Texas Bar - Bankruptcy

Front 1

Bankruptcy: What must an individual in order to be eligible to be a debtor under the Bankruptcy code?

Back 1

Within 180 days of filing, must receive briefing from approved nonprofit budget and credit counseling agency. Must file certificate of completion and any debt repayment plan created.

Front 2

Bankruptcy: What are the two duties of a debtor's attorney?

Back 2

1. Considered a "debt relief agency".
2. Has a duty to investigate and inquire.

Front 3

Bankruptcy: What is a Chapter 13 bankruptcy?

Back 3

Voluntary bankruptcy instituted by individual who wants to propose plan to repay creditors over time.

Front 4

Bankruptcy: What may be done to debts under Chapter 13?

Back 4

Debts may be extended and reduced.

Front 5

Bankruptcy: What must be done for a Chapter 13 plan to be approved by the court?

Back 5

The plan must meet the best interest of the creditors test in present value terms.

Front 6

Bankruptcy: What are the requirements to file Chap 13?

Back 6

1. Must have regular income.
2. Debtor must have noncontingent, liquidated unsecured depts of less than $336,900 and secured debts of less than $1,010,650.

Front 7

Bankruptcy: What does liquidated mean in regards to debts.

Back 7

Means that it is clear as to the amount of the debt.

Front 8

Bankruptcy: What happens if the debt is too much for a Chapter 13?

Back 8

Must file a Chapter 11 or 7.

Front 9

Bankruptcy: What is the purpose of Chapter 11?

Back 9

To rehabilitate a business (or individual) by extending, reducing, or modifying the debtors obligations.

Front 10

Bankruptcy: Who may file Chapter 11?

Back 10

Businesses or individuals.

Front 11

Bankruptcy: What is required to approve a plan under Chap 11?

Back 11

Must meet the best interest of the creditors test.

Front 12

Bankruptcy: What is the "best interest of the creditors test"?

Back 12

Each creditor must recieve, in present value terms, at least as much as they would receive if debtor was liquidated under Chapter 7.

Front 13

Bankruptcy: How is a bankruptcy case commenced?

Back 13

By filing a petition.

Front 14

Bankruptcy: Under what chapter may the debtor continue to operate the business in bankruptcy? For which chapters are trustees always appointed?

Back 14

Chapter 11, as a Debtor in Possession.

Chapters 7 and 13.

Front 15

Bankruptcy: Why would a trustee be appointed under Chapter 13?

Back 15

For cause, including fraud, dishonesty, incompetence, or gross mismanagement.

Front 16

Bankruptcy: What are the two results of a judge's confirmation of a Chapter 13 plan?

Back 16

1. Vests title to property of the estate in the debtor.
2. Binds debtor and all creditors to the terms of the plan.

Front 17

Bankruptcy: What is Chapter 7?

Back 17

The debtor's nonexempt assets are liquidated and for an individual debtor his debts are discharged.

Front 18

Bankruptcy: Under what circumstances may a Chapter 7 be dismissed?

Back 18

Abuse.

Front 19

Bankruptcy: How is abuse established?

Back 19

1. Filing in bad faith
2. Establishing lack of good faith by "totality of the circumstances of the debtors financial situation."
2. Means test

Front 20

Bankruptcy: What is the means test?

Back 20

Judge compares debtor's income for six months prior, if not over median family income for families of similar size in state, debtor may file Chap 7.

Front 21

Bankruptcy: Who may file Chap 7?

Back 21

Individuals and entities.

Front 22

Bankruptcy: Is insolvency a prerequisite for Chap 7?

Back 22

No.

Front 23

Bankruptcy: Who may be the subject of an involuntary Chap 7 petition?

Back 23

Any debtor eligible to file a voluntary petition.

Front 24

Bankruptcy: What bankruptcy law allows for preferences?

Back 24

Only Texas. Federal allows for recovery of preferences.

Front 25

Bankruptcy: What are the grounds to file an involuntary petition for bankruptcy?

Back 25

1. Debtor is generally not paying debts as they come due.
2. Debtor must regularly miss a significant number of payments.
3. Debts in bona fide dispute NOT counted.

Front 26

Bankruptcy: What does the automatic stay do?

Back 26

Halts collection activities from time of bankruptcy filing, regardless of whether the creditor knows of the filing.

Front 27

Bankruptcy: What are two common exceptions to the automatic stay?

Back 27

1. Prosecution of criminal actions.
2. Domestic support obligations.

Front 28

Bankruptcy: When can the automatic stay be lifted? (Three situations)

Back 28

1. Lack of adequate protection.
2. Lack of equity.
3. Scheme to defraud creditors.

Front 29

Bankruptcy: What property of the debtor becomes property of the bankruptcy estate?

Back 29

All property of the debtor acquired PRIOR to bankruptcy.

Front 30

Bankruptcy: What post petition property becomes property of the bankruptcy estate under Chapter 7?

Back 30

Inherited property, life insurance, and property received in divorce (within 180 days of the petition).

Front 31

Bankruptcy: Is a Texas resident required to choose state exemptions?

