Bankruptcy

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state collection remedies generally reward

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creditors who act first against a debtor's assets

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state remedies will not protect the indebted person from

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repeated and harassing creditors attempts at collection

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federal bankruptcy law is designed to promote a ______ ______ creditor's remedy and debtor relief program

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more equitable

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bankruptcy law is founded in Title ___ of the U.S. code and divided into ____ Chapters

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11
9

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Chapters

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1
3
5
7
9
11
12
13
15

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Chapter 1, 3 and 5

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govern the operation of the bankruptcy proceeding

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Chapter 7

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liquidation

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Chapter 9, 11, 12, 13

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rehabilitation

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straight bankruptcy

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debtor will surrender all nonemept assets to a " trustee in bankruptcy"
trustee will liquidate all of these nonexempt assets and use the cash to pay the creditors of the debtor in priority
provided that the debtor is not guilty of a specified conduct, all debts that can be discharged under bankruptcy are discharged

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rehabiltiation

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in chapters 11, 12 and 13 the debtor's assets are not liquidated
creditors with future earnings according to a plan of repayment filed with and approved by the bankruptcy court

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Chapter 11

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addresses primarily business or corporate rehabilitation

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Chapter 13

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addresses primarily individual consumer debtors

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Chapter 12

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addresses those engaged in the farming business within prescribed certain debt limitations

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bankruptcy court judges

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appointed for terms of 14 years

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bankruptcy courts are established

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in each of the federal districts

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trustees

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appointed by the U.S. Attorney General in each of the 21 geographic districts along with an assistant trustee
charged with establishing and supervising panels of private trustees to oversee and monitor the administration of bankruptcy

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consumer v. business bankruptcy

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in consumer bankruptcy cases there is generally very little creditor interest because there are few assets that are not exempt from claim or already subject to a secured creditor's claim
primary focus of business bankruptcy case is the collection and distribution of assets rather than discharging of debt

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straight bankruptcy
businesses

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voluntary (initiated by the debtor) or involuntary (initiated by the creditor)
vast majority of Chapter 7 cases are commercial, voluntary cases

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voluntary chapter 7 is very difficult for a consumer to qualify and file

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bankruptcy code is designed to make sure that consumer debtors with ability to repay do not take advantage of liquidation and avoid their obligations

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Means Test

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applied to any individual filing for voluntary Chapter 7 bankruptcy
if the debtor's monthly income when reduced by
1) monthly expenses
2) payments on accounts of secured debt
3) payments on priority expenses
exceeds $100 abuse of Chapter 7 is assumed

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property acquired post filing of the petition is not subject to claim
except
1)
2)
3)

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1) property acquired within 180 days after the filing
2) proceeds, rents and profits received from the property of the estate
3) property recovered by the trustee under the avoidance powers

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exempt property
1)
2)
3)

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1) certain sources of income such as unemployment, social security, veteran benefits, crime/victim reparations, alimony, child support
2) specific property such as prescribed health aids and unmatured life insurance contracts
3) specific property with dollar amount limitations such as residence, motor vehicle, furnishings, clothing, appliances