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BUL 3320 Final CH 39
Bankruptcy
56
Law
Undergraduate 3
12/11/2012

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Term
Creditor
(Terms)
Definition
any entity that has a claim against the debtor.
Term
Creditors
Definition
Example: When credit card companies give you a card, they are basically loaning you money with the understanding that you will pay them back with interest. They have a claim against you since they are loaning you money
Term
Debtor
(Term)
Definition
any entity that owes a claim to the creditor.
Term
Debtor
Definition
Example: In the above example, you are the debtor.
Term
Claim
(Terms)
Definition
a right to payment.
Term
Bankruptcy estate
(Terms)
Definition
when a bankruptcy case is filed, all legal and equitable interests of the debtor in nonexempt property become property of the estate. Creditors are generally limited to satisfaction of their debts from the estate, not the debtor, so it is treated as a separate legal entity distinct from the debtor.
Term
Bankruptcy estate
Definition
Example: If you go bankrupt, your estate may become your house, cars, vacation homes, etc. as long as those items are not exempt from bankruptcy law.
Term
Discharge
(Terms)
Definition
relief from liability for all debts except those the Bankruptcy Code specifies as not dischargeable.
Term
Trustee
(Terms)
Definition
a third party that supervises the bankruptcy case and can control disposition (dispersal) of assets. The trustee gains the rigths and powers o the creditor with judicial lien (an interest in property obtained by court action to secure payment of a debt).
Term
Chapter 7
(Types of Bankruptcy Proceedings)
Definition
Liquidation for either individuals or businesses. Liquidation is the termination of a business operation in order to use business assets to discharge existing liabilities (debts).
Term
Chapter 9
(Types of Bankruptcy Proceedings)
Definition
Reorganization for Municipalities or other government units.
Term
Chapter 11
(Types of Bankruptcy Proceedings)
Definition
Reorganization for most businesses.
Term
Chapter 12
(Types of Bankruptcy Proceedings)
Definition
Reorganization for family farms
Term
Chapter 13
(Types of Bankruptcy Proceedings)
Definition
Wage earner plan for individuals
Term
Joint Filings Chapter 7 or 13
(Types of Bankruptcy Proceedings)
Definition
Spouses may file proceedings together
Term
The filing of a petition
(Commencement of bankruptcy cases)
Definition
begins jurisdiction in the bankruptcy court.
Term
Voluntary petitions
(Commencement of bankruptcy cases)
Definition
filed by the debtor (person who owes money). This option is available to any debtor even if they are solvent. A consumer debtor must receive credit counseling before filing for bankruptcy.
Term
Involuntary petitions
(Commencement of bankruptcy cases)
Definition
filed by a creditor. May be filed only under Chapter 7 or 11 if the debtor is not paying his debts as they become due; the debtor may answer the petition.
Term
must contain
(The Petition)
Definition
i. Identification of the debtor.
ii. Lists of assets.
iii. Lists of debts.
iv. Identification of creditors.
Term
If it is incomplete
(The Petition)
Definition
may result in no or incomplete relief from the debts owed.
Term
Automatic Stay
(Case Administration)
Definition
upon the filing of a petition and giving notice in other proceedings, it prevents attempts by creditors to recover on claims outside of the bankruptcy court; it even freezes pending litigation in state courts.
Term
Notice to creditors
(Case Administration)
Definition
if assets exist, creditors are given the opportunity to file a claim in order to use those assets as a means to satisfy the debts owed to them by the debtor.(Case Administration)
Term
Automatic Stay
Definition
Example: if you file a petition for bankruptcy because you have insufficient funds to make your credit card payments, any other proceedings which the credit card company has started against you will be frozen.
Term
Meeting of creditors (Section 341 meeting)
(Case Administration)
Definition
states that the debtor must appear before his creditors and answer questions about his petition and financial situation.
Term
Voidable preferences
(Terms)
Definition
the Bankruptcy Code invalidates certain preferential transfers made before the date of bankruptcy from the debtor to favored creditors.
Term
Voidable Preferences (extra)
Definition
Any payment on an antecedent debt (not made in the ordinary course of business) within 90 days of filing a bankruptcy petition is a _____ _____.
Term
Voidable preferences
Definition
Example: If you owe money to a family friend’s business, paying that business first before your other creditors would satisfy the qualifications of a ____ _____.
