Bankruptcy

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What is chapter 13, 11 & 7

-chapter 13 is 'reorganization' proceedings for individuals with regular income. -chapter 11 if 'reorganization' proceedings for all other debtors -chapter 7 "liquidation," that is, the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors

start with term from page 25

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automatic stay can be terminated for? (5 options)

1. case closed or debtor receives discharge 2. debtor fails to comply with their duties 3. 45 days after first scheduled MOC 4. creditor successfully petitions court to lift order 5 if debtor is a serial filer.

acts not stayed by automatic stay (6 options)

1. criminal proceedings 2. domestic support orders 3. enforcement of environmental rules 4. eviction after order of possession 5. repayment of individual retirement account 6. family law proceedings

creditors can bring involuntary petitions for?

1. prevent debtor from committing fraud, dissipation of assets or hiding assets from creditors 2. debtor who needs bankruptcy, but refuses to do so. 3. can only place debtor into chapter 7 or 11 only.

Chapter 13 (reorganization + regular income) 2dn most common

A bankruptcy proceeding where a debtors seeks confirmation of a plan that will repay creditors while permitting the debtor to retain assets or continue business. (must have regular income, 30 percent of cases are Ch13)

Equity Security Holder

An entity owning an interest in a debtor. 101(17)

creditor

An entity with a claim that arises before the petition is filed. Known as a prepetition claim. 101(10)

homestead exemption

An exceptions permitted in an individual debtors place of residence. State law 125,000

domestic support obligations

An obligation owed for the payment of spousal support, child support or maintenance either accrued before or after filing for bankruptcy.

security

For the purpose of a basic understanding, any document that evidences an intangible financial right will generally be considered a security under the code. 101(49)

insiders

Generally those entities in control of a debtor, or the debtors relatives. An insider and equity security holder are not synonymous. 101(31)

bankruptcy exemption

Statutorily defined property that an individual debtor may protect from administration by bankruptcy estate.

Bankruptcy Code (proper term)

The name of the bankruptcy laws in effect since October 1 1979

creditors meetings

a mandatory hearing, held within 40 days after the entry of an order for relief in any chapter proceeding.

what happens if creditor violates automatic stay?

acts in violation are void. For willful violations of the automatic stay the bankruptcy court has the power to impose santions (fines) against creditor.

creditors meeting scope?

creditors are limited to nature and location of assets. Not an opportunity for creditors to conduct discovery into individual claims.

california exceptions

debtors must choose one of two: -CCP 703.140(b) favors debtors with little or no equity in the primary residence. Has the 'wild card' --CCP 704 favors debtors with substantial equity in their primary residence.

rule 2004 examinations

federal rule of bankruptcy provides a remedy for creditors or trustee to conduct deposition-like proceedings to examine debtors.

exempt

free from the reach of creditors or trustee

median family income

income most recently calculated and reported by the bureau of the census.

chapter 13 detailed definition

program for individuals (and their spouses) with regular income who have unsecured debt of less than 336,900 and secured debts of less that 1,010,650. Attempt to repay over a period of time not to exceed 5 years. Able to retain non-exempt assets if successfully paid and discharged by the court.

exemption

property that an individual debtor may protect from bankruptcy. Exempt property is not available for for liquidation.

what are the caps on chapter 13

regular income who have unsecured debt of less than 336,900 and secured debts of less that 1,010,650.

federal exemptions in CA cases

where no state exemptions law controls, federal exemptions will apply.

Chapter 7 (liquidation) most common

The sale of an estate's assets to repay creditors. Most common

fresh start

describes the basic elements of debtor relief: discharge, exemption, and the automatic stay.

discharge

legal relief from debt provided for by section 524 of the bankruptcy code.

automatic stay

the automatic order that issues from bankruptcy court that protects a debtors from creditors acts to collect pre-petition debts. Upon filing of a petition all legal actions against or involving debtor, including debt collection and lawsuits to which debtor is a party, are stayed until court allows them to proceed

consumer no asset bankruptcy

A chapter 7 bankruptcy proceeding for an individual in which there are normally no assets available for distribution to creditors. (debtors seek the basic goal of debtor relief)

community claim

A claim against the debtor that would be enforceable against community property under non-bankruptcy law. Section 101(7)

statutory lien

A lien created by operation of law and not by court order (judicial lien) or agreement (consensual lien). i.e. Mechanics liens or landlord's lien are common examples of liens that are created by statute or statutory liens. 101(53)

Judicial Lien

A lien obtained by virtue of a court. i.e. judgment, prejudgment writ attachment, post judgment writ of execution. 101(36)

what happens in you file in wrong chapter?

you get sanctioned!

person

A person include; any kind of entity, individual, partnership, or corporation, except a governmental unit. (note distinction an 'individual' can only be a 'person, but a 'person' encompasses more than just an 'individual'.) 101(41)

composition agreement

An agreement between a debtor and multiple creditors for the repayment of debt. Other definition - Occurs by two or more creditors' agreement with debtor to accept less than full amount of debt as full satisfaction of debt

security agreement

An agreement that creates or provides for a security interest. i.e. A bank loan to finance a car creates a security interest in the car. 101(50)

insolvency

An entity is normally insolvent when the entities liabilites (debt) exceed the value of the assets (property). Also defined as Balance Sheet Insolvency. 101(32)

