BANKRUPTCY ISSUES

1
BANKRUPTCY ISSUES

• South Dakota Land Title Association
• Fall Education Seminar
• October 3, 2000

2
General

• Chapter 7 Liquidation
• Chapter 13 Individual with Regular Income
• Chapter 12 Family Farm Reorganization
• Chapter 11 Corporation Reorganization
• Chapter 9 Municipal Reorganization

3
Procedure

• Petition
• Automatic Stay
• Creation of an Estate
• Meeting of Creditors (341)
• Chapter 7 - Distribution of assets (if any)
• Chapter 11, 12, 13 Approval of payment
  plan
• Discharge

4
Automatic Stay

• Applies to all Chapters
• Occurs upon filing of petition
• Creditors cannot enforce collection of debts
• Cannot further encumber estate property
• McConville

5
Discharge

• A discharge is a release of personal liability
  for the debtor
• Not all debts can be discharged
• Examples of Exceptions
• Spousal or child support or alimony
• Willful and malicious injury
• Fines and penalties
• Student loans
• Damages for personal injuries caused by DUI
• Statutory liens perfected before filing the
  petition will not be discharged (See In re
  Taylor, 1998 BkDSD 4)

6
Discharge

• Chapter 7 Discharge occurs automatically if no
  creditors object
• Chapter 12 and 13 Discharge occurs upon
  completion of plan payments
• Chapter 11 Discharge occurs upon court
  approval of payment plan

7
Judgment of Discharge

• Must specifically state which debts are
  discharged (See SDCL 15-16-20)
• Should be filed in appropriate file
• Clerk is required to show discharge on the
  judgment docket card
• Can apply to circuit court for discharge if
  judgment is not specifically listed

8
What You May See

• Relief from Automatic Stay
• 362(d) - Allows creditor to proceed with
  collection of debt
• Reaffirmation
• Agreement with creditor to pay debt
• Requires court approval

9
What You May See

• Abandonment of property by the Trustee
• 554 When property is burdensome or of
  inconsequential value
• Order for Sale Free and Clear of Liens
• 362(f) Trustee may sell property free and
  clear of liens with court approval

10
Conveyances

• Abandoned Property
• Title Standard 14.1
• Petition
• Certificate of commencement
• Order appointing Trustee (except in Chapter 11)
• Motion, Notice of Hearing, and Order
• If property abandoned as part of a plan, an order
  confirming plan is needed

11
Conveyances

• Property claimed as Exempt
• Check Schedules filed with Petition
• Title Standard 14.2
• Petition
• Certificate of Commencement
• Schedule showing property as exempt
• Certificate of Clerk of Bankruptcy Court showing
  no objections to exempt property or an order
  determining property is exempt

12
Conveyances

• Order to Sell Free and Clear of Liens
• Title Standard 14.3
• Petition
• Certificate of Commencement
• Order appointing trustee
• Motion, Notice of Hearing, and Order Confirming
  Sale
• Deed from Trustee or Debtor-in-possession

13
Conveyances

• If a Debtor is under a Chapter 12 or 13 Plan,
  Trustee approval is needed to incur additional
  debt as it may affect the execution of the plan.