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66 Cards in this Set

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Section 109(g) states a debtor shall be ineligible; if in the past ____ days, she did either of the following?
a) case dismissed by court for willful failure of debtor to abide by orders ot the court, or to appear before the court in proper prosecution;
b) debtor got voluntary dismissal following filing of request for relief from automatic stay.
Client states they currently receive money from an annuity or spendthrift trust. What is the issue and what further information from the client should be obtained?
The issue: Whether the annuity payments are exempt property.
Inquire whether the payments are "reasonably necessary" for the debtor's expenses. If it's paying out an exorbitant amount of money, it's likely going to be a problem.
Client states they pay into a employer sponsored annuity plan (like TIAA Cref, etc). What is the issue and what further information from the client should be obtained?
The issue is whether the annuity can be excluded from the BK estate. The inquiry is whether the employer or employee have any reasonable access to the funds, or is it truly "locked", only to be used in retirement. The latter description is likely to be an exempt asset. The former, not so much.
Client states they have created a trust for themselves. Problem?
Absolutely. While a spendthrift trust (one which the settlor and beneficiary are two different people), may be exempt property, if the client sets up a trust for himself, he's going to lose that property to the estate.
Client states they are a beneficiary of a spendthrift trust. Inquiry?
Need a copy of the trust. Generally, a trust becomes property of the estate, UNLESS the trust contains a valid spendthrift clause, enforceable under state law. Of course, if the spendthrift trust fails for drafting, the wildcard exemption (if not already used up) may be an option.
Debtor says he is in possession of a piece of art, which is actually owned by someone else. Problem?
The art is not part of the estate. Nonetheless, the following question should be asked: do you owe the owner anything for the art? If so, we need to list as creditor. Also, is the creditor secured?
Joe Blow says that, 3 years ago, he transferred possession of some jewelry to a friend, "to keep it out of a bankruptcy". What do you advise?
Just because Joe transferred the property, does not mean the property will be excluded from the estate. Section 548 allows the trustee to avoid any transfer "made with intent to defraud, hinder, or delay his or her creditors" which occur within the previous 2 years of filing. Sec. 544 further allows the trustee to use any state law provisions to void a transfer- N.C. FTA looks back 4 YEARS for any fraudulent conveyance.
Husband and wife are looking to divorce, but have not hired an attorney. They come into your office looking to file bankruptcy, but don't know whether they should file for divorce first. What do you advise?
You MUST stress that your representation is limited to their remedies vs. creditors. At that point, it would be advisable to file for bankruptcy prior to obtaining the divorce- specifically a chapter 7 (why have a payment plan hanging over your head). This answer needs to be hashed out.
Debtor has excess DMI, lots of unsecured creditors, and significant student loan debt. What does debtor's attorney need to do?
Debtor's attorney should file proofs of claim for the student loan debt, so that the DMI goes toward paying those down instead of being paid toward unsecureds.
What is Norht Carolina wage exemption?
Exempt: Income earned during the 60-day period prior to filing bankruptcy if the money is reasonably needed to support the debtor's family. (Note: there is case law to the effect that "reasonably necessary" should be liberally construed).
Debtor says they have property titled in their name, however the property REALLY belongs to daughter. What is the inquiry?
This may be a "forgotten" debt. Daughter is making payments- but if you you still need to list it in the bankruptcy. Further, you need to determine the equity in the vehicle, and include it in the asset list.
Debtor's car has been repo'd after bankruptcy petition filed. What do you do?
Motion for sanctions (it's a stay violation).
Debtor's car has been repod before bankruptcy petititon. What do you do?
Send proof of filing to creditor and they will need to contact the repo company and authorize release of the vehicle. YOur client will need to take whatever amount the creditor demands (usually the arrearage plus the repo/storage fees) and proof of insurance (adequate protection).
When would a creditor prefer a foreclosure as opposed to a deed in lieu of foreclosure.
If there is a 2nd DT behind the foreclosing 1st, it would be pointless to accept a DIL- Foreclosure would wipe out the 2nd.
Bankruptcy 1 and bankruptcy 2 are filed within one year of eachother. Does the automatic stay automatically continue in the 2nd case?
Depends. Law states that if two BK cases filed within same year, must make motion to extend stay and show that the latter case filed in good faith. However, under the Paschal case, only have to move court when there has been some formal action taken by creditor.
In a chapter 13, when does the property of the estate revest with the debtor?
Upon plan confirmation, unless the plan provides otherwise. As a practical note, it is best in a REFILE to provide that the estate not revest with the debtor, so that the automatic stay will continue to protect the property (See In re Jones).
What options for a debtor whose house is set for foreclosure, but who has recently lost his job (thus having an artificially high CMI).
File without a Schedule I. 101(10A)(A)(ii) allows debtor to use a different 6 month period. 521(a)(1)(B) requires a schedule I, "unless the court orders otherwise". You can file without and then ask the court to set an alternative date for determining CMI.
