Presentation on theme: "40.1 b a c kn e x t h o m e Identify the purposes for bankruptcy and who may file for it. Describe the procedures in a bankruptcy (liquidation) case."— Presentation transcript:
40.2 b a c kn e x t h o m e Kinds of Debtors Voluntary A petition is filed by the debtor. Involuntary Creditors file petition, forcing debtor into bankruptcy. Court enters an order of relief.
40.3 b a c kn e x t h o m e Liquidation Certain property cannot be liquidated: Residence Vehicle Household effects Tools of the trade Non-mature life insurance contracts Wearing apparel Personal effects such as family heirlooms
40.4 b a c kn e x t h o m e Duties of Debtor Debtor must cooperate fully with the trustee. Debtor must attend creditors’ meetings and furnish evidence about debts due. Debtor must prepare a schedule of all assets and liabilities. Debtor must obey all orders of the referee.
40.5 b a c kn e x t h o m e Claims What would an owner of consigned or bailed goods in possession of a debtor do to regain the property? Give examples of the following: Fully secured claims Partially secured claims Unsecured claims What claim has the highest priority? Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss
40.6 b a c kn e x t h o m e Debts Not Discharged Claims for alimony and child support. Taxes incurred within three years. Debts owed by reason of embezzlement. Debts due on judgments. Wages earned within three months of proceedings. Debts incurred through fraud. Educational loans.
40.7 b a c kn e x t h o m e Nonliquidation Plans Business reorganization: Chapter 11 plans Business affairs can be restructured rather than liquidated. Voluntary or involuntary. Individual debtor: Chapter 13 plans Reorganization for individuals with less than $100,000 unsecured debts and less than $350,000 secured debts. Voluntary.