CA CLS Bankruptcy flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Automatic stay

Injunction under 11 U.S.C. §362 that arises automatically when a bankruptcy petition is filed, halting most creditor collection actions, foreclosures, and lien enforcement against the debtor and estate property.

Relief from stay

Motion under §362(d) requesting the court to terminate, annul, modify, or condition the automatic stay, commonly filed by secured creditors seeking to proceed with foreclosure or repossession.

Chapter 7 trustee

Official appointed under §701 to administer the Chapter 7 estate: collect and liquidate nonexempt property, investigate the debtor's financial affairs, object to improper exemptions, and distribute proceeds to creditors.

Means test

§707(b) screening mechanism comparing the debtor's current monthly income to the state median; above-median debtors must calculate disposable income to determine whether a Chapter 7 filing is presumed abusive.

Current monthly income

Average monthly income received during the six months before filing, excluding certain Social Security and other benefits, used to apply the means test and calculate Chapter 13 plan commitments.

Property of the estate

Under §541, all legal or equitable interests of the debtor in property as of the petition date, including causes of action, contingent interests, and certain post-petition acquisitions such as inheritances within 180 days.

California exemptions

California has opted out of the federal exemption scheme; debtors must choose between the wildcard system under CCP §703.140 and the homestead system under CCP §704.730.

Homestead exemption

California exemption protecting equity in a debtor's principal residence; amount varies by county and filing date under CCP §704.730, with automatic adjustment for inflation.

Discharge injunction

§524(a) permanently enjoins creditors from attempting to collect discharged debts as personal liabilities and voids any judgment obtained on such debts.

Nondischargeable debts

Debts excepted from discharge under §523, including certain taxes, domestic support obligations, student loans absent undue hardship, and debts incurred through fraud or willful injury.

Priority claims

Unsecured claims entitled to payment ahead of general unsecured claims under §507, including domestic support obligations, administrative expenses, and certain tax claims.

Chapter 13 plan

Proposed repayment plan filed by an individual debtor with regular income, lasting three to five years, committing disposable income and providing for secured and priority claims.

Chapter 13 co-debtor stay

§1301 stay protecting certain co-debtors who are liable with the debtor on consumer debts, preventing creditors from collecting from them during the Chapter 13 case.

Chapter 11 debtor in possession

Debtor that retains possession and control of the estate and exercises the rights and powers of a trustee under §1107, unless a trustee is appointed for cause.

Exclusivity period

Under §1121, the debtor has the exclusive right to file a Chapter 11 plan for 120 days after the petition date, extendable by the court up to 18 months.

Cramdown

Confirmation of a Chapter 11 plan over the objection of an impaired class under §1129(b), requiring the plan be fair and equitable and not discriminate unfairly.

Absolute priority rule

Principle in §1129(b)(2) that in cramdown, senior classes must be paid in full before junior classes receive anything, and old equity is wiped out unless all creditors are paid.

Avoidance powers

Trustee's authority under §§544, 547, 548 to avoid unperfected liens, preferential transfers, and fraudulent conveyances to recover property for the estate.

Preference

Transfer to a creditor made within 90 days before filing (one year for insiders) while the debtor was insolvent, enabling the creditor to receive more than in a Chapter 7 liquidation.

Fraudulent transfer

Transfer made with actual intent to hinder, delay, or defraud creditors, or for less than reasonably equivalent value while insolvent, avoidable under §548 or state law.

Strong-arm clause

§544(a) grants the trustee the status of a hypothetical lien creditor or bona fide purchaser, allowing avoidance of unperfected security interests and unrecorded transfers.

Executory contract

Contract under §365 where performance remains due by both parties; trustee may assume, reject, or assign it, subject to cure of defaults and adequate assurance of future performance.

Ipso facto clause

Contract provision that terminates or modifies the contract upon bankruptcy filing; generally unenforceable under §365(e) against the debtor, subject to exceptions.

Adequate protection

Under §361, protection given to a secured creditor whose collateral is being used or depreciated by the estate, such as periodic cash payments, replacement liens, or indubitable equivalent.

Cash collateral

Under §363, cash, negotiable instruments, and deposit accounts in which the estate and a creditor have an interest; debtor may not use it without creditor consent or court authorization.

First meeting of creditors

Meeting under §341 conducted by the trustee, where the debtor is examined under oath regarding assets, liabilities, and financial affairs; creditors may attend and ask questions.

Proof of claim

Written statement filed under §501 by a creditor asserting a right to payment from the estate; if not filed, the schedules may serve as a proof of claim for most creditors.

Claim objection

Motion under §502 challenging the validity, amount, or priority of a filed proof of claim; the trustee or debtor may object, and the court determines the allowed amount.

Dismissal vs. conversion

Under §1112 and §1307, a case may be dismissed (debtor loses bankruptcy protection) or converted to another chapter (e.g., Chapter 7), typically for cause such as bad faith or failure to comply.

Reaffirmation agreement

Under §524(c), a voluntary agreement between debtor and creditor to remain personally liable on a debt after discharge; requires court approval and disclosure of consequences.

Redemption

Under §722, an individual debtor may redeem tangible personal property from a secured creditor by paying the allowed secured claim in full, often the current value of the collateral.

Lien stripping

In Chapter 13 or 11, avoidance of a wholly unsecured junior lien on the debtor's principal residence, treating it as unsecured; not available in Chapter 7.