In a chapter 13, what form must be filled out if debtor is above median?
B22C- to determine disposable monthly income. This must then be projected out over the "applicable commitment period" and paid out.
What is the "applicable commitment period" for an above median case?
5 years.
Are priority debts counted as deductions on form B22C?
Yes
Are secured debts counted as deductions on form B22C?
Yes.
Debtors have an adjustable rate mortgage. They are on the fence regarding chapter 7 vs. chapter 13. What do you advise?
Best to go with a chapter 7. As the interest rate rises, so will the plan payment. If either in a debt buster or traditional chapter 13, they might get screwed.
what is the automobile exemption amount?
$3,500.00
Unmarried debtor over 65 years has what amount of homestead exemption?
$37,000.00
Tools of the trade exemption amount?
$2,000.00
What items does the household goods exemption cover?
Household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments
Can you split one person's auto exemption amongst 2 or more cars?
NO.
Debtor bought a car 2 months ago, in which they have $3200 in equity. Can they exempt it?
No, exemptions do not apply to property acquired in the past 90 days.
Let's say arrearage claim comes in showing much higher claim than what was included on B22C, will the plan amount necessarily increase?
Not necessarily, the arrearage monthly payment will be deducted on the B22C (an amended one will be filed)- consequently, the dividend to unsecured may not increase at all.
Creditor purports to have a revolving line of credit, with an APR of 19%, securing the purchase of an auto. What result
Seek to declare lien void and damages for violation of unfair deceptive practices. See in re: worley.
If a secured creditor has not filed a proof of claim in your case, is it necessary to file one for that creditor?
Yes, if no proof of claim is filed, the creditor doesn't get paid. This probably defeats one of the big reasons the debtor has filed bankruptcy.
Creditor files a proof of claim, but there is insufficient documentation of a valid lien. What options are available?
File adversary proceeding and seek order determining creditor to have an unsecured claim (but watch for EAE problems).
Cash advance- what is the look back period?
If in the past 70 days, its nondischargeable.
What is the look back period for a self-settled trust?
Trustee may avoid any transfer made to a self-settled trust in the past 10 years.
IRS has a tax lien in the amount of $25,000.00. Debtor has $2k equity in house, and no equity in the car. What is the value of the tax lien?
2K. Balance of claim would be unsecured. (Cram down?).
How long does a creditor have to file a proof of claim?
90 days from the date first set for the 341 meeting of creditor. 180 days for governmental units.
What are the 3 options for the debtor in a Chapter 7 as regards to secured property.
Reaffirm, redeem or surrender. But if its real property, you don't HAVE to reaffirm.
Does the debtor HAVE TO sign a reaffirmation as to an agreement secured by real property (as in, a note).
No. 362(h)(1) (requiring reaffirmation), only applies to personal property.
Client has recently been at fault in an auto accident- no insurance.
In addition to discharging potential personal injury lawsuits, what help
NCGS 20-9A provides that an uninsured who causes an accident shall have his license revoked within 60 days, unless he posts a bond.
A BK will stop the license from being revoked.
How many days of pay advices must be filed with the court with BK petition.
60 days. Under statute, court shall dismiss if the problem is not cured.
Debtor has a business, for which she has incurred debt in the business's name AND in her own name. She does not want to let the business die- what options?
Rename the business. File for personal bankruptcy.
For which prior tax years must the debtor file prior to filing for bankruptcy?
Debtor must file tax returns for the preceding 4 tax years.
Are Section 523 challenges allowed in a Chapter 13?
Yes. Pre-BAPCPA, Section 523 challenges were not allowed. However, post-BAPCPA, Section 523 challenges ARE allowed.
What are the most common bases for non-dischargeability under Section 523?
1. Taxes under 3 years old, for which returns were not filed, which were assessed within 240 days, were filed late and less than two years prior to the bankruptcy filing, or fraudulently filed.
2. Unlisted debts.
3. For a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty.
4. for a fine, penalty or forfeiture payable to and for the benefit of a governmental unit.
Which are dischargeable? Pre or post petition HOA dues?
Post petition HOA dues are NOT dichargeable while the debtor has a legal, equitable or possessory ownership. Pre-petition HOA dues ARE dischargeable.
What is the rule regarding the dischargeability of recently purchases luxury goods or services?
Section 523 states that if you incur (cumulatively) $500.00 or more in luxury goods debt through the SAME creditor in the preceding 90 days, that debt is presumed to be non-dischargeable, but ONLY if an AP is filed and the creditor prevails.
Rule 707(b) covers what action? Who may raise such an action?
Rule 707(b) covers Conversion of a Chapter 7 bankruptcy to a Chapter 13 bankruptcy. The court, a trustee, or any party in interest may move the court to convert pursuant to 707(b).
Prior discharge in a Chapter 7. Can not receive discharge in new chapter 7 for how many years?
