ACP ACP Bankruptcy Law & Procedures 2 — Questions and Answers
Question 1: What is the '341 meeting' in bankruptcy?
- A meeting of creditors where the debtor is examined under oath (Correct answer)
- A hearing to confirm a reorganization plan
- A trustee's auction of the debtor's assets
- A court hearing on claimed exemptions
Correct answer: A meeting of creditors where the debtor is examined under oath
The 341 meeting, named after 11 U.S.C. § 341, is a mandatory meeting where the trustee and creditors may question the debtor under oath about finances.
Question 2: Which chapter of the Bankruptcy Code is available only to family farmers and fishermen?
- Chapter 12 (Correct answer)
- Chapter 7
- Chapter 11
- Chapter 13
Correct answer: Chapter 12
Chapter 12 of the Bankruptcy Code is specifically designed for family farmers and fishermen to reorganize their debts.
Question 3: What does 'exempt property' mean in bankruptcy?
- Property the debtor can keep that is protected from creditors (Correct answer)
- Property automatically abandoned by the trustee
- Property transferred to creditors in satisfaction of debts
- Property used as collateral for a secured loan
Correct answer: Property the debtor can keep that is protected from creditors
Exempt property is property protected by state or federal law that the debtor is allowed to retain even in a Chapter 7 liquidation.
Question 4: What is a 'preference payment' in bankruptcy?
- A transfer to a creditor within 90 days before filing that the trustee can recover (Correct answer)
- A priority claim entitled to payment ahead of general unsecured creditors
- A payment approved by the bankruptcy court during the case
- A secured creditor's right to receive collateral proceeds first
Correct answer: A transfer to a creditor within 90 days before filing that the trustee can recover
A preference is a payment made to a creditor within 90 days (or one year for insiders) before bankruptcy that the trustee may recover to redistribute fairly among all creditors.
Question 5: What is the homestead exemption in bankruptcy?
- A protection that allows debtors to exempt equity in their primary residence (Correct answer)
- A federal law requiring all states to allow unlimited home exemptions
- A tax benefit available to homeowners who file bankruptcy
- A court order preventing foreclosure during the bankruptcy case
Correct answer: A protection that allows debtors to exempt equity in their primary residence
The homestead exemption protects a specified amount of equity in the debtor's primary residence from being liquidated by the bankruptcy trustee.
Question 6: What is 'cramdown' in Chapter 13 bankruptcy?
- Reducing the principal of a secured loan to the collateral's current value (Correct answer)
- Forcing all creditors to accept a below-market interest rate
- Converting a Chapter 13 case to Chapter 7
- Discharging a student loan through the repayment plan
Correct answer: Reducing the principal of a secured loan to the collateral's current value
Cramdown allows a Chapter 13 debtor to reduce a secured debt to the current fair market value of the collateral, paying only that reduced amount through the plan.
ACP ACP Bankruptcy Law & Procedures 2
What is the '341 meeting' in bankruptcy?