What is the distribution order in bankruptcy?
Once the debtors assets have been aggregated, they will be distributed to creditors based on priority. The three basic payments will be paid out to (1) Secured claimants, (2) Priority claimants, and (3) General creditors. The priority list is as follows:
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What is chapter 7 bankruptcy?
Chapter 7 bankruptcy is also referred to as liquidation. Chapter 7 permits both voluntary and involuntary petitions. Under chapter 7 liquidations, a trustee will generally be appointed to act on behalf of the debtor, and when the time comes, will be the fiduciary that is responsible for collecting and liquidating the assets. The proceeds from […]
What is an automatic stay?
An automatic stay is a legal provision related to bankruptcy cases that temporarily prevents lenders (creditors) from harassing and pursuing borrowers (debtors). Under section 362 of the United States Bank, the stay beings the moment the bankruptcy petition is filed and typically last around 30 days. For most Chapter 7 bankruptcies, and automatic stay goes […]
What are the different types of bankruptcy cases are tested on the CPA exam?
Bankruptcy is an often-tested component of the business law section of the CPA exam. You will be required to have a general understanding of the six types of bankruptcy cases. These consist of chapter 7, chapter 11, chapter 13, chapter 9, chapter 12, and chapter 15: