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1. BK Code Book
2. Cheap basic calculator
Form of exam:
1. one long fact pattern (fact pattern is case heavy, therefore, you must know the USSC cases and 11 th Circuit cases)
a. the exam is an opportunity to shine by showing off what you know BUT DON’T answer something that isn’t there
b. the exam will most likely take you the entire 3 hours but there is no reason why you shouldn’t finish the exam
c. the people that do really well are the exam writers that provide a well thought out organized answer with all appropriate
codes
i. make sure you review the last chapters of the “Principles Book” that explain an entire typical case
ii. also make sure you go over “executory contracts” (pg. 154 of “Principles” book)
d. the fact pattern will not have every single fact you need; you might have to assume certain facts but STATE that you are
making an assumption
i. we will be provided with the OCGA
e. Whaley’s exam is more about the law rather than formulas
Business entities and individuals can use either Ch. 7 or Ch. 11, but only individuals can file for a Ch. 13
Ch. 3 and 5 are general rules that apply to all bankruptcy petitions
The basic principles of obtaining the remedy of bankruptcy is clean hands and full disclosure
Advantages of filing bankruptcy:
o for debtors:
(1) automatic stay
(2) discharge
(3) possible reduction in the amount they pay to their creditors
(4) fresh start for debtor
o for creditors:
(1) judicial supervision of the debtor’s use of property of the estate protects creditors from fraud or waste
(2) the aggregate costs to all creditors of a bankruptcy are less than the total costs to individual creditors of
individual collection efforts
one of the first steps in starting a case is determining whether the client qualifies as a bankruptcy client
o first determine why the client wants to file for bankruptcy (is there a need for a bankruptcy case?)
if so, what is the client trying to accomplish?
if they need a fresh start right away, then you might continue the conversation along the lines of what assets the
client really needs
o for a Ch. 7 (liquidation), you would do a means test to see if they can overcome the presumption of abuse
Ch. 7 is best for people who:
have no tax liability
are below the means
where a married couple jointly owns all of their property and are jointly liable on all debts
o if the client is behind on their house or car and they need to keep those, then they most likely would need to reorganize
themselves and therefore a Ch. 13 (reorganization as well as Ch.s 11 and 12) would be applicable
o means test:
“Means Test”: determines whether the debtor has the “means” to make meaningful payments to creditors
will appear on the exam if the fact pattern states that (1) the debtor is an individual and (2) her debts are
primarily consumer debts and (3) she files a Ch. 7 petition, and (4) the fact pattern also gives you detailed
information about how much the debtor earns and how much she spends
707(b)(1) provides for dismissal of the case if “abuse” is established
abuse is established by:
o (a) bad faith filing
o (b) “totality of the circumstances of the debtor’s financial situation”
o (c) “means test”: if the debtors can afford to pay their creditors at least between $6K and $10K
over five years, they should pay instead of using Ch. 7 to avoid paying
707(b)(2) applicability turns primarily on a comparison of the debtor’s “current monthly income” as
defined in 101 and “median family income” as defined in 101
o “current monthly income” under 101(10A)(A): the average monthly income from all sources that
the debtor receives (or in a joint case the debtor and the debtor’s spouse receive), without regard
to whether such income is taxable income, derived during the 6-month period ending on
(i) either the last day of the calendar month immediately preceding the date of the
commencement of the case if the debtor files the schedule of current income; OR
(ii) the date on which current income is determined by the court if the debtor does not
file the schedule of current income
o if the debtor’s “current monthly income” times 12 is less than “median family income” for the
state in which the debtor lives, then no one can file a motion to dismiss the Ch. 7 case based on
707(b)(2) means test and 707(b)(7)
o for those whose with “current monthly income” is greater than “median family income”, the
means test of 707(b)(2) compares 60 months of “current monthly income” with the total of the
following:
(1) 60 months of expenses measured by IRS expense standards; AND
(2) 60 months of other, actual expenses specified in 707(b)(2); AND
(3) payments due on secured and priority debts for the 60 months after the bankruptcy
petition date
the formula is: [(“current monthly income” x 60) – (sum of (1),(2),(3))]
if the difference is greater than either:
o (1) $11,275 OR
o (2) the greater of $7,025 or 25% of the debtor’s non-priority
unsecured debts,
o then 707(b) “abuse” is presumed, section 707(b)(7)
“abuse” is a rebuttable presumption which can be done by the debtor swearing
to and documenting “special circumstances” that increase expenses or
decrease “current monthly income” so as to bring the debtor’s income after
expenses below the $11K/$7K trigger
under Ch. 13, if the debtor’s “current monthly income” exceeds “median family income”, then:
o (1) the Ch. 13 plan payment period is “not less than 5 years” instead of 3 years, section
1325(b)(4); AND
o (2) the minimum amount required to be paid under the plan is measured by the “means test”
instead of the “disposable income” test under 1325(a)(3)