SU 20 Debtor-Creditor

Question 1

Statutory lien

Answer 1

Party add value to property by agreement

Types-artisan, mechanic, bailee, tax

artisan & mechanics liens have priority over all security interests in property unless statute disagrees
-properly recorded real estate mtg priority mech lien attached after mtg recorded

Question 2

Artisan lien

Bailee lien

Answer 2

artisan- repair/improve personal property; retains possession
-must have express/implied agreement
bailee- common carrier; secures pmt of shipment or storage charges (doc of title)

Question 3

Mechanics lien

Answer 3

mechanics-svc or improve real property; not possesory

• file w/in 60-120 days after complete
• lien attaches when work began

Question 4

Tax lien

Answer 4

tax-taxes owed to govt

• only fed statutes exempt debtor assets from federal tax liens
• state homestead exemption shield debtor’s equity in home from some liens
• -doesn’t exempt mtg or tax liens

Question 5

Judicial lien

Answer 5

judgment, seizure, judicial process
writ of execution- sheriff can seize & sell non exempt propety of debtor if debtor fails to pay
attachment-prejudgment remedy, seize nonexempt property and gives court custody (secures satisfaction of pending judgment)
–replevin- secure property subject to lien/repo
garnishment

Question 6

Termination of liens

Answer 6

property doesn’t exist
pmt/tender
if lien depends on possession, terminates when lienholder surrenders possession/control of property
waiver

Question 7

equitable right of redemption

Answer 7

regain rights by paying mtg & interest
can’t relinquish thru agreement
redemption possible thru refinance
rights exists from default until sold

Question 8

Statutory right of redemption

Answer 8

repurchase property after foreclosure sale for max of 1 year by paying auction sale price

Question 9

Composition

Answer 9

contract when debtor agrees to pay creditors less than full amnt
consent of creditors needed
extension- debtor pays full amnt over longer pd

Question 10

Assignment

Answer 10

voluntary transfer of debtor of title to assets to 3rd party (assignee/trustee)
-trustee gets property, converts to cash, distributes cash to creditors (creditors release debtor)
-consent of creditors not req
-assignee has legal title
Fraudulent transfers are voidable

Question 11

Types of bankruptcy

Answer 11

7-liquidation
9-adjust debts of municipality
11-reorg
12-adjust debts of family farmer or fisherman with regular annual income
13-adjust debts of indiv w/ reg income
15-ancillary, cross-border

Question 12

Ch 7 eligible vs ineligible

Answer 12

Ch 7-liquidation (voluntary/involuntary)

• eligible: indiv (pass means test), pship, corp
• ineligible-municipalities (Ch 9), RBIs, Credit Union

Question 13

Ch 11 eligible vs ineligible

Answer 13

reorganization (voluntary/involuntary)

eligible: railroad, pship, corp, debtors qualiefied for relief under Ch 7
ineligible: sh, commodities/stockbrokers, insurers, banks, credit unions, S&L

Question 14

Ch 13 eligible vs ineligible

Answer 14

eligible- indiv

ineligible- nonindiv, indiv w/o reg income

Question 15

voluntary vs involuntary

Answer 15

voluntary- auto order for relief

involuntary can’t be used for- farmers, banks, insurers, NFP, railroad, ppl owed

Question 16

Opposition to involuntary

Answer 16

case dismissed, creditors pay debtor’s costs, atty fees, damages from trustee’s possession of debtor’s property
petitioner acted in bade faith pay damages bc harmed debtor’s reputation

Question 17

Presumption of abuse

Answer 17

CMI after deductions 207.92 regardless amnt of general unsecured debt
CMI is at least 124.58 if pays at least 25% of general unsecured debt over 5 years

Question 18

Debtor’s Estate includes

Answer 18

nonexempt property currently held
interests debtors becomes entitled to w/in 180 day after filing (life ins, divorce settlement, amnts rec’d upon death)
trustee can choose to assume unexpired lease (60 days after order for relief to assume lease)

Question 19

Voidable preferential transfer

Answer 19

transfer may be voluntary property, voluntary creation of lien, or involuntary creation of lien
voidable
-to/benefit of creditor, for pre-existing debt, during debtor’s insolvency, w/in 90 days before petition filed, for purpose to entitle creditor to get larger amnt of claim than would get under bankruptcy distribution

Question 20

Can void

Answer 20

preferential liens (judgment)
pmts to insiders w/in 1 yr
fraudulent transfers

Question 21

Secured creditors

Answer 21

trustee can’t defeat rights

• pd in full if collateral is sufficient
• if can’t pay full amnt, become general creditor
• perfected property tax lien satisfied before support obligations
• secured creditors w/ interest in same collateral, 1st perfected interest has priority

Question 22

Priority creditors

Answer 22

unsecured creditors pd after secured

priority over general creditors

Question 23

List of priorities for unsecured claims

Answer 23

1. Domestic support obligations,
2. Administrative expenses,
3. Claims arising in the ordinary course of business after the petition was filed but before the order for relief was granted,
4. up to $12,475 for wages earned by an individual within 180 days before filing (vacation/sick pay),
5. employee benefit plans,
   Claims of grain producers and fishermen,
6. Claims of depositors of money for the purchase of undelivered consumer goods,
7. Tax claims of governmental units, and
8. Death and injury claims arising from an intoxicated person’s operation of a motor vehicle.

