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Wiley CPAexcel Exam Review 2014 Focus Notes: Regulation by Wiley

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Module 30: Bankruptcy

BANKRUPTCY

Voluntary Filing—Chapter 7

Means testing for consumer debtor added by Bankruptcy Act of 2005, prohibiting Chapter 7 filing when

  • Consumer debtor monthly income exceeds certain specified amounts in the bankruptcy code
  • Debtor current monthly income is reduced by
    • Monthly expenses
    • Payment made on secured debts, and
    • Payment made to priority general creditors

Consumer debtor must meet with an authorized credit counselor within 180 days prior to filing for bankruptcy

Involuntary Filing—Chapter 7

12 or more unsecured creditors

  • Requires three or more unsecured creditors to file petition
  • Total undisputed claims of petitioners ≥ $15,325

Fewer than 12 unsecured creditors

  • Requires only one or more unsecured creditors to file petition
  • Total undisputed claims of petitioners ≥ $15,325

Powers of Bankruptcy Trustee

Avoidance

Enables trustee to obtain return of debtor's property

Applies to

  1. 1)   Fraudulent transfers
  2. 2)   Statutory liens against debtor's property
  3. 3)   After-filing date transfers
  4. 4)   Voidable preferences

His attempt to transfer the property caused a flap

Voidable Preferences

Transfers of property made by debtor that can be recovered by trustee

To be a voidable preference, the transfer must be made:

  • Within ninety days of filing of petition if to a noninsider
  • Within one year of filing if to an insider
  • For a pre-existing (antecedent) debt
  • While the debtor is insolvent
  • When the transfer exceeds the amount that the creditor would obtain through ...

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