Quiz 30: Secured Transactions
a) Yes, Burke may file a voluntary petition for bankruptcy. Once she files her petition for bankruptcy, it is considered a voluntary bankruptcy. b) O and S can force B into involuntary bankruptcy by petition if they meet the following requirements: ? If B, the debtor, has 12 or more creditors, then at least three creditors must have claims totaling at least $14,425. ? If B has less than 12 creditors, then at least one creditor must have a claim totaling $14, 425 or more. In this case, B only has eight creditors, but since both O and S's claims are well above the $14,425 benchmark, they can force her into involuntary bankruptcy.
J should file for the official forms that are available at the bankruptcy court. She should receive the required credit counselling from an approved non-profit agency. This counselling should not be before 180 days from the date of filing a bankruptcy petition. J should also receive an approved certificate from the non-profit agency that proves that she has received counselling from the agency in the past six months.
The Bankruptcy Code grants trustees avoidance powers. A trustee can avoid transfer of property or payments to a creditor when this transfer is considered a preference. A preference occurs when one creditor is preferred over another. A preference exists when the debtor is insolvent and has made a payment for a preexisting debt within the 90 days before his bankruptcy filing. During this time, the debtor is considered insolvent. However, these 90 days can be extended to one year as a preference period if the payment was made to an insider, as in this case, where a payment was made to a family member. [The 90 days of presumed insolvency is not extended. The Cool Springs payment was made within those 90 days. Also, P made a payment to his father, an insider, within that one year preference period and it seems he was insolvent at the time. Thus, Cool Springs would have difficulty overcoming the insolvency presumption. If P was not insolvent, then his father would not be preferred and the avoidance that occurred would be improper.