fin 240 kaplowitz worksheet 31.2: liquidation proceedings

Select the two other situations when a court might dismiss a Chapter 7 filing.

(1) the debtor has been convicted of a violent or drug-trafficking offense (2) the debtor fails to pay domestic-support obligations after the petition is filed

Adequate protection

a doctrine that protects secured creditors from losing their security, by requiring a debtor or trustee to make payments or provide alternative collateral to a secured creditor

Involuntary petition

a document forcing the debtor into bankruptcy proceedings

Automatic stay

a prohibition on the creditors from attempting to collect a debt

Preference

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

In a _____ bankruptcy the assets are turned over to a _____, who is appointed by the court to manage the assets. The trustee 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.

chapter 7, trustee, nonexempt, discharge

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 _____ 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 _____ proceeding or has had a prior discharge within _____ years, the court may deny or delay a discharge of debt.

conduct, destroys, financial, education, felony, eight

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

When an automatic stay is in place, collection on debts must stop, with some exceptions. First, collection efforts can continue for _____ obligations. Proceedings against the debtor related to _____, child custody, visitation, _____ and support enforcement are not stayed. Investigations by agencies that regulate _____ can continue, and certain statutory _____ for property taxes are not removed.

domestic-support, divorce, domestic violence, securities, liens

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

false

Liquidation is the sale of all the debtor's assets and the distribution of funds to the creditors.

false

To be enforceable, reaffirmation agreements must be made after the creditor is granted a discharge.

false

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

filing of a petition

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 clothing and _____ goods, such as furniture. Other exemptions include the _____ of the debtor's trade, and any _____ compensation in a bank account.

homestead, vehicle, household, tools, unemployment

Which answer choice is not an exception to discharge?

loans for plastic surgery

After the debtor submits to an examination under oath at the creditors' meeting, the creditors must file what in order to receive a portion of the estate?

proof of claim

The bankruptcy estate does not include:

property that was sold three years ago by the debtor

If a discharge is denied, the assets of the debtor are still distributed and:

the debtor remains liable for any remaining debt

Strong-arm power

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

Power of avoidance

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

Reaffirmation agreements must include all of the answer choices except:

the prediction of future interest rates

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

true

A trustee may avoid fraudulent transfers if they were made within _____ prior to the filing of the petition or were made with intent to hinder or defraud a creditor.

two years

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, the debtor must include a statement of _____ income and a copy of his or her _____ 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 how the court grants relief to the petitioner