Yr Reg 30 And 31

Front 1

The types of bankruptcy

Back 1

Chapter 7 Voluntary

Chapter 7 Involuntary

Chapter 11 Reorganization

Front 2

Chapter 7 Voluntary

Back 2

debtor files for a liquidation and a trustee is appointed

Front 3

When is the order of relief for a chapter 7 voluntary?

Back 3

the same as the filing date

Front 4

Can you file for Chapter 7 Voluntary bankruptcy if you are solvent (asset > liabilities)

Back 4

Yes, all you need is debts of any amount

Front 5

May a husband and wife jointly file for Chapter 7 Voluntary bankruptcy?

Back 5

Yes

Front 6

Chapter 7 Involuntary

Back 6

creditors file to force a liquidation and a trustee is appointed

Front 7

If there are 12 or more creditors, how many creditors need to file for there to be a Chapter 7 Involuntary bankruptcy?

Back 7

Need 3 or more to file owed $15,325 in unsecured claims

Front 8

With less than 12 creditors, how many creditors need to file for there to be a Chapter 7 Involuntary bankruptcy?

Back 8

Need 1 or more to file owed $15,325 in unsecured claims

Front 9

When is the order of relief in a Chapter 7 Involuntary bankruptcy if uncontested by the debtor?

Back 9

The order of relief is the same date as the filing date

Front 10

When is the order of relief in a Chapter 7 Involuntary bankruptcy if contested by the debtor?

Back 10

The order of relief comes after the hearing has determined insolvency

Front 11

Test for insolvency for Chapter 7 Involuntary bankruptcy

Back 11

Equitable insolvency (not paying debts when due)

NOT insolvency in the bankruptcy sense (assets - liabilities)

Front 12

Who are exempt from Chapter 7 Involuntary bankruptcy?

Back 12

Farmers and charities

Front 13

What can happen if a creditor improperly files for Chapter 7 Involuntary bankruptcy?

Back 13

The debtor may collect compensatory damages, court costs, attorney's fees, and punitive damages

Front 14

Chapter 11 Reorganization

Back 14

the debtor submits a plan to restructure the debtor’s debts for the purpose of allowing the debtor’s business to continue (no liquidation occurs)

Front 15

To whom is a Chapter 11 Reorganization debtor's plan submitted?

Back 15

To an unsecured creditor's committee

Exclusive rights for 120 days

Front 16

Who must approve the debtor's Chapter 11 Reorganization plan?

Back 16

At least one impaired class of creditors

Front 17

Who acts as a trustee in a Chapter 11 Reorganization plan

Back 17

The debtor

Front 18

Is a Chapter 11 Reorganization plan voluntary?

Back 18

It can be voluntary or involuntary

Front 19

When will a Chapter 11 Reorganization plan be confirmed?

Back 19

Plan won't be confirmed until full payment of administrative costs

Front 20

What industries may not file under Chapter 7?

Back 20

R - railroads

I - insurance companies

B - banks

S - savings and loans

Front 21

Filing under Chapter 7 or 11 acts as an automatic stay, meaning

Back 21

stops all collection actions from creditors

Front 22

Exception to Filing under Chapter 7 or 11 acting as an automatic stay

Back 22

an automatic stay doesn't stop alimony and child support payments

Front 23

What property goes to the trustee for creditors after bankruptcy?

Back 23

Property as of the filing date, including proceeds gained after filing

Front 24

What property are exempt from going to the trustee for creditors after bankruptcy?

Back 24

Social security

Disability benefits

Things necessary to live

Front 25

Debtors keep most property gained after filing, with the following exceptions

Back 25

Property gained within 180 days after filing by divorce, inheritance, or insurance goes to the trustee

Front 26

With leases, the trustee can accept or reject in what time period?

Back 26

If there is no action in 60 days, they are rejected

Front 27

To disaffirm the prior payment, allowing trustees to avoid a debtor's preferential transfer (preferring one creditor over another), five tests must be made

Back 27

T - must have a transfer of property that benefits a creditor

A - transfer must have been for an antecedent debt (an existing overdue debt)

N - transfer must have been made within 90 days of the filing date (ex: transfer unsecured debt to secured) (may be up to 1 year prior to filing if creditor was an insider)

I - transfer must have been made while debtor was insolvent

M - creditor received more than he would have received in bankruptcy

Front 28

Fraudulent conveyance

Back 28

a phony transfer by D to hide property from creditors

Front 29

When can a trustee disaffirm a payment because of fraudulent conveyance?