8 years from date of commencement of the 1st action.
Prior discharge in a Chapter 7. Can not receive discharge in new chapter 13 for how many years?
4 years from date of commencement of the 1st action. (But saving house or putting student loans on hold through a 13 may be an option).
Prior discharge in a Chapter 13. Can not receive discharge in new chapter 13 for how many years?
2 years from date of commencement of the 1st action. (But saving house or putting student loans on hold through a 13 may be an option).
Debtor has an in rem order issued in a prior case. Debtor is now re-filing. What's the problem?
An in rem order will avert the automatic stay as to the property covered by the in rem order. This prevents "serial filers" from protecting secured collateral.
What are the elements of constructive fraud pursuant to UFTA?
Constructive fraud, as opposed to actual fraud, is built by circumstancial evidence. Evidence to consider is a) insolvency and b) lack of reasonable return consideration.
Under the UFTA, what are the 2 remedies for a creditor seeking to avoid a fraudulent transfer?
a) Recovery of the property from the transferee so that it can be subjected to levy and sold in execution.
b) Money judgment against the transferee for the lesser of either the value of the property measured at the time of transfer or the amount of the debt due by the debtor.
Under UFTA, what protection is available to a good faith transferee who has received less than reasonably equivalent value?
What about a bad faith transferee?
a) Good faith transferee will still be liable, but the liability will be offset by the value given to the debtor for the property.
b) Bad faith transferee has no protection, and his liability is NOT offset. That is, he is liable for the ENTIRE value, regardless of any token amount which was paid for the property.
Under Section 342, what specific creditor addresses must be included to constitute effective notice?
1) A correspondence address supplied by creditor in 2 communications in the 90 days preceding BK filing.
2) An address requested by the creditor by notice served on the debtor.
3) An address request filed by the creditor for use in all BK courts, or as specified in that district.
What 3 identifiers MUST be included in any notice provided to a creditor? What is the effect of failure to include this information?
1) Name
2) address
3) Last 4 digits of the debtor's social security number.
Failure to comply results in ineffective notice.
SSA is pursuing debtor for overpayment of Social Security benefits. Is the debt dischargeable?
Generally, this debt is dischargeable. However, if fraud is alleged, it may not be dischargeable.
Debtor says they are about to receive a substantial personal injury award. Will it all be protected in bankruptcy?
Most of it will be exempt. However, if the award is broken down, any compensable wages are NOT exempt.
You have a non-filing spouse. How is the income of the non-filer used for purposes of the means test and I & J/
For means test purposes, we need the non- filing spouse's total gross income; AND we need the non-filer's separate expenses (which we subtract out on schedule J).
Is debt discharged in bankruptcy taxable income?
No, IRS Code Section 108 provides a specific exception for bankruptcy. And so, a creditor may receive a 1099 from the creditor, which he DOES need to fill out. However, the amount is NOT taxable so long as the client files a form 982 along with their tax return.
What are the 6 "totality of the circumstances" factors to be evaluated under In re Green which tend to show substantial abuse? What is the primary factor?
(1) Whether the bankruptcy petition was filed because of sudden illness,
calamity, disability or unemployment;
(2) Whether the debtor incurred cash advances and made consumer purchases far
in excess of his ability to repay;
(3) Whether the debtor's proposed family budget is excessive or unreasonable;
(4) Whether the debtor's schedules and statement of current income and expenses
reasonably and accurately reflect the debtor's true financial condition; and
(5) Whether the petition was filed in good faith.
THE MOST IMPORTANT FACTOR: ABILITY TO PAY
Middle district case Rhoades decides what?
The standard for granting a motion to dismiss under 707b3 is now "abuse" not "substantial abuse".
(debtor's devotion of 61% of income toward mortgage payment found to be abusive in light of the other 6 totality of the circumstances analysis).
The standard for granting a motion to dismiss under 707b3 is what?
Eastern district- substantial abuse.
Middle district- merely "abuse"
What is a 910 vehicle?
A 910 vehicle is a one that was purchased within 910 days preceding filing of the bankruptcy petition, for the debtor's personal use.
Eastern district- Car was purchased within the 910 days preceding filing- at some point before filing, debtor decided her husband needed the car, and so the husband began using the car exclusively. Can the car be crammed down?
No, the car is a 910 vehicle- and so it cannot be crammed down. Even though at the time of filing, the car was not being used for the debtor's personal use, it is still a 910. For determining personal use, the relevant time period is "at the time of purchase".
Eastern district- Car was purchased within the 910 days preceding filing- at the time of purchase, car was used exclusively by debtor's husband. BUT, sometime before petition filing wife began using car. Can the car be crammed down?
Yes, car can be crammed down. Personal use is determined at the the point in time of acquisition. Therefore, car was not subject to the 1325 hanging paragraph, and can be crammed down pursuant to section 506.