Question 24

Ch 11

Answer 24

trustee not required
committee of unsecured creditors appointed after order of relief granted (7 largest unsecured claims)
must file reorganization plan w/in 120 days after order for relief (creditors don’t approve plan w/in 180 days any party can file)
entity discharged from debts happen prior to confirm if not protected by plan

Question 25

Confirmation by bankruptcy court of plan for Ch 11

Answer 25

``` acceptance by class req holder of > 50% of claims represent 2/3 of dollar totals to approve plan plan must be accepted by each class court can't confirm plan not in creditor's best interest ```

Question 26

Cramdown

Answer 26

confirmation over objection of 1 or more classes reqs -acceptance by at least 1 impaired class -plan is fair -plan doesn't discriminate unfairly against any creditor

Question 27

Confirmation of reorg required if

Answer 27

proposed in good faith provides full pmt of admin exp each class accepted plan or is unimpaird each member of impaired class accepted plan or receives amnt would've under Ch 7

Question 28

Ch 13

Answer 28

pmt from future income (confirmation/extension) debtor able to retain more assets (better than liquidation) voluntary trustee appointed only need bankruptcy judge's approval debtor has reg income & owe unsecured of

Question 29

requirement for ch 13 confirmation

Answer 29

good faith, complies w/ code debtor can comply req amnts pd value of property distributed on each unsecured claim = at least ch 7 amnt secured claim-holder accepted plan, holder retains lien, debtor surrenders possession of collateral to holder

Question 30

Person who receives money or credit

Answer 30

debtor, principal, principal debtor, obligor

Question 31

creditor/obligee

Answer 31

allows debtor to receive goods, svcs, $, or value w/o paying full price

Question 32

surety

Answer 32

legal person contractually liable for another's debt/default | absolute surety- guarantor of pmt & primary liable upon debts maturity

Question 33

guarantor

Answer 33

secondary liable upon default, creditor must proceed against principal debtor & get judgment that isn't satisfied then proceed against guarantor conditional guarantor- not liable until creditor sued debtor & can't collect judgment

Question 34

Surety contract

Answer 34

express contract elements of contract-legal capacity, consideration req Statute of frauds req contract be written & signed by surety -writing needed for secondary promise

Question 35

Creditor duty to disclose

Answer 35

communicate to surety prior to contract info about significant risk to surety -duty exists if believe surety doesn't know facts surety can't void based on debtor misconduct (contract bet surety & creditor)

Question 36

Rights of surety

Answer 36

reimbursement exoneration right of contribution

Question 37

Exoneration

Answer 37

req court to get capable/reluctant debtor to pay debt before creditor collects from surety

Question 38

reimbursement

Answer 38

sue debtor for amnt pd to creditor

Question 39

right of contribution

Answer 39

cosurety pays > share agreed to pay max liab/sum of max liab * default amnt

Question 40

Discharge of surety

Answer 40

performance of obligation agreement bet creditor & debtor extend pmt time discharges surety to extent of loss to surety creditor's release of debtor discharge unless -reserves rights against surety -instruments states creditors rights retained modification of debtor-creditor contract w/o consent of surety -discharge complete if surety risk of loss increases creditor's impairment of collateral rescission/revocation of principal contract releases surety from further liab but not from liab already incurred release by creditor of surety releases cosureties to extent can't obtain contribution from released surety

Question 41

Defenses of surety

Answer 41

suretyship contract debtor's defense special

Question 42

Suretyship contract defense

Answer 42

valid contract of suretyship never existed contract is valid, surety exercised right to void it creditor got surety's promise thru fraud/duress surety

Question 43

Debtor defense unavailable to surety

Answer 43

incapacity due to infancy/mental incompetence discharge in bankruptcy claim for set-off

Question 44

Defense for debtor & surety

Answer 44

``` forgery of signautre fraud on contract lack of valid creditor-debtor contract illegal/impractical performance performance by debtor creditor refused to accept tender/perf ```

Question 45

Special surety defense

Answer 45

creditor's release of debtor unless creditor reserves rights against surety modify debtor-creditor contract w/o surety consent creditor's impairment of collateral