May19th Notes

Complex Litigation
May 19, 2010

NEWS
-one more exam
-needs to see the law applied, not simply stated
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Purposes of Bankruptcy
1. Fresh Start
    -to give people a new lease on life
    -orderly process of distribution of assets
2. Creditor Protection
    -article 1 section 8
3.Societal Benefit
    -don't need more wards of the state
    -

Different Chapters of Bankruptcy
Ch. 7 Liquidation
    -take what I have and distribute it, no repayment, just assets
    -usually for those with no assets
    -Banks, Savings and Loans, Railroads can not file for Chapter 7
    -creditors can force you into bankruptcy here
        -involuntary Chapter 7
        -for creditor protection
1.Need to establish they are not paying the debts
2.Fewer than 12 creditors, it takes 1 you owe $10,775
3.More than 12, it takes 3 to aggregate the $10,775
Ch. 9 Municipalities
    -when cities file bankruptcy
Ch. 11 Corporate Reorganization
    -corporations getting time to repay their debts from reorganization of the company
    -most don't make it and end up in Chapter 7
Ch. 12 Family Farms
Ch. 13 “Regular income” reorganization
    -used to be wager, want to pay off debts over time 3-5 years
    -need regular income and keep property
   
Bankruptcy law is all Federal law
-every state has creditor laws

Title II
II USC section  ___

1. section 362 “automatic stay” 
    -protects debotors
    -nobody can take any action against the debtor
    -the action take in violation of the stay is void
    -huge sanctions if they do not remove that action
    -also stops the indirect things: phone calls, letters, collections
    -doesn't stop everything: criminal prosecutions, alimony, paternity actions, child support,
        -required to get debt counseling since 2005


2. section 362(d)
Adequate Protection
-protects creditors
-of the creditor's interest but creditor's want repayment
How to do it:
    -equity
    -cash
        -rarely seen since they are filing for bankruptcy
    -replacement lien
        -of another piece of property

Exemptions (II USC section 522)
    -Things you allowed to keep for the Fresh Start
    -There is a Federal list and a State list too
        -Must pick one or the other
    -Washington Exemptions RCW 6.13 – 6.15
    -can prepay rent/mortgage, car repair, IRA, life insurance, down payment on house

-Tools of the trade ($2025)
-Life Insurance
-Personal/Household goods ($475/$9850)
-Jewelry ($1350)
-Furniture ($525/$10,775)
-Car ($3225)
-S.S./Alimony/Disability


Preferences (II USC section 547)
    -creditor protection
    -all creditors of a similar ilk must be treated similar
    -can not pay other creditors and not one that is the same

Fraudulent Transfers (II USC section 548)
    -creditor protection
    -can be made to anyone
    -it must be reasonable value for the item
    -they look back on the whole year

Distribution (II USC section 726)
    -creditor protection
    -First: Secured creditors (only to the extent of the security)
    -Second: Estate expenses, wages, benefits, post-filing expenses, alimony, taxes
    -Third:  Unsecured creditors