1. Welcome to Seminar #3 ► The first two weeks flew by and you guys are doing great so PLEASE keep up the excellent work with the Discussion board and on your assignments!!

2. You guys are Winning!!!! Like I said – keep up the good work!!

3. You guys did so well this past week…. ► That I did not have as many phone calls to make this past Sunday….and that makes for a happy Adam!!

4. Now let’s focus on this week’s assignments: ► We have our usual discussion board work ► We have our usual quiz ► Another short paper

5. Short Paper for Week #3…. ► This week's short paper deals with the Advantages and Disadvantages of Bankruptcy. The good news is that there are no more short papers or writing assignments for that matter until Week #7. ► What is gained or lost by filing for bankruptcy? ► Create a fictional example to illustrate your comparison AND then explain how filing for Bankruptcy would be BOTH good and bad. ► Ok? Not too bad, right?

6. How did the Demand Letters go? ► I thought that was a pretty straight-forward assignment and I think you guys probably did well on it! ► I will have the Demand Letters graded on Saturday of this week. ► If you have not submitted it yet for this week – get it to me by Saturday.

7. I cannot get enough of this class. Adam is the best! ► Tonight’s seminar was the first seminar that required a real lot of reading from our textbook. I know it was a lot of reading and it is more than normal….so if you weren't able to read all of the chapters yet - then don't sweat it BECAUSE I will start out by giving a very quick synopsis of what each Chapter covered before we cover tonight’s material….

8. Here we go with the recap of the Reading for this week…. ► Chapter 1 in Basic Bankruptcy Law for Paralegals introduces the history of debt and bankruptcy, including the evolution of bankruptcy systems around the world. The chapter also explores the history and evolution of bankruptcy law in the Unites States.

9. Chapter 2…. ► Chapter 2 focuses on the Bankruptcy Code, which is largely a self-contained system designed to settle the financial affairs of debtors. The Code is divided into chapters. Chapter 7 is primarily a liquidation proceeding, while Chapters 11 and 13 are reorganization proceedings that apply to specific kinds of debtors.

10. Chapter 4…. ► Chapter 4 explains the filing of a bankruptcy petition, both voluntarily and involuntarily. The petition is vital because a debtor is not legally bankrupt until the court enters an order for relief from creditors and debt.

11. Chapter 5…. ► Chapter 5 details the general rules of construction and definitions that apply across the entire Code.

12. And last but not least…. Chapter 6: ► It outlines Section 101 of the Code. Specifically, Section 101 defines the many terms that are regularly used in other Code sections. (Hint: this may be on this week’s quiz) ;) ► Here is a link to Section 101: http://www.law.cornell.edu/uscode/usc_sec_11_000 00101----000-.html

13. ► In today's economy, it is not difficult for a person or a company to become overwhelmed with bills that cannot be paid. When a debtor's outstanding bills become too great, bankruptcy may be the only reasonable solution. ► In the past, debtors were often considered deadbeats or failures. This is no longer the case. There are over half a million bankruptcy petitions filed each year, and bankruptcy has become widely accepted.

14. ► Doesn’t that seem crazy! Over half a million bankruptcy petitions filed each year! It does to me….

15. Present bankruptcy laws accomplish two important objectives…. ► The first is to protect a debtor from any future claims arising from his or her debts. ► The second is to provide an equitable distribution of the debtor's assets among his or her creditors.

16. Here is a brief history of Bankruptcy…. ► According to the United States Constitution, Article I, Section 8, "The Congress shall have the power to... establish... uniform laws of the subject of bankruptcies throughout the United States." As such, all bankruptcy proceedings are handled in federal courts.

17. How long has Bankruptcy been around? ► The first bankruptcy laws were passed in 1898. The Bankruptcy Act of 1898 controls all bankruptcy petitions filed before October 1, 1979. ► In 1978, Congress updated the bankruptcy laws with the Bankruptcy Reform Act of 1978 into the code we are familiar with today. The 1978 act regulates bankruptcy cases filed after October 1, 1979.

18. AND THEN a new bankruptcy law went into effect in October of 2005…. ► A new bankruptcy law went into effect in October of 2005, making it harder for consumers to prove that they should be allowed to clear their debts in what's known as a "fresh start" -- or Chapter 7 -- bankruptcy.