Back 29

They can disaffirm if within 1 year of filing

Front 30

Priority order of paying categories of debt acronym

Back 30

SAG-WEG-CTO-AM

Front 31

If there is insufficient money to pay all debts within a given category,

Back 31

each debt within that category receives a pro rata share of the available funds

Front 32

SAG-WEG-CTO-AM

SAG

Back 32

S - secured creditors are paid up to the value of the collateral

A - administrative costs of the bankruptcy proceedings and domestic support obligations, such as child support and alimony

G - gap creditors: debts occurring after filing but before the order of relief

Front 33

SAG-WEG-CTO-AM

WEG

Back 33

W - wages unpaid: must be earned within 90 days prior to filing and maximum priority is $12,475 per employee

E - employee benefits unpaid: must be earned within 180 days prior to filing and maximum priority is $12,475 per employee

G - grain producers and fishermen unpaid: maximum priority is $6,150 per individual

Front 34

SAG-WEG-CTO-AM

CTO

Back 34

C - consumer deposits for goods or services not received and maximum priority is $2,775 per

T - taxes

O - obligations

Front 35

SAG-WEG-CTO-AM

AM

Back 35

A - accidents while under the influence of drugs or alcohol

M - miscellaneous unsecured debts

Front 36

Upon bankruptcy completion, what is discharged vs. what is dissolved?

Back 36

An individual's debts are discharged

Corporations and partnerships are dissolved

Front 37

Actions by the debtor that will preclude any discharge (denial of discharge)

Back 37

a. Received previous discharge within 8 years of filing.
b. Unjustifiably failed to keep adequate books and records (during bankruptcy proceedings)
c. Attempted to hide assets within 1 year of filing.
d. Refusal to explain a loss of assets or refusal to obey a court order.
e. Making false oath or account

Front 38

Even if a discharge is granted, what debts are non-dischargeable

Back 38

WAFTED

W - Debts from causing Willful and Malicious injury to others
A - Debts concerning Alimony and Child Support
F - Debts resulting from Fraud
T - Taxes owed within 3 years of filing
E - Educational loans
D - Debts unscheduled by the debtor and creditor had no notice of bankruptcy

Also: theft and embezzlement and any debt from Sarbanes Oxley

Front 39

Surety relationship

Back 39

one who promises to pay a creditor if the debtor defaults

Front 40

Statute of frauds for surety

Back 40

a signed writing is required for a Surety’s promise to be enforceable

Front 41

What consideration is necessary for sureties

Back 41

Consideration is present if the surety, creditor, and debtor are all created at the same time

If the surety comes after the creditor/debtor relationship is created, there must be additional consideration going to the surety

Front 42

Rights of a surety

Back 42

1. Subrogation - after a Surety pays the Creditor in full, (s) he get all of Creditor’s rights

2. Reimbursement - the right of the Surety to recover from the Debtor any money the Surety had to pay the Creditor after the Debtor’s default

3. before the Debtor’s default, a Surety gets a court order that Debtor pay (the Surety will still be required to pay the Creditor if the Debtor defaults)

Front 43

Co-suretors

Back 43

two or more sureties of same debt (even if unaware of each other)

Front 44

Right of contribution of co-suretors

Back 44

once one co-suretor pays, (s) he may receive a pro rata share or contribution from all other co-suretors (contribution is only available to co-suretors)

Front 45

Calculation of the pro rata share (proportionate liability) of each co-suretor

Back 45

Amount guaranteed by individual co-suretor

Amount paid to the creditor amount guaranteed by all the co-sureties

Front 46

When should a co-suretor's dollar amount not be considered in determining the pro rata share of the other co-suretors

Back 46

The co-suretor is discharged in bankruptcy

Front 47

Rights of a creditor after default

Back 47

a. Immediately demand payment from the Surety
b. Immediately demand payment from the Debtor
c. Immediately go after collateral is there is any

Front 48

Exception to the rights of a creditor after default

Back 48

Guarantor of collection or conditional guarantor
a. Promises to pay only after the Creditor exhausts all remedies against the Debtor.
b. Creditor must give notice of default to the guarantor of collection.