Term
Fraudulent transfers
Definition
the trustee may avoid (set aside) _____ _____ made on or within one year before the date of bankruptcy. A ____ ____ is one intended to hide or protect assets.
Term
The 2005 Act amends fraudulent transfers
Definition
was amended to include a payment to a corporate insider that is not made in the ordinary course of business.
Term
Fraudulent transfers
Definition
Example: If you know that you are going to file bankruptcy and transfer a valuable asset (such as a vacation home) to a friend or family member, then that transfer will meet the qualifications of _____ _____.
Term
Priority of Claims
Definition
the right of certain claims to be paid before claims of lesser rank.
Term
Secured claims
(Property of claims)
Definition
(claims with liens on property of the debtor) have absolute priority over all claims.
Term
Secured claims
Definition
Example: Creditors who are likely to have ____ ____ are mortgage lenders, automobile finance companies, jewelry dealers, and car title lenders.
Term
Priority unsecured claims
(Property of claims)
Definition
these claims are not secured by liens on property, but after the secured claims have been paid these claims have the next priority. These debts can rarely be discharged through bankruptcy.
Term
Priority unsecured claims
Definition
Example: Priority creditors include wage claims and tax claims.
Term
Unsecured claims
(Property of claims)
Definition
these claims are not secured with liens against property. These claims have the lowest priority. ____ ____ may also be portions of claims that exceed the value of the debtor’s property securing the claims. Most claims are this:
Term
(1-9 The Priority of Claims are as follows)
Definition
Domestic support obligations
Term
(2-9 The Priority of Claims are as follows)
Definition
Expenses of administration of debtor’s estate.
Example: payments to the trustee for services rendered.
Term
(3-9 The Priority of Claims are as follows)
Definition
Gap creditors (for debts incurred between the filing of the claim and order for relief).
Term
(4-9 The Priority of Claims are as follows)
Definition
Up to $10,000 for wages, salaries, or commissions of employees of businesses filing the petition.
Term
(5-9 The Priority of Claims are as follows)
Definition
Contributions to employee benefit plans for employees of businesses filing the petition.
Term
(6-9 The Priority of Claims are as follows)
Definition
Up to $4,925 for grain or fish producers against a storage facility.
Term
(7-9 The Priority of Claims are as follows)
Definition
Up to $2,225 for consumer deposits.
Term
(8-9 The Priority of Claims are as follows)
Definition
Taxes.
Term
(9-9 The Priority of Claims are as follows)
Definition
Claims arising from DUI convictions.
Term
Liquidation
(Chapter 7 Liquidation)
Definition
involves terminating the business of the debtor, distributing the nonexempt assets, and discharging all dischargeable debts.
Term
The distribution of estate
(Chapter 7 Liquidation)
Definition
i. Secured creditors
ii. Creditors entitled to priority
iii. Unsecured creditors
iv. Fines and interest
v. The debtor
Term
Discharge
(Chapter 7 Liquidation)
Definition
granted unless the debtor has committed an offense under the Bankruptcy Code or has received a discharge within the past eight years.
Term
Purpose
(Chapter 11 Reorganization)
Definition
to preserve a distressed entity (like the business of a debtor) and its value as a going concern.
Term
Proceedings
(Chapter 11 Reorganization)
Definition
debtor usually remains in possession and management of the estate. Debtor serves as the trustee, under the direction of a committee of creditors.
Term
Plan of Reorganization
(Chapter 11 Reorganization)
Definition
Acceptance of plan
Confirmation of plan
Effect of confirmation
Term
Acceptance of plan
(Plan of Reorganization)
Definition
requires a specified proportion of creditors to approve the plan.
Term
Confirmation of plan
(Plan of Reorganization)
Definition
requires good faith, feasibility, cash payments to some creditors, and acceptance by creditors.
Term
Effect of confirmation
(Plan of Reorganization)
Definition
binds debtor and creditors and discharges the debtor after the plan payments are made.
Term
Purpose
(Chapter 13 Wage Earner Plan)
Definition
to permit an individual debtor to file a repayment plan (called a wage earner plane) to discharge most debts.
Term
Confirmation of Plan
(Chapter 13 Wage Earner Plan)
Definition
requires good faith, that the value of property distributed to creditors cannot be less than the amount that they would receive under Chapter 7 bankruptcy, the creditors accept the plan, and the debtor be able to make payments and comply with the plan.
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