Terms Debtor, Creditor, Trustee

Debtor; entity that owes a debt Creditor: an entity with a claim arising before filing of a bankruptcy petition Trustee: A fiduciary appointed by U.S. Trustee to administer a bankruptcy estate.

current monthly income

Defined as creditor's average monthly income, from all sources received, in the six months preceding the filing of a bankruptcy petition.

corporation

Is a business organized and registered according to non-bankruptcy or state law. 101(9)

transfer

Is any type of means that human beings might devise to dispose of property or interest and foreclosure of a debtor's equity of redemption of property are all expressly noted as transfers. 101(54)

Debt Relief Agency

Is either a consumers debtors bankruptcy attorney or a bankruptcy petition preparer.

venue rule/venue proper rule

Geographic location of the bankruptcy court. Venue proper is district in which the debtor resided, had principal place of busines, or principal assets for the better part of the 180 days prior to filing bankruptcy.

individual with regular income

Income that is regular and sufficiently stable to make monthly payments to the trustee under chapter 13 plan.

discharge

Legal relief from debt provided for by section 524 of the bankruptcy code.

debt

Liability on a claim. Debt is the inverse of a claim. A claim is what a creditor says it is owed; a debt is what a debtor says it owes. 101(12)

Chapter 11 (reorganization)

Most complex and time consuming for a debtor seeks to avoid liquidation by proposing a viable plan to the creditors that can be successfully performed and applied.

claim

Two simple sentences: 1. Claim is a right to payment of any kind, whether or not the amount has been previously determined or liquidated. 2. A claim may also be a right to performance if the debtor's breach can be compensated by monetary damages, whether or not the amount has been previously determined. A claim is considered LIQUIDATED when it has been reduced to a fixed sum. section 101(5)

chapter 11

also known as reorganization bankruptcy, the most complex bankruptcy filing and the one that most troubled businesses file, the debtor continues to function, maintains ownership of all assets, and tries to work out a reorganization plan to pay off creditors.

composition agreement

an agreement between a debtor and multiple creditors for the repayment of a loan.

what is BABCPA

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What Is The Difference Between Chapter 7, Chapter 9, Chapter 11, Chapter 12 and Chapter 13 Bankruptcy?

Chapters 7, 9, 11, 12. and 13. They are named after the chapters of the bankruptcy code book that contains the rules specific to that kind of bankruptcy. These five kinds of cases are divided into two different types of bankruptcy cases: 1) Straight/Liquidation - Chapter 7 only. 2) Reorganization - Chapters 9, 11, 12 and 13. Chapter 7 is for a person, company or corporation and will discharge the filing debtor in exchange for giving up assets. It is for people who can not afford to pay back their debts. People who file Chapter 7 are able to keep some of their assets. It may be everything they own, or it may not be. What they keep varies from state to state. Chapter 9 is a reorganization for municipalities (cities). Chapter 11 is a reorganization for corporations, or individuals with debts over $336,900 in unsecured debts (no collateral) and secured debts (with collateral) over $1,010,650. (These numbers were current for April 2007, and are adjusted upwards periodically) Chapter 12 is a reorganization for farmers. Chapter 13 is a reorganization for individuals (people). It is for people who have under $336,900 in unsecured debts and secured debts under $1,010,650 (April 2007.) This is the reorganization used by most consumers. Chapter 13 is for people who have money to make payments but maybe not as fast or as much as the creditors want. Chapter 13 helps people keep assets they might not be able to keep if they filed Chapter 7. It can also reorgnize aspects of secured debts. It can stop foreclosures and repossessions, and give people time to catch up on payments over time.

chapter 7

The chapter of the Bankruptcy Code providing for "liquidation," that is, the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors. In order to be eligible for Chapter 7, the debtor must satisfy a "means test." The court will evaluate the debtor's income and expenses to determine if the debtor may proceed under Chapter 7. Section of Bankruptcy law that allows individual and business debtors to have assets liquidated and debts discharged. Most popular.

chapter 13

The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with 'regular income', often referred to as a "wage-earner" plan. Chapter 13 allows a debtor to keep property and use his or her disposable income to pay debts over time, usually three to five years/36 to 60 months. Reorganization of debt chapter for consumers.

what is means testing

Title formula to determine whether or not a consumer debtor is presumed to be abusing the bankruptcy system by filing a chapter 7. Where abuse is presumed, the case will be dismissed unless the debtors consents to conversion to chapter 13. Abuse is presumed when debtors current income monthly income exceeds state median and can repay 109.58 per month over 60 months (6575) or 10,950 over 60 months.

involuntary cases, involuntary petition, involuntary bankruptcy

a bankruptcy proceeding initiated by one or more creditors (or general partners of a partnership) by filing a petition seeking the entry of an order for relief, a judgement that the debtor is bankrupt.

joint case v. consolidation cases

a bankruptcy proceeding involving an individual and the individual's spouse. -a joint case may be filed under DOMA for gay couples. -consolidation of cases available to closely related debtors, corporations and subsidiary.

Lien

a charge against or a right to property to secure repayment of a debt or the performance of an obligation. 101(37) Lien: judicial, consensual, statutory lien. (see page 76 in book)

automatic stay

a statutory bar to the conducting of any collection activity by creditors after a bankruptcy petition has been filed.