Front 49

Defenses of a surety vs. a creditor

Back 49

1. Lack of a writing or lack of consideration are good defenses for a Surety.

2. Payment or tender of performance by Debtor is always a good defense for a Surety.

3. Fraud by the Creditor is a good defense for the Surety

Fraud by the Debtor is not a good defense unless the Creditor was aware of the fraud

4. Surety may not use defenses that are personal to Debtor (infancy, insanity or bankruptcy).

5. Any action by Creditor which increases the risk of a Surety, release the Surety to the extent of the increased risk.

Front 50

Examples of actions by Creditor which increases the risk of a Surety, and therefore release the Surety to the extent of the increased risk

Back 50

1. Binding extension of time by the creditor (totally releases the surety)

Unless the creditor doesn't agree to extend time

2. Release of one co-suretor by a Creditor without the consent of other co-sureties, increases their risk by the amount of contribution they could have collected.

3. If Creditor release Debtor without reserving rights against Surety, Surety is released.
If Creditor reserved rights against the Surety, the Surety is not released.

Front 51

Creditor pre-judgment remedies

Back 51

1. Attachment: puts a lien on debtor’s property so it’s available if a judgment is obtained (requires a hearing before a judge and creditor may be required to post a bond).

2. Pre-judgment garnishment: places a lien on debtor’s property or money in the hands of a 3rd party so the property is available to satisfy any judgment.

Front 52

Creditor post-judgment remedies

Back 52

1. Writ of Execution: served by a sheriff on the debtor demanding payment of a judgment if returned “unsatisfied” creditor can levy on debtor’s property and force a public sale.

2. Garnishment: creditor collects money from debtor’s wages or bank accounts.

Front 53

Fraudulent conveyence

Back 53

a phony transfer of property by debtor to a 3rd party to stop creditors from attaching it (3rd party is expected to return property to debtor at a later time)

Front 54

Creditor remedy of fraudulent conveyence

Back 54

The creditor may still attach the property upon proof that the transfer was fraudulent

Front 55

Indications of a fraudulent conveyence

Back 55

· The debtor remains in possession of the property.
· The debtor retrains an equitable interest in the property.
· The transfer was done secretly.

Front 56

Composition of creditors

Back 56

an agreement between a debtor and creditors to discharge the debtor’s debts in return for a partial payment by the debtor

Front 57

Debts are only discharged when the debtor completes

Back 57

all partial payments

Front 58

To whom is a composition of creditors binding?

Back 58

To those creditors who agree to it

Front 59

Assignment for Benefit of Creditors

Definition and purpose

Back 59

a debtor transfers property to a trustee to pay creditors on a pro rata basis

protects assigned property from attachment by creditors

Front 60

Does an assignment for benefit of creditors require the agreement of other creditors?

Back 60

No

Front 61

Does an assignment for benefit of creditors discharge the debtor's debt?

Back 61

No

Front 62

Who does the Fair Debt Collection Practices Act cover?

Back 62

Collection agencies, not the original creditor

Front 63

Fair Debt Collection Practices Act purpose

Back 63

prohibits abusive, deceptive and unfair debt collection by collection agencies

Front 64

Who enforces the Fair Debt Collection Practices Act?

Back 64

The Federal Trade Commission

Front 65

What may debtors do if there is a violation of the Fair Debt Collection Practices Act?

Back 65

They may sue for money damages

Front 66

What specific actions does the Fair Debt Collection Practices Act prohibit?

Back 66

1) Disclosing the debt to 3rd parties
2) Communicating with debtor at unreasonable times
3) Communicating with the debtor if (s) he has an attorney
4) Use of harassing, oppressive or abusive conduct or false representations
5) Upon debtor’s written demand, the collection agency must stop all contact

Front 67

Property of the debtor that are exempt from attachment or garnishment

Back 67

a. Homestead exemption – protects Debtor’s equity in his residence from attachment by a Creditor (no protection against a Mortgage or against a valid IRS tax lien.

b. Social Security benefits are exempt from attachment or garnishment.

Front 68

Examples of debts that are not antecedent debts

Back 68

· New debts are not antecedent debts (a contemporaneous exchange for new value)

· Secured debts are not antecedent debts – can’t prepay

· Paying current bills in the ordinary course of business aren’t antecedent debts – can’t prepay

· Consumer debts of $650 or less are not antecedent debts

Front 69

Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which type(s) of debts is (are) nondischargeable in bankruptcy?

Back 69

Death/injury cause by flying/driving under the influence

Debts for homeowner association fees

Front 70

Do you need to have a regular income to file for Chapter 11 bankruptcy?

Back 70

Yes

Front 71

Surety is also known as a

Back 71

guarantor