Business Law Unit 5

What is prejudgment attachment? Attachment is a court-ordered seizure and taking into custody of property prior to the securing of a judgment for a past-due debt.

What is a writ of execution? A writ of execution is a court order directing a sheriff to seize and sell any of the debtor’s nonexempt real or per­sonal property within the court’s jurisdiction. This is used when a debtor will not or cannot pay a judgment.

How does a creditor use these remedies? To use attachment as a remedy, a creditor (1) files with a court an affidavit, stating that a debtor is in default and the grounds on which attachment is sought, and (2) posts a bond to cover costs, the value of the loss of use of the good by the debtor, and the value of the property. The court directs the sheriff or other officer to seize nonexempt property, which can be sold to satisfy a judgment.

What is garnishment? Garnishment occurs when a creditor is permitted to collect a debt by seizing property of the debtor that is being held by a third party (such as a paycheck held by an employer or a checking account held by a bank). Closely regulated, gar­ nishment is used in some cases in which debts are not paid.

In a bankruptcy proceeding, what constitutes a debtor’s estate in property? In a bankruptcy proceeding, a debtor’s estate in property consists of all the debtor’s legal and equitable interests in property currently held, wherever located, together with certain jointly owned property, property transferred in transactions voidable by the trustee, proceeds and profits from the property of the estate, and certain after-acquired property.

What is the difference between an exception to discharge and an objection to discharge? An exception to discharge is a claim that is not dischargeable in bankruptcy (such as a government claim for unpaid taxes). An objection to discharge is a circumstance that causes a discharge to be denied (such as concealing assets).

In a Chapter 11 reorganization, what is the role of a debtor in possession? Under Chapter 11, a debtor in possession (DIP) is allowed to continue to operate his or her business while the bankruptcy proceeds. The DIP’s role is similar to that of a trustee in a liquidation, or Chapter 7, proceeding.