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Creating a Bankruptcy Plan - Essay Example

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The study of Flyn E, Bermant G. and Bakewell G. in 2002 stated that 960,944 cases were filed under Chapter 7 and only 33,700 cases were filed under Chapter 11.(Flynn, E.,…
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Creating a Bankruptcy Plan
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Creating a Bankruptcy Plan Answer to Questions: a. What is the ratio of Chapter 7 to Chapter 11 filings for businesses? The ratio of cases of bankruptcy of Chapter 7 to Chapter 11 in the United States as of 2001 is 34 percent. The study of Flyn E, Bermant G. and Bakewell G. in 2002 stated that 960,944 cases were filed under Chapter 7 and only 33,700 cases were filed under Chapter 11.(Flynn, E., Bermant, G. & Bakewell, K., 2002).
b. What is the typical time span for filing for Chapter 11, confirmation, and successful completion of the reorganization plan?
A debtor may be qualified to apply for Chap. 11 bankruptcy after he received credit counseling from an authorized agency. A debtor is required within 20 days after filing to submit to the court a list of secured and unsecured debts, statement of assets and liabilities, a liquidation plan of reorganization stating the financial benefits for creditors, and approval of the plan by the company creditors.
Within 20 days after filing, debtor meets the appointed bankruptcy trustee to discuss details of the reorganization plan. Within 30 to 45 days after filing, debtor meets creditors in a meeting presided over by trustee to agree on the payment plan proposed by debtor.
Discussions, approval, or rejections by the creditors on the disclosure statement, proposed payment plan and analysis of the liquidation plan should be finalized not more than 120 days after filing. When the plan is approved, the debtor is discharged from any debt that arose before confirmation. After confirmation of plan, debtor is required to make payments as stated in the reorganization. A new contractual right replaces the pre-bankruptcy contracts. (Chapter 11)
c. What are the most common reasons that force an individual to file for bankruptcy?
One of the most common reasons that an individual applies for bankruptcy
is “when one is unable to pay his debts any more. The bankruptcy law gives a person who is burdened with debts to have a new start by wiping out his/her debts.”(Maller-Barnes-Bowers-Langvardt, Chap. 20)
d. What kind of individual debts may not be discharged through a Chapter 7 filing? If a debtor is unable to make payments under a Chapter 13 plan, can it be modified?
A debtor is not given a discharge if he has not paid debts for taxes and debts related to committed crimes. or if there are “debts covered by a waiver of discharge executed by the debtor and approved by the court. An order of discharge cannot also be given to a debtor who has a judicial order to pay domestic support obligations unless he can certify that he is up to date in payments. (Mallor-Barnes-Bowers-Langvardt, Chap. 20)
A debtor who has a confirmed plan for reorganization is allowed to request for modification of the plan anytime after its confirmation. According to Chapter 11 Bankruptcy code, modification is allowed if he/she has met some requirements of the Bankruptcy Code. This request will require the creditors’ consensus and approval of the court.
References
“Chapter 7. Liquidation Under the Bankruptcy Code” U.S. Courts Retrieved September 23,2009 from http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapt er7.html
‘Chapter 11 Reorganization Under the Bankruptcy Code” U.S. Courts. Retrieved September 24, 2009 from http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter 11.html#discharge
Flynn, E, Bermant, G. and Burke, Virginia (2000). “Bankruptcy by the Numbers”. Executive Office for the United States Trustees. Retrieved September 23, 2009 from www.usdoj.gov/ust/eo/public_affairs/.../abi092000.htm
Mallor-Barnes-Bowers-Langvardt, “Bankruptcy” Busines Law: The Ethical, Global, and E-Commerce Environment. Chapter 20, 13th Edition
“Post-Confirmation Administration and Modification. Chapter 11. Reorganization Under the Bankruptcy Code. Retrieved September 23, 2009 from http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter11.html#post confirm
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