Laura A Deeter Esq 5 Things Every Lawyer Should Know About Bankruptcy Five Things What do the different BK chapters mean Do I need to file a Proof of Claim What does the BK Trustee do ID: 1027362
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1. 5 THINGS EVERY LAWYER SHOULD KNOW ABOUT BANKRUPTCYLaura A. Deeter, Esq.
2. 5 Things Every Lawyer Should Know About BankruptcyFive ThingsWhat do the different BK chapters mean?Do I need to file a Proof of Claim?What does the BK Trustee do?What is the Automatic Stay?What is a 341 Meeting – and should I go?
3. 5 Things Every Lawyer Should Know About Bankruptcy1. BK ChaptersThree main types:Chapter 7Chapter 13Chapter 11(“Chapter” => particular chapter under Title 11 of the U.S. Code)
4. 5 Things Every Lawyer Should Know About BankruptcyChapter 7Governing rules are set forth at 11 U.S.C. §§ 701-784.LiquidationIndividuals or BusinessesLiquidate all non-exempt assets
5. 5 Things Every Lawyer Should Know About BankruptcyChapter 13Governing rules are set forth at 11 U.S.C. §§ 1301-1330.ReorganizationIndividuals only (income-based)Reorganize via structured payment Plan
6. 5 Things Every Lawyer Should Know About BankruptcyChapter 11Governing rules are set forth at 11 U.S.C. §§ 1101-1174.Reorganization (or Liquidation)Individuals or BusinessesReorganize via a Confirmed Plan; stringent requirements
7. 5 Things Every Lawyer Should Know About Bankruptcy2. File Proof of Claim?POC can be filed in the BK case by a Creditor of the DebtorTiming important; deadlines provided in NoticePOC Forms online; can attach supporting documentation
8. 5 Things Every Lawyer Should Know About Bankruptcy2. File Proof of Claim?Chapter 7: “No Asset” vs. “Non-exempt Assets”No Asset Case:No Proof of Claims filedNo recovery against Debtor
9. 5 Things Every Lawyer Should Know About Bankruptcy2. File Proof of Claim?Chapter 7: Non-exempt Assets Case: File POCRecovery only against assets Debtor did not claim under an exemption
10. 5 Things Every Lawyer Should Know About BankruptcyCh. 7 ExemptionsSome equity in houseHousehold goods, clothingSome unpaid earned wagesPensionAutos, jewelry, tools of trade (to max)Public benefitsPI Damages“Wildcard”
11. 5 Things Every Lawyer Should Know About BankruptcyCh. 7 ExemptionsHow to elect Exemptions?Federal vs. State ExemptionsStates have residency requirementsSome states opt out of the Federal Exemptions
12. 5 Things Every Lawyer Should Know About Bankruptcy3. Bankruptcy TrusteeAdministers the BK estate on behalf of creditorsAppointed by CourtPreserve and/or liquidate assets of estateEnsure Debtor complies with BK law
13. 5 Things Every Lawyer Should Know About Bankruptcy3. Bankruptcy TrusteeChapter 7, Chapter 13: appointed TrusteeChapter 11:Debtor-in-Possession acts as Trustee, unless a Trustee is appointed
14. 5 Things Every Lawyer Should Know About Bankruptcy3. Bankruptcy TrusteeAuthority of Trustee:Account for propertyObject to claimsEmploy professionalsUse, sell, lease estate propertyObtain creditAssume/reject contracts/leasesMove to dismiss, object to discharge
15. 5 Things Every Lawyer Should Know About Bankruptcy3. Bankruptcy TrusteeTrustee’s “Avoidance Powers”:§ 547: Preferences Can avoid certain payments to creditors made within certain time before filing90 days vs. One year for InsidersExceptions: New Value Ordinary Course of Business
16. 5 Things Every Lawyer Should Know About Bankruptcy3. Bankruptcy TrusteeTrustee’s “Avoidance Powers”:§ 548: Fraudulent TransfersCan avoid transfers made with intent to hinder, delay, or defraud, or for less than reasonably equivalent value2 years before filingSelf-settled trust: 10 years
17. 5 Things Every Lawyer Should Know About Bankruptcy3. Bankruptcy TrusteeTrustee’s “Avoidance Powers”:§ 549: Post-petition TransfersCan avoid these transfers if not authorized by Court or by Title 11Cut off: 2 years after transfer or upon closing/dismissal, whichever is earlier
18. 5 Things Every Lawyer Should Know About Bankruptcy4. Automatic Stay?11 U.S.C. § 362Effective as soon as petition filedProhibits debt collection efforts against Debtor Attempts to collect are sanctionable
19. 5 Things Every Lawyer Should Know About Bankruptcy4. Automatic Stay?Exceptions:11 U.S.C. § 362(b) has 28 subsections of exceptions.Does not stop criminal proceedingsDoes not stop proceedings for child support, alimony, custody, domestic violence
20. 5 Things Every Lawyer Should Know About Bankruptcy4. Automatic Stay?Exceptions:Taxing authorities can maintain some actions, such as audits, notice of deficiencyStay affected if prior BK case(s) dismissed within certain time(s)
21. 5 Things Every Lawyer Should Know About Bankruptcy4. Automatic Stay?Relief from Stay / Lifting the Stay: Creditor can ask court to “lift the stay,” so that it can proceed with collection efforts against the DebtorBy Motion and Hearing11 U.S.C. § 362(d)
22. 5 Things Every Lawyer Should Know About Bankruptcy4. Automatic Stay?Relief from Stay / Lifting the Stay: Secured Creditor: Debtor not making paymentsLack of adequate protectionNo equity & not necessary to reorganization
23. 5 Things Every Lawyer Should Know About Bankruptcy4. Automatic Stay?Relief from Stay / Lifting the Stay: Unsecured Creditor: Debt non-dischargeableEviction, if post-petition rent not paid
24. 5 Things Every Lawyer Should Know About Bankruptcy5. 341 Meeting?11 U.S.C. § 341Chapter 7Mandatory meeting of CreditorsTrustee questions the Debtor to ensure compliance with bankruptcy requirementsCreditors can question the Debtor
25. 5 Things Every Lawyer Should Know About Bankruptcy5. 341 Meeting?Attend if you are a Creditor with questions about the assets, the petition, whether filed in good faith, whether Debtor intends to repay your debtTypical case:
26. 5 Things Every Lawyer Should Know About BankruptcyAttorneys’ FeesTypical Payment:Chapter 7: Pay up frontChapter 13: Pay through Plan, over several yearsChapter 11: Retainer up front; Fee Application to Court; paid as Administrative (high priority) claim
27. Thank YouLaura Deeter – laura@ghandilaw.com -- (702) 878-1115