which is a bankruptcy for municipalities? course

Full Answer

Which type of bankruptcy is designed for municipal bankruptcy?

Chapter 9 -This chapter of the Bankruptcy Code provides for reorganization of municipalities, which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts.

Which chapter of the Bankruptcy Code applies to municipalities quizlet?

Chapter 9 is a reorganization for municipalities (cities).

What is government bankruptcy?

Bankruptcy is a legal process to help debtors (people who owe money) get relief from the debts they cannot pay and, at the same time, help creditors (people who are owed money) get paid from whatever property or assets the debtor has that he or she does not need to live.

Can a local government file for bankruptcy?

The Law. Chapter 9 of the U.S. Bankruptcy Code permits municipal governments to declare bankruptcy when they are unable to pay their debt service due to a lack of income, generally due to declining tax revenues.

How are Chapter 7 and 13 bankruptcies similar?

Both Chapter 7 and Chapter 13 Bankruptcies Trigger an Automatic Stay. While Chapter 7 eliminates your debts while Chapter 13 restructures them, you will be able to enjoy something called an “automatic stay” when you file either.

What is the difference between Chapter 9 and 11?

The main difference between Chapter 9 and Chapter 11 bankruptcies is who can use them. While Chapter 9 applies to certain government entities, Chapter 11 bankruptcy allows a business or individual to reorganize its debts and obligations.

What are the different types of bankruptcies?

In fact, there are six different types of bankruptcies:Chapter 7: Liquidation.Chapter 13: Repayment Plan.Chapter 11: Large Reorganization.Chapter 12: Family Farmers.Chapter 15: Used in Foreign Cases.Chapter 9: Municipalities.

How many different chapters of bankruptcy are there?

However, can you tell the differences between each of the different chapters of bankruptcy? There are six chapters of bankruptcy in the United States, Chapter 7, Chapter 9, Chapter 11, Chapter 12, Chapter 13 and Chapter 15, with Chapter 7 and Chapter 13 bankruptcy being the most common forms filed.

Why do people file for bankruptcy?

Bankruptcy is meant for individuals who cannot make progress in paying down their debts. If this describes your situation, declaring bankruptcy can provide you with a fresh financial start.

What is Chapter 13 bankruptcy?

A chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years.

What is a Chapter 7 Bankruptcy Discharge?

The Chapter 7 Discharge. A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor.

What does the municipality do?

The functions of municipal governments include the following: Provision of state-run home services and basic unmet needs as regards health, education, environmental cleanliness, drinking water in homes, recreation and sport.

Which of the following is not exempt from satisfaction of Judgement debts?

Which of the following is an example of personal property that normally WOULD NOT be exempt from the satisfaction of judgment debts? Jewelry normally will not be exempted and may be seized and sold to satisfy a judgment debt.

Which of the following statements correctly depicts duties of court appointed trustees?

Which of the following statements correctly depicts duties of court-appointed trustees? Trustees identify and collect a debtor's assets and then allocate those assets to creditors in an orderly manner.

Which of the following is false regarding a sole proprietorship?

Which of the following is FALSE regarding a sole proprietorship? A sole proprietor is not personally liable for obligations of the business. This is False B/C A sole proprietor is personally liable for any losses or obligations associated with the business.

What is the advantage of having a written agreement with a roommate rather than an oral agreement?

Having a written roommate agreement makes everyone take their responsibilities more seriously, and helps avoid the misinterpretations and memory lapses that come with oral understandings. Much of your agreement won't be legally binding?for example, a judge likely wouldn't order your roommate to clean the bathroom.

What is considered a municipality in bankruptcy?

What is considered a municipality for the Bankruptcy Code? The Bankruptcy Code defines the term “municipality” as a “political subdivision or public agency or instrumentality of a State.”. Entities as large as major cities ( i.e., Detroit, Vallejo and Harrisburg) along with major counties ( i.e., Orange County and Jefferson County) ...

What is the role of bankruptcy court in Chapter 9?

Unlike other bankruptcy cases, the role of the Bankruptcy Court is limited in a Chapter 9 case. The court may not interfere with the day to day operations (i.e., use of property or revenues) of the municipality or its political discourse.

What is Chapter 9 in a case?

As with a Chapter 11 case, the goal of a Chapter 9 case is the filing of a plan for the adjustment of the municipality’s debts. If the plan was not filed with the petition, it must be filed by a date fixed by the court. The court will schedule a hearing to consider confirmation of the plan.

What happens to retirement plans in Chapter 9?

What happens to retirement plans in a Chapter 9 case? A municipality has the ability to alter the terms of retirement plans while in bankruptcy. Unlike in a Chapter 11 case, there are no specific provisions relating to retirement and health plans in a Chapter 9 case.

What happens if a municipality is not able to file for Chapter 9?

If a municipality is not able to file for Chapter 9, an out of court restructuring may have to be pursued, such as a refinancing or extension of debt obligations, tender offers or exchanges or other negotiated resolutions.

How to determine if a municipality is unable to pay its debts?

In determining whether the municipality is unable to pay its debts as they become due, courts look at the cash flow of the municipality rather than using a balance sheet test. The court also will look to the municipality’s expected projected near term fiscal condition.

Do you have to file a schedule for Chapter 9?

