Business Law 201 Final Exam

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Automatic Stay
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1. Court Order that halts all collections and court actions against the Debtor once the Petition is filed. 2. Stops all actions by creditors and consolidates all proceedings into the Bankruptcy Court. 3. Stops all foreclosures, telephone calls, letters etc… by Creditors.
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Debtor
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Person or business filing for Bankruptcy Protection
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Creditor
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Person or business that is owed money by the Debtor
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Parties in Bankruptcy Proceedings
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U.S. Trustee Chapter 13 Trustee Chapter 7 Trustee Bankruptcy Court Judge Governmental Creditors (Taxes, Utility bills, etc…) Private Creditors: LLs, Auto Cos., Credit Card Cos., Banks
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Chapter 7
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Liquidation of all non-exempt assets and conversion to cash in order to pay creditors Liquidation by a Chapter 7 Trustee Filing and Review of Proof of Claims Payments to the Trustee, administrative expenses then the Creditors (? Types)
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Chapter 13:
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Individual or small business that files for bankruptcy protection and will prepare a Plan of Reorganization to repay their debts over 3 to 5 years. 1. Chapter 13 Trustee 2. Debtor files the Petition & Schedules 3. Debtor files a Plan of Reorganization pursuant to the Court Rules 4. 341 hearing with the Trustee 5. Confirmation of the Plan and address any Objections
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Chapter 11
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Business Reorganization that will prepare a Disclosure Statement and Plan of Reorganization to repay its debts over a 3 to 5 year period. 1. Petition & Schedules 2. 341 meeting with U.S. Trustee and Creditors 3. General Discovery 4. Submission of Proof of Claims 5. Debtor’s Proposed Disclosure Statement 6. Debtor’s Proposed Plan of Reorganization 7. Objections to the Plan of Reorganization 8. Confirmation of the Plan of Reorganization 9. Payments to Creditors
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Reasons for Bankruptcy Protection
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1. Debts Exceed Assets 2. Monthly Expenses exceed Monthly Income 3. Job Loss 4. Health Care Crisis 5. Divorce/Death of the Breadwinner 6. Foreclosure 7. Repossession 8. Termination of Credit 9. Gov. Seizure 10. Credit Card Debt
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Bankruptcy LawsTitle 11 United States Code
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Historically: Failure to pay your debts was considered a crime resulting in Debtors’ Prison. Viewed as a Financial Scarlet Letter/Stigma
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Goals of Bankruptcy Laws
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Fresh Start Reorganize your financial affairs Appears on Credit Report for 10 years
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Secured Creditors
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1. Banks/Mortgagees with a lien on Real Property or Personal Property (Security Interest/UCC-1 Filing) 2. Auto Companies with a security interest in Debtor’s Vehicle
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Unsecured Creditors
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1. Credit Card Companies 2. Unsecured Personal Loans 3. Judgment Creditors who have not recorded their liens prior to the Bankruptcy
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Proof of Claim
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Formal Legal Document filed by a Creditor (Secured or Unsecured) that verifies the amount owed and the nature of the debt as either secured or unsecured.False information can lead to prosecution for making false statements to the government (Potential $250K fine or 5 yrs. In prison)
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Bankruptcy Case
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1. Petition & Schedules 1a. Automatic Stay 2. 341 Bankruptcy hearing w/Trustee 3. Plan of Reorganization 4. General Discovery 5. Confirmation of Plan 6. Payments to Trustee
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Civil Case
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1. Complaint 2. Summons 3. Service of Process 4. Answer 5. Discovery 6. Case Evaluation 7. Pre-trial Motions 8. Trial

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