ch 31- bankrupcy law

What is the primary goal of Chapter 7 bankruptcy?

The primary goal of Chapter 7 bankruptcy is to liquidate the debtor's non-exempt assets to repay creditors and provide the debtor with a discharge of most unsecured debts.

Who oversees the liquidation process in a Chapter 7 bankruptcy?

A court-appointed trustee oversees the liquidation process in Chapter 7 bankruptcy.

What is the difference between voluntary and involuntary bankruptcy under Chapter 7?

In voluntary bankruptcy, the debtor files the petition themselves. In involuntary bankruptcy, creditors can force the debtor into bankruptcy if certain criteria are met.

What is the automatic stay, and what does it protect debtors from?

The automatic stay is an injunction that halts most collection actions against the debtor or their property upon filing for bankruptcy, protecting the debtor from creditors.

List three exceptions to the automatic stay in bankruptcy.

Domestic support obligations, SEC investigations, and certain tax liens are exceptions to the automatic stay.

What is the role of the bankruptcy estate in Chapter 7 proceedings?

The bankruptcy estate consists of all legal or equitable interests of the debtor in property at the commencement of the case, which the trustee manages for liquidation.

What is the lookback period for the trustee to recover assets transferred by the debtor?

The trustee can look back one year before the filing to recover assets transferred by the debtor if they were not exempt.

Describe the 'means test' in the context of Chapter 7 bankruptcy.

The means test assesses the debtor's income to determine if there is substantial abuse of Chapter 7, potentially leading to dismissal or conversion to Chapter 13.

What are the trustee's avoidance powers in bankruptcy?

Avoidance powers allow the trustee to void certain pre-bankruptcy transfers, including preferences and fraudulent transfers, to recover assets for the estate.

What is a preferential transfer, and when can it be avoided?

A preferential transfer is a payment or transfer made within one year of filing that benefits one creditor over others when the debtor is insolvent. It can be avoided if it's not in the ordinary course of business.

What does a debtor have to do at the 341 hearing?

At the 341 hearing, the debtor must appear and be examined under oath by the trustee and creditors, who can object to the discharge or plan.

What are some common exemptions in Chapter 7 bankruptcy?

Common exemptions include a homestead exemption, a vehicle, public benefits, jewelry, and retirement accounts like 401(k)s.

How does the distribution of property work in Chapter 7 bankruptcy?

Secured creditors are paid first from the sale of collateral, followed by unsecured creditors, support obligations, administrative expenses, and then other claims in order of priority.

What is a reaffirmation agreement, and what are its key aspects?

A reaffirmation agreement is an agreement where the debtor agrees to repay a debt despite the discharge. Key aspects include filing before discharge, court oversight, and the right to rescind within 60 days.

What are the differences between Chapter 11 and Chapter 13 reorganizations?

Chapter 11 is for businesses or individuals with significant debt, allowing them to reorganize with a plan that creditors can vote on. Chapter 13 is for individuals with debt below specific limits, where the debtor proposes a repayment plan, and creditors must accept or be paid in full.