Back 31

No. Texas allows residents to choose either state or federal exemptions.

Front 32

Bankruptcy: What is the purpose of exemptions?

Back 32

Allows debtor to keep a minimum amount of property.

Front 33

Bankruptcy: What is the Texas exemption amount for a family's personal possessions For an individual?

Back 33

$60K.
$30K.

Front 34

Bankruptcy: May a secured creditor with a perfected security interest obtain property perfected by an exemption?

Back 34

Yes.

Front 35

Bankruptcy: What eles does a Texas debtor get to keep in addition to the exemption?

Back 35

Wages earned after bankruptcy, alimony, etc.

Front 36

Bankruptcy: What is the amount of the homestead exception for urban properties? For rural?

Back 36

1. Not more than 10 acres, regardless of value.

2. Not more than 200 acres.

Front 37

Bankruptcy: What are the powers of the trustee? (4)

Back 37

1. Hypothetical lien creditor.
2. Hypothetical BFP of real estate.
3. May claim rights of other creditors
4. May avoid fraudulent transfers.

Front 38

Bankruptcy: What may a trustee do as a hypothetical lien creditor?

Back 38

Avoid any property interest or cliam held by a creditor that could be trumped by a judicial lien creditor.

Front 39

Bankruptcy: How does a secured creditor prevail over a lien creditor?

Back 39

Perfect by time lien established OR obtain security agreement and file financing statement by time lien established.

Front 40

Bankruptcy: How does a trustee claim rights of other creditors?

Back 40

May avoid any transfer that would also be voidable under nonbankruptcy law by an actual unsecured creditor.

Front 41

Bankruptcy: What is the SOL for avoiding transfers fraudulent under Texas law? Federal?

Back 41

4 years.
2 years.

Front 42

Bankruptcy: What does the Uniform Fraudulent Transfer Act give to creditors? Trustees

Back 42

Allows creditors to get property back that was given away in a fraudulent transfer, even without bankruptcy. Trustee also has this right.

Front 43

Bankruptcy: What conveyances may a trustee avoid?

Back 43

Fraudulent conveyances under the Bankruptcy code if made within 2 years before the filing date.

Front 44

Bankruptcy: What is a transfer made with fraudulent intent?

Back 44

Transfers made with actual intent to hinder, delay or defraud any creditor.

Front 45

Bankruptcy: How do we tell if a transfer for less than Reasonably Equivalent Value is fraudulent?

Back 45

1. Debtor was insolvent or became insolvent as result of transfer, was engaged or about to engage in business with unrsbl small amount of capital, and intended to incur debts beyond ability to pay.
2. Insider ransfers.

Front 46

Bankruptcy: Are statutory liens valid against a trustee in bankruptcy?

Back 46

Yes.

Front 47

Bankruptcy: What are the five elements of a voidable preference?

Back 47

1. A transfer to or for the benefit of the creditor.
2. Debtor is insolvent.
3. On account of an antecedent debt.
4. Within 90 days of filing the petition in bankruptcy.
5. That allows the creditor to receive more than it would have received in liquidation.

Front 48

Bankruptcy: What are the exceptions to the voidable preference rule?

Back 48

1. Xfer intended as contemporaneous exchange for new value.
2. Purchase money security interest.
3. Statutory liens
4. Domestic support obligations.

Front 49

Bankruptcy: What is the trustee's power as to executory contracts?

Back 49

Trustee may assume, reject, or assign executory contracts upon court approval. Clauses prohibiting are invalid.

Front 50

Bankruptcy: What is the order of claim payment?

Back 50

1. Secured claims and secured judicial lien creditors.
2. Priority claims.

Front 51

Bankruptcy: What are the priority claims, in order?

Back 51

1. Domestic support obligation claims.
2. Administrative expenses.
3. Involuntary gap claims.
4. Wage claims.
5. Contributions to employee benefit plans.

Front 52

Bankruptcy: For securd claims, how much can the creditor get?

Back 52

Up to the value of the collateral, including interest accrued.

Front 53

Bankruptcy: What does an individual get upon discharge?

Back 53

Discharge of all debts and a fresh start.

Front 54

Bankruptcy: Under what circumstances will there be objections to a discharge?

Back 54

1. Non-individual debtors
2. Fraudulent transfers or concealment of proprerty.
3. Failure to keep books and records.
4. Bankruptcy crime.
5. Failure to explain loss of assets.
6. Uncooperation.
7. Only one 7/11 discharge within 8 years.

Front 55

Bankruptcy: What debts are not dischared?

Back 55

1. Tax claims entitled to priority.
2. Debts incurred by fraud.
3. Certain luxury goods.
4. Cash advances over $825 in aggregate with 70 days of filing.
5. Unscheduled (unlisted) debts)
6. Domestic support obligatiosn
7. Student loans.

Front 56

Bankruptcy: What is required for a reaffirmation of a debt?

Back 56

1. Agreement must be made before discharge.
2. Creditor must provide debtor prescribed disclosures.
3. Agreement must be filed with Court.
4. Reaffirmation hearing.