Sometimes eligibility to file a case is hotly contested by creditors. However, unlike Chapter 11 debtors, Chapter 9 debtors are not required to file schedules or a statement of financial affairs. Rather, a Chapter 9 debtor is only required to file a list of creditors.

What is the bankruptcy code for a city?

Cities file for bankruptcy under Chapter 9 of the Bankruptcy Code . Yet before a city can declare Chapter 9 bankruptcy, the city must establish it is eligible to do so according to state law.

Which city has filed for bankruptcy?

Left: Protestors rally outside the U.S. Courthouse in Detroit, Mich in December. Detroit is the largest city in U.S. history to file for bankruptcy. Credit: Bill Pugliano/Getty Images

Which states have the right to file for bankruptcy?

Some states, like Arizona and Washington, expressly grant municipalities the right to file for bankruptcy.

Can a municipality declare bankruptcy?

But unlike individuals and corporations, cities are not always allowed to declare bankruptcy. Bankruptcy is a federal process.

Can a city declare bankruptcy in Georgia?

Georgia and Iowa prohibit cities from declaring bankruptcy, though Iowa has an exception to the law for municipalities that become bankrupt for reasons beyond their control. A number of states haven’t written any specific law that determines whether or not a municipality can declare bankruptcy.

Is bankruptcy a federal process?

Bankruptcy is a federal process. In turn, a state must give its cities, towns, counties, and other municipalities — governmental administrative districts like irrigation authorities or hospital districts — the right to petition the federal government to restructure their debts.

Is bankruptcy a last resort?

As cities try to manage crushing debt from pension obligations, some municipalities are turning to bankruptcy as a last resort. NewsHour Weekend reports from Vallejo, Calif., with a cautionary tale for cities looking to bankruptcy as the solution.

What are the different types of bankruptcy?

Types of Business Bankruptcies. Business bankruptcies typically fall into one of three categories. Two — Chapter 7 and Chapter 13 — are variations on the personal bankruptcy theme. Chapter 11 bankruptcy is generally for businesses that have hit a bad patch and might be able to survive if their operations, along with their debt, can be reorganized.

What is the name of the bankruptcy code for a private individual?

Filing as a private individual? Personal bankruptcy generally comes in two flavors, known by their places in the federal Bankruptcy Code: Chapter 7 and Chapter 13.

Why did Congress extend Chapter 9 bankruptcy protection?

Senate Majority Leader Mitch McConnell (R-Ky.) suggested Congress might want to extend bankruptcy protection to states to help alleviate some of the effects of bad management that were exacerbated by the coronavirus shutdown.

What is Chapter 13?

Chapter 13: Small Business Repayment Plan. Customarily reserved for individuals, Chapter 13 can be used for small business bankruptcy by sole proprietorships because the sole proprietor and the individual are indistinguishable; in the eyes of the law, they exist as one.

How many Chapter 13 cases are there in 2020?

There were 154,341 Chapter 13 cases in 2020, accounting for 28% of the total bankruptcy load.

Why is Chapter 15 important?

A fairly recent addition to the federal Bankruptcy Code, Chapter 15 was adopted to enhance cooperation in international insolvencies. Such filings are rare, but they are useful to parties representing debtors, creditors, and assets involving more than one country seeking efficient and reasonable bankruptcy processes.

What is written off in a bankruptcy?

At the completion of the process, all obligations — leases, contracts, loans, overdue accounts, credit cards, and other business debts — are generally written off by creditors as all business assets were presumably liquidated.

What is Chapter 7 bankruptcy?

In a Chapter 7 bankruptcy, an individual debtor asks the Bankruptcy Court to discharge (or cancel) all their existing debt. It is often referred to as the "fresh start" or "liquidation" chapter of bankruptcy. In return, the debtor turns over all his non-exempt property to the bankruptcy trustee. The bankruptcy trustee then liquidates the debtor's non-exempt property in order to pay all or a portion of the existing debt. Any debt remaining after the debtor's assets have been applied to the outstanding debt is discharged.

Why is Chapter 9 bankruptcy important?

Reorganization allows a municipality to pay back all or a portion of its debts over time and under the protection of the Bankruptcy Court. Accordingly, the municipality can settle its debts and rework its finances with minimal disruption to the residents of the town.

What is Chapter 11?

In Chapter 11, the debtor maintains control of the day-to-day operations of the business or the individual's estate. However, at the same time the business or estate continues to function, the debtor, creditors, and bankruptcy trustee work with the Bankruptcy Court to establish a plan to repay some or all of the debt owed to the creditors over an extended period of time.

Why did Congress create Chapter 12 bankruptcy?

In creating Chapter 12 bankruptcy, Congress sought to tailor a bankruptcy process to be most beneficial to famers and fisherman, who often have significant debt due to the purchase of large pieces of machinery.

How long does a Chapter 13 debt last?

Typically, the repayment period under Chapter 13 lasts no longer than 3-5 years. Chapter 13, like Chapter 7, often does not require the repayment of unsecured debt (credit cards), and such debt is frequently discharged. What debt, if any, remains after the repayment period is over is often discharged.

What is exempt property?

The definition of "exempt" property (that which does not have to be turned over to the bankruptcy trustee for liquidation) varies from state-to-state. However, exempt property typically includes some portion of the equity on the debtor's residence, furniture, household items, and personal effects.

Is Chapter 11 a liquidation?

Like a Chapter 9 bankruptcy, Chapter 11 is not a liquidation, but rather a reorganization.