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Lecture Notes: Bankruptcy Liquidation |
The Petition and Standard Forms: What is required to start the bankruptcy case in court.
The Supporting Schedules: How is the debtor's financial information collected in a uniform fashion.
The Estate in Bankruptcy: What property is included and what property is excluded from liquidation.
Start with all property interests, legal or equitable, real or personal. Include both present and future interest. (If you have a question about the interest in property, real or personal property, remember that the law of real property is not bankruptcy law. Look to state law to determine the character of the property and interest.. What is not property of the estate? (worry about #1 and #6. Others are rare.)
1. Powers solely exercised for others' benefit (trusts, executors)2. Commercial leases that have terminated at the end of the term before the filing of bankruptcy3. Government education programs.4. Interests in gas or oil that are in title only.5. Money order transfers in progress/ chain of negotiation.6. Interests in spendthrift trusts
The bankruptcy court has jurisdiction over property of the debtor, wherever the property is located, because the court has jurisdiction over the debtor. The debtor came to court voluntarily..
After acquired property. Property below, that would have been property of the estate if it had been acquired before filing the petition, if acquired within 180 days after filing the petition, is part of the estate. (Comment: One would think this list would be longer but this is an exclusive list!)
Inheritance, orDivorce Property Settlement, or as aBenficiary of a life insurance policy..
Attempted contractual limitations limiting transferability, in an effort to get around bankruptcy, will be ignored: (eg., " . . . this franchise shall terminate if . . . franchisee files for bankruptcy . . ."No need to distinguish between possession and control and right to do so. If the debtor has an interest, the trustee is empowered to obtain possession from whomever has possession or control of the property.
Exemptions: At the time of filing, all the debtor's property is property of the estate in bankruptcy, but the debtor will be able to exempt property needed for a fresh start, depending on state and/or federal exemptions. Most states, like Oregon, do not permit a choice between federal and state exemptions; one must use the state exemptions. liens and impairment of exemptions,
-Converting non-exempt to exempt property before filing the petition is not fraudulent per se, but may be held to be so depending on the facts. (eg., taking nonexempt cash out of a bank account and purchasing a home to live, then filing bankruptcy, claiming the exemption for the home.).
-Waiver of exemptions if not claimed. Property continues to belong to trustee!!!
Stays:
Not
stayed: criminal prosecutions, paternity claims,domestic relations cases,tax
audits to determine liability, demand for tax returns, assessment of a tax.