Worksheet 22.1: The Bankruptcy Code & Chapter 7 -- Liquidation

If the debtor files a Chapter 7 petition but his or her median income is higher than his or her state's median income under the means test, the debtor is presumed to have substantially abused the law. In such a case, the court can:

dismiss the Chapter 7 and convert it to a Chapter 13.

The Bankruptcy Code allows certain property to be exempt from the bankruptcy estate. The __ exemption allows for the residence and burial plot of the debtor to be exempt up to a certain dollar amount. The debtor also may keep up to a certain dollar amount in a __ and in __ goods, such as furniture and clothing. Other exemptions include the __ of the debtor's trade, and __ such as wheelchairs or glasses.

homestead; car; household; tools; health aids

When a petition in bankruptcy is filed, several schedules also must be filed. The petitioner must include a list of both secured and __ creditors with contact information and debt information, a statement of the __ affairs of the debtor, a list of all property __ by the debtor, including __ property, and a list of __ income and expenses. The creditor must submit proof of credit __ and of __ received from employers within sixty days prior to the filing. Finally, they debtor must include a statement of __ income and a copy of their __ income tax return for the most recent year.

unsecured; financial; owned; exempt; current; counseling; payments; monthly; federal

Order for relief

when a proper petition for bankruptcy is filed, this is the court's granting for relief to the petitioner

Preference

A transfer of property to a creditor that favors that creditor over other creditors

A Chapter 7 bankruptcy proceeding is formally commenced by the __.

Chapter 7; trustee; exempt non-exempt; discharge

If a debtor challenges an involuntary petition for bankruptcy, a court will automatically stay the petition for 45 days so the debtor can prove that he or she can pay the debts.

False

In a __ bankruptcy, the assets are turned over to a __ , who is appointed by the court to manage the assets. The trustee separates out the __ assets and then sells the __ assets, distributing the proceeds to the creditors. If any debt still exists after this distribution, the court will __the remaining debt, with certain exceptions.

Filing of a petition in bankruptcy

The bankruptcy estate does not include which one of the answer choices?

Property that was sold three years ago by the debtor

Power of Aviodance

The power to a trustee to set aside a sale of transfer of debtor's property and take the property back for inclusion in the debtors estate.

The trustee will distribute property first to secured creditors and then proportionately to unsecured creditors.

True

1. The Bankruptcy Code has several chapters. Chapter Select7911Item 1 provides for liquidation proceedings, ChapterSelect71112Item 2 governs reorganizations, and Chapter Select111213Item 3 provides for an adjustment of debts for individuals with regular income.

7; 11; 13

When a court discharges the debt, the creditors may object. If that occurs, the court may deny a discharge based on the __ of the debtor. If the debtor __ hides or destroys property to keep it out of the bankruptcy estate, the discharge may be denied. Likewise, if the debtor conceals or destroys __ records or fails to complete the required consumer __ course, the court may deny discharge. Finally, if the debtor is involved in a S__ proceeding or has had a prior discharge within __ years, the court will deny or delay a discharge of debt.

Conduct; Intentionally; financial; education; felony; eight

Select the two situations, from those listed below, when a court might dismiss a Chapter 7 filing.

The debtor has been convicted of a violent or drug-trafficking offense AND The debtor fails to pay domestic-support obligations after the petition is filed

Strong-arm Power

The power of a trustee to force persons holding the debtor's property to deliver it to the trustee

Involuntary Petition

a document forcing the debtor into bankruptcy proceedings

Reaffirmation agreements must include all of these except:

a prediction of future interest rates.

automatic Stay

a prohibition on the creditors from attempting to collect a debt