Chapter 30Bankruptcy Law.ppt

Chapter 30 Bankruptcy Law §1: Bankruptcy Proceedings Article I, Section 8 of the U.S. Constitution. Federal jurisdiction. Bankruptcy Reform Act of 1978, amended by Reform Act of 1994. Federal court under U.S. district court, can appeal to district courts. Federally appointed judges. Types of Bankruptcy Relief [1] Bankruptcy code has 8 chapters. 1,3, 5 - general definitional provisions and provisions covering administration, creditors, debtor and estate. Chapter 7 - liquidation proceedings. Chapter 9 - adjustment of debts of a municipality. Types of Bankruptcy Relief [2] Chapter 11 – reorganizations. Chapter 12 - adjustment of debts of family farmers with regular incomes. Chapter 13 - adjustment of debts of individuals with regular incomes. §2: Liquidation Proceedings Chapter 7: Ordinary or straight bankruptcy. All assets are turned over to a trustee. Trustee sells nonexempt property and distributes the proceeds to the creditors. Remaining debts are discharged. Liquidation Proceedings Available for any person, individual, corporation, partnership. Railroads, insurance companies, banks, savings and loan and investment companies licensed by the SBA, and credit unions cannot be debtors. Filing the Chapter 7 Petition Straight bankruptcy is commenced by the filing of a voluntary or involuntary petition in bankruptcy with the bankruptcy court. Voluntary vs. Involuntary bankruptcy. Voluntary Petition [1] Petitioner must understand there are other chapters available. Debtor does not have to be insolvent. List secured and unsecured creditors and addresses and amount of money owed. List of all property owned including property claimed; current income and expenses. Swear to these and sign. Federal crime to misrepresent. Voluntary Petition [2] Court issues order of relief. Clerk of court gives trustee and Creditors mailed notice of the order within 20 days. Court will deny if “substantial abuse” of Chapter 7. Case 30.1: In Re Lamanna (1998). Involuntary Bankruptcy [