of debts of individuals with regular income and is available to a family farmer with regular income.
The bankruptcy estate includes property the debtor receives from a bequest, devise, inheritance, property settlement, divorce decree or beneficial interest in a life insurance policy or death benefit plan within _____ days after the filing of the petition.
180 days
In addition, the estate includes any income generated by estate property (rents, interest and dividends) after the petition is filed. Earned income after the case commences is generally excluded.
Alimony, support or maintenance is exempt property.
Government benefits, such as social security, veterans benefits, unemployment comp. and disability, are exempt property.
If a person has fewer than 12 creditors, any one or more of them with unsecured and undisputed claims that aggregate at least $15,775 more than the value of any collateral securing the claim may file the petition. (true or false)
true
A person may be petitioned involuntarily into bankruptcy if that person is not paying debts as they become due. (true or false)
true
In a liquidation proceeding, after the petition is filed, a trustee will be appointed, and unless within 20 days after the filing of the creditor’s petition the debtor objects to the petition, an automatic stay against creditor collection proceedings goes into effect. (true or false)
true
On the other hand, if the debtor files the petition, the automatic stay takes effect on the day of filing.
After a Chapter 7 bankruptcy, the debtor may not obtain another bankruptcy for _____ years.
8 years
Not all debts are discharged by a bankruptcy. For example, alimony is not discharged, and neither are debts arising from fraud.
The filing of a petition in bankruptcy invokes an automatic stay against all attempts to collect on most debts of the debtor. (true or false)
true
The filing does no terminate liens, but merely stays them. (i.e., temporarily prevents their enforcement).
The filing does not terminate security interest but rather merely stays them.
A debtor need not be insolvent to file a voluntary petition under Chapter 7. Although the debtor’s income may not exceed certain specified levels, insolvency is not a requirement. Additionally, there is no requirement of 3 creditors in a voluntary petition. An involuntary petition requires at least 3 creditors to file if the debtor has 12 or more creditors. (true or false)
true
A transfer of the debtor’s property to or for the benefit of a creditor for an antecedent debt at a time when the debtor was insolvent and within 90 days of filing the bankruptcy petition constitutes a preference if the transfer gives the transferee more than the transferee would have obtained under the Bankruptcy Code. (true or false)
true
Prepayment on an installment loan falls within this description. This transaction does qualify for the exception for payment of ordinary business because the prepayment is not under the usual terms of the contract.
There (is or is not) a requirement of liquidation in a reorganization.
IS NOT
In a reorganization:
- A plan of reorganization must be filed
- the plan of reorganization must be approved by the court
- Each class of claimants has an opportunity to accept the plan (although it need not be accepted by all classes, such as unimpaired classes of security holders)
A general rule in a reorganization is that a trustee is not appointed
There is no requirement of insolvency for filing a voluntary reorganization petition.
A creditor must wait 120 days to file a plan unless a trustee has been appointed.
Under Bankruptcy Code Section 303, creditors may petition a debtor involuntarily into a Chapter 11 bankruptcy reorganization proceeding.
A trustee in bankruptcy is treated as a hypothetical lien creditor on all of the debtor’s property as of the date the bankruptcy petition is filed. The trustee is subordinate to all prior perfected security interests, including statutory liens that were effective prior to the filing of the bankruptcy petition. (true or false)
true
Thus, like any secured creditor, the trustee would have the power to force persons holding the debtor’s property to deliver it to the trustee.
Also, the trustee would have the same rights the debtor would have to obtain the return of the debtor’s property.
A trustee in bankruptcy has the power to set aside preferences, which generally may be defined as a transfer that:
1) is made for the benefit of a creditor on account of an antecedent debt,
2) is made within 90 days of the filing of the bankruptcy petition
3) is made while the debtor was insolvent (presumed within the 90 day period), and
4) enables the creditor to get more than the creditor would have received in the bankruptcy proceeding.
Transfers made within _____ years of the filing date with an intent to hinder, delay, or defraud creditors or any transfers where the debtor received less than equivalent value while the debtor was insolvent are fraudulent transfers and may be set aside by the trustee.
two
Although both individuals and corporations are generally eligible for relief under Chapter 11, stockbrokers are specifically excluded. (true or false)
true
