CBS Chapter 7 Liquidation Procedures 3 — Questions and Answers
Question 1: Under § 362(c)(3), the automatic stay terminates how many days after filing if the debtor had a prior case dismissed within the preceding year?
- 30 days (Correct answer)
- 60 days
- 90 days
- The stay never arises
Correct answer: 30 days
Under § 362(c)(3), the automatic stay terminates 30 days after the new petition if the debtor had one prior dismissal within the past year, unless extended by court order.
Question 2: Which of the following transfers is most likely avoidable as a preferential transfer under § 547?
- Payment to a trade creditor for new goods delivered on the payment date
- Payment to a credit card company 80 days before filing for a balance incurred two years earlier
- Payment to an insider 10 months before filing for an antecedent debt (Correct answer)
- Grant of a mortgage to a new lender in exchange for a new loan on the filing date
Correct answer: Payment to an insider 10 months before filing for an antecedent debt
Insider preference lookback is one year; a payment to an insider 10 months pre-petition for an antecedent debt satisfies all § 547(b) elements.
Question 3: What is the primary purpose of the § 341 meeting of creditors in a Chapter 7 case?
- For the judge to question the debtor under oath
- For the trustee and creditors to examine the debtor under oath (Correct answer)
- For the debtor to present a repayment proposal
- For creditors to vote on the trustee's appointment
Correct answer: For the trustee and creditors to examine the debtor under oath
The § 341 meeting is conducted by the trustee (not the judge) to examine the debtor under oath about assets, liabilities, and financial affairs; creditors may also ask questions.
Question 4: A Chapter 7 debtor received a $15,000 inheritance 45 days after the petition date. Is this property of the estate?
- No, because it was acquired post-petition
- Yes, because inheritances within 180 days of filing belong to the estate under § 541(a)(5) (Correct answer)
- Yes, but only if the debtor had a legal right to it before filing
- No, inheritances are always exempt
Correct answer: Yes, because inheritances within 180 days of filing belong to the estate under § 541(a)(5)
Section 541(a)(5)(A) captures inheritances the debtor becomes entitled to within 180 days of the petition date as property of the estate.
Question 5: Which of the following debts is NON-DISCHARGEABLE in a Chapter 7 case under § 523(a)?
- Medical bills incurred before filing
- Student loans, absent undue hardship (Correct answer)
- Pre-petition credit card debt for groceries
- Utility bills more than 90 days old
Correct answer: Student loans, absent undue hardship
Student loans are excepted from discharge under § 523(a)(8) unless the debtor can prove repayment would cause undue hardship.
Question 6: In a Chapter 7 no-asset case, what happens to the proof of claim deadline for unsecured creditors?
- Creditors must file within 90 days of the petition
- The court sets no bar date because there are no assets to distribute (Correct answer)
- Creditors have 180 days from the § 341 meeting
- Claims are deemed filed automatically from the schedules
Correct answer: The court sets no bar date because there are no assets to distribute
In a no-asset case, no bar date is set and creditors are not required to file proofs of claim because there are no funds to distribute.
Question 7: A trustee discovers that the debtor transferred $30,000 to a family member two years before filing with intent to hinder creditors. Under which section may the trustee recover this transfer?
- § 547 (preference)
- § 548 (fraudulent transfer) (Correct answer)
- § 549 (post-petition transfer)
- § 544 (strong-arm power)
Correct answer: § 548 (fraudulent transfer)
Section 548 allows the trustee to avoid fraudulent transfers made within two years of the petition date with actual intent to hinder, delay, or defraud creditors.
CBS Chapter 7 Liquidation Procedures 3
Under § 362(c)(3), the automatic stay terminates how many days after filing if the debtor had a prior case dismissed within the preceding year?