Legal CH 16 Worksheet

When a bankruptcy petition is filed, an automatic stay goes into effect immediately. An automatic stay is a court order prohibiting

creditors from collecting debts incurred by the bankrupt before the petition was filed.

Which of the following are requirements of a Chapter 13 plan? Select all that apply. a. Debtor promises to pay all debts in full. b. Debtor commits to sell majority of current assets. c. Debtor promises to file annual financial statements with trustee. d. Debtor promises to pay all secured and priority claims in full. e. All remaining classes are treated equally. f. Debtor commits some future earnings to pay off debts.

- All remaining classes are treated equally. - Debtor commits some future earnings to pay off debts. - Debtor promises to pay all secured and priority claims in full.

Chapter 11 _________ the appointment of a trustee. The bankrupt is called _____________ and has responsibility for (1) operating __________ and (2) developing ____________ . However, a trustee will be appointed if the debtor is uncooperative or ___________ .

- does not require - the debtor in possession - the business - a plan for reorganization - incompetent

A court will not impose a cramdown unless it views the reorganization plan as:

- in the best interest of the creditors - fair - feasible

After the automatic stay goes into effect in a Chapter 11 bankruptcy, ___________ has/have the exclusive right to _________ a reorganization plan. The court may extend this period for up to _________ . After this period, ___________ can develop a plan.

- the debtor - propose - 18 months - creditors and shareholders

Fill in the blanks with the word(s) that best complete the passage. The filing of a bankruptcy petitions creates a new (1)___________, called the bankruptcy (2)__________. All of the debtor's assets are included, except for (3)___________and property acquired by the debtor (4)__________.

1. legal entity 2. estate 3. exempt property 4. after the petition is filed

Which of the following must a reorganization plan provide for?

1.) Payments to creditors 2.) Continuation of business

Cramdown

Approval of a reorganized plan by the court even when some classes have voted against it

Which one of the following is the order in which Chapter 7 bankruptcy claims are paid? A. Debtors, Secured Claims, Priority Claims, Unsecured claims B. Secured Claims, Priority Claims, Unsecured claims, Debtors C. Unsecured claims, Priority Claims, Secured Claims, Debtors D. Priority Claims, Debtors, Secured Claims, Unsecured claims

B. Secured Claims, Priority Claims, Unsecured claims, Debtors

Which of the following must a debtor demonstrate in order to show that payment of student loans will constitute an "undue hardship" under the Brunner Test? Select all that apply. a. Debtor cannot maintain minimum standard of living if required to repay loans. b. Debtor has made good faith effort to repay the loans. c. This state of affairs is likely to persist for a significant portion of repayment period. d. Debtor has been unemployed for at least three months. e. Debtor's liabilities exceed her assets. f. Debtor cannot obtain a job that requires her degree.

Debtor cannot maintain minimum standard of living if required to repay loans Debtor has made good faith effort to repay the loans

Under Chapter 13, the bankrupt makes payments

Directly to the trustees, who transfers the payments to the creditors

An individual with less than $1 million in unsecured debt would be eligible to file under Chapter 13. True or False.

False

Once 15 days have passed after a consumer has filed a Chapter 13 petition, both creditors and the debtor may file a plan. True or False

False

Once a debt is discharged, it cannot be reinstated and the debtor cannot be once again obligated to pay it under any circumstances. True or False.

False

The benefit of declaring bankruptcy is that it provides the debtor with a fresh start by discharging all pre-petition debts. True or False.

False

Disclosure statement

Information for creditors and shareholders about the plan of reorganization, which must be mailed out with the plan when proposed

Confirmation Hearing

Meeting held by court to determine whether reorganization plan should be adopted

Which of the following are unsecured claims? Select all that apply. a. Alimony and child support b. Bankruptcy trustee's fee c. Secured claims that exceed value of collateral d. Priority claims that exceed priority limits e. Mortgage f. Taxes

Secured claims that exceed value of collateral Priority claims that exceed priority limits

How did the court determine what to impose for punitive damages in Jackson v. Holiday Furniture?

The court charged the defendant a certain amount for each violation of the automatic stay in order to deter the defendant from doing this again.

To be eligible to file under Chapter 13, an individual must have a regular source of income because under Chapter 13

The debtor will usually keep most assets in exchange for promise to repay some of his debts using future income

Which of the following must be true for a trustee to be able to void a transfer (whether payment or lien) made by a debtor? Select all that apply. a. Transfer created a new debt obligation. b. Transfer was to a relative. c. Transfer took place within 90 days before the petition was filed. d. The transfer was to pay an existing debt. e. The creditor had not requested payment. f. Debtor's liabilities exceeded assets at time of transfer. g. The creditor received more from the transfer than she would receive during bankruptcy process. h. Transfer was to a creditor of the bankrupt.

Transfer took place within 90 days before the petition was filed Debtor's liabilities exceeded assets at time of transfer Transfer was to a creditor of the bankrupt The transfer was to pay an existing debt The creditor received more from the transfer than she would receive during bankruptcy process

A Chapter 13 filing can only be started with a voluntary petition. True or False.

True

For individuals with moderate income and high debt, Chapter 11 is the only option for a bankruptcy filing. True or False

True

Once a bankruptcy estate has been distributed to creditors, no creditor can make a claim against the debtor for money owed before the filing, regardless of whether the creditor received any payment during the bankruptcy process. True or False.

True

States may choose whether or not to use the federal Code's system for determining property that is exempt from a bankruptcy estate. True or False.

True

A court will approve a reorganization plan if:

a majority of creditors and shareholders in each class, and two-thirds of total debt in each class, vote for it

Which of the following are circumstances under which debts cannot be discharged? Select all that apply. a. Dishonesty or bad faith by debtor b. Individuals under Chapter 7 bankruptcy c. Unsecured creditor failed to submit proof of claim during bankruptcy process d. Business organizations in a Chapter 7 bankruptcy e. Court revokes discharge within one year due to fraud on the part of the debtor f. Repeated filings for bankruptcy

a. Dishonesty or bad faith by debtor d. Business organizations in a Chapter 7 bankruptcy e. Court revokes discharge within one year due to fraud on the part of the debtor f. Repeated filings for bankruptcy

A creditor who violates an automatic stay may be liable for: (Select all that apply) a. Punitive damages b. Pain and suffering c. Actual damages d. Discharge of the debtor's debt

a. Punitive damages c. Actual damages

A transfer is fraudulent if made within one year before a bankruptcy petition is filed, and its purpose is to _________. Debtors who make fraudulent transfers are subject to ________.

hinder, delay, or defraud creditors; criminal penalties.

The holding in the Kelly v. Mich. Fin. Auth. (In re Kelly) case demonstrates _____________.

the considerable burden a debtor must show to have student loans discharged

Once a plan is confirmed under chapter 13,

the debtor's pre-petition debt is discharged as long as the debtor complies with the plan

The U.S. Trustee typically appoints the largest _______ creditors to the creditors' committee because __________.

unsecured; their interests require more protection than those of secured creditors.