Chapter Seven.Overview of Chapter 7 • After reading this chapter, you will be able to: • Describe the basic events which occur in all bankruptcy proceedings. • Understand the rules relating to professional retention and compensation in bankruptcy proceedings. • Define the concept of discharge • Define the concept of reaffirmation and the procedures utilized to reaffirm a debt
Consumer No Asset Chapter 7 Proceeding • A consumer no asset Chapter 7 proceeding is a proceeding filed by an individual debtor or joint debtors in which there will normally be no assets available for the trustee to administer for distribution of dividends to unsecured creditors. • Any assets owned by the debtor will be either secured or exempt.
Practice Pointer • The Bankruptcy Code describes ‘‘joint debtors’’ as an individual debtor ‘‘and such individual’s spouse.’’ The Code recognizes married couples but no other joint filings.
Employment and Compensation of Professionals • The Bankruptcy Code regulates the employment and compensation of professionals rendering services in any bankruptcy proceeding.
Bankruptcy Petition Preparers • Section 110(a) defines a bankruptcy petition preparer as a person other than the debtor’s attorney or the attorney’s employee under that attorney’s direct supervision who prepares for compensation a document for filing with the Bankruptcy Court. • An unsupervised paralegal may be a bankruptcy petition preparer. • A document for filing is any document prepared for filing by a debtor in a bankruptcy case.
Exempt • Exemptions are statutorily defined property that an individual debtor may protect from administration by a bankruptcy estate. • Exempt property is not available for liquidation to pay a dividend to creditors; a debtor may keep exempt property. • Exemptions are a primary element of debtor relief.
Discharge • Discharge is legal relief from debt provided for by Section 524 of the Bankruptcy Code. • The discharge is one of the three elements of debtor relief provided for in the Bankruptcy Code.
Automatic Stay • Automatic Stay is a statutory bar to the conducting of any collection activity by creditors after a bankruptcy petition has been filed. • The automatic stay is one of the three major elements of debtor relief provided by the Bankruptcy Code.
Fresh Start • “Fresh Start” is the phrase most frequently used colloquially to describe the basic elements of debtor relief: • Discharge • Exemptions • Automatic Stay
Eight Basic Requirements for Bankruptcy Petition Preparers • The preparer must sign the document and include the preparer’s name and address. • Provide a notice to the debtor, prior to the preparation of any document, stating that a petition preparer may not give legal advice. • The preparer shall include the preparer’s Social Security number on the document. • The preparer shall furnish the debtor with a copy of the document not later than the time the document is presented to the debtor for signature. Slide 1 of 2
Eight Basic Requirements for Bankruptcy Petition Preparers • The preparer shall not execute any document on behalf of a debtor. • The preparer shall not use the word “legal” or any other similar term in advertisements or advertise under any “legal” category. • The preparer may not receive or collect payment for court fees. • The preparer shall, within ten days after filing of a petition, file a declaration under penalty of perjury disclosing any fees paid or promised by or on behalf of the debtor. Slide 2 of 2
Reaffirmation • Reaffirmation is a debtor’s agreement to remain legally liable for repayment of a debt otherwise dischargeable in a bankruptcy proceeding. • For a debt to be legally reaffirmed, strict compliance with the provisions of Bankruptcy Code Section 524 is required.