Bankruptcy
When approaching a Bankruptcy exam, focus on identifying the type of bankruptcy proceedings at issue (Chapter 7, 11, or 13) and the associated rules governing those proceedings. Be prepared to analyze creditor-debtor relationships, dischargeability of debts, and the automatic stay.
A debtor is eligible for Chapter 7 if their debts exceed their assets and they pass the means test.
Certain debts, such as student loans and certain taxes, are generally non-dischargeable.
Exemptions may allow debtors to retain certain property when filing for bankruptcy.
Chapter 11 allows for reorganization and allows the debtor to retain control as a debtor-in-possession.
A reorganization plan must be approved by the court and can be crammed down against objecting classes of creditors if the plan meets certain conditions.
All classes of claims must receive fair and equitable treatment.
Individuals with regular income may file for Chapter 13 as long as their debts are below specified limits.
Debtors must propose a repayment plan lasting 3-5 years that is feasible and in good faith.
Completion of the payment plan may lead to a discharge of certain debts.
The automatic stay prohibits most actions against the debtor or their property once a petition is filed.
Certain actions, such as criminal proceedings and government enforcement actions, may be exempt from the stay.
A creditor can file for relief from stay if they can show cause.
Discharges granted will typically exempt the debtor from personal liability for certain debts.
Creditor objections must be raised timely and for valid statutory reasons.
Nondischargeable debts remain enforceable after bankruptcy.
A transfer can be set aside if it was made with the intent to hinder, delay, or defraud creditors.
Constructive fraud involves transactions that do not receive reasonably equivalent value.
The look-back period is typically two years prior to the filing of the bankruptcy.
A security interest is perfected by filing, possession, or control.
Secured creditors generally have priority over unsecured creditors in bankruptcy distributions.
A debtor can reclaim certain goods secured by purchases if specific criteria are met.
Creditors have limited rights once an automatic stay is imposed until relief is granted.
Priority creditors, such as tax claimants and child support claimants, receive payment ahead of unsecured creditors.
Lien avoidance can allow the debtor to reduce the impact of secured claims.
To structure your answer, begin with a clear identification of the relevant legal issues followed by applicable rules and case law, applying them to the facts presented. Conclude with a well-supported resolution based on your analysis.
Aim to allocate your time evenly across the major topics, spending about 20 minutes on outline and 40 minutes on writing for each question in a three-hour exam.