19. What is BAPCPA? ► The Bankruptcy Abuse Prevention and Consumer Protection Act, or BAPCPA, is a law that was passed in 2005. This law made significant changes in the process of bankruptcy and the way it works in the United States. The basic purpose of this law is to make it more difficult for consumers to bankrupt under Chapter 7. However, some of those consumers who do not qualify for bankruptcy under Chapter 7 can still use Chapter 13.

20. ► Prior to the 1970s, "referees" heard all bankruptcy matters. These referees are now called bankruptcy judges.

21. ► Title 28 of the U.S. Code contains information about all legislation pertaining to U.S. Bankruptcy Court and judges. ► Title 11 of the United States Code regulates the substantive bankruptcy laws. ► Title 11 is often referred to as the Bankruptcy Code.

22. ► The United States Bankruptcy Code is primarily a self- contained system designed to resolve the financial affairs of a debtor. The Bankruptcy Code is organized into chapters. There are 8 chapters at the present time. ► Three chapters (1, 3, and 5) contain rules that apply in all of the various Chapter proceedings. The rules in those 3 chapters include the basic features of debtor relief, discharge, exemptions, and the automatic stay, as well as the basic features of debt collection, claims, and their priority of distribution.

23. ► The remaining 5 chapters of the Bankruptcy Code (7, 9, 11, 12 and 13) comprise the various types of bankruptcy proceedings available to debtors. The different proceedings may be categorized as either “liquidation” or “reorganization” proceedings.

24. What is a Liquidation? ► In a liquidation, a debtor’s non-exempt assets are sold by a trustee and the proceeds are distributed to the creditors.

25. What is a Reorganization? ► In a reorganization, the debtor will seek approval of a repayment plan that will avoid liquidation.

26. ► Chapter 7 is a liquidation proceeding. ► Chapters 11 and 13 are the most common reorganization proceedings. ► A Chapter 11 is a business reorganization. ► A Chapter 13 is a individual (aka consumer) reorganiztion.

27. ALSO, here are some quick Key Terms….they will be kind of obvious, but I just wanted to go over them real quick. ► Debtor – is the entity that is bankrupt and owes the debt. ► Creditor – the entities to whom the debts are owed. ► Trustee – is an independent third party who liquidates the estate’s assets and distributes dividends to the creditors. We will over Trustees in more depth in a few weeks….

28. Now let’s talk about the Bankruptcy Courts…. ► The primary concern of the bankruptcy courts is to hear core matters, that is, matters that relate specifically to the Bankruptcy Code. ► However, bankruptcy courts have also been given the authority to hear matters that, while not regulated by the Bankruptcy Code, may affect the debtor's bankruptcy estate. These secondary matters are often referred to as non-core matters. Some examples include personal injury, wrongful death, and civil contract claims that may affect the debtor's financial position.

29. Who can tell me the two types of Bankruptcy Petitions?? ► Voluntary and Involuntary?

30. There are voluntary petitions and involuntary petitions. ► If the petition is filed by the Debtor, then it is a Voluntary Petition. However, if it is filed by the Creditors it is an Involuntary Petition. Makes sense, right? :-)

31. ► A bankruptcy petition should be filed in the district court in which the petitioner had (1) a domicile, residence, principal place of business in the United States or (2) principal assets in the United States for the 180 days immediately preceding such filing. ► The Voluntary Petition is the most common way of initiating a Bankruptcy proceeding.

32. Not so fast…. ► A Debtor is not legally bankrupt until the court enters an order for relief. This order is automatic when a voluntary petition is filed and is the judgment that the petitioning creditors seek in an involuntary petition. ► The procedure of an involuntary petition can be compared to a non-bankruptcy lawsuit. The petitioning creditors are essentially plaintiffs who seek the entry of an order for relief against an alleged debtor who is essentially a defendant.

33. What exactly do they do? ► So who can tell me what the role of the Bankruptcy Court is, in general, in Bankruptcy proceedings….

34. Well, here is what they do…. ► In many bankruptcy proceedings, the bankruptcy court is responsible for gathering up the debtor's assets, known as the estate, and dividing them among the creditors. As many of you know, the amount paid to each creditor may be only a fraction of the amount owed to them.

35. What exactly makes up the assets that are found in a Bankruptcy Estate?? ► The assets in the bankruptcy estate consist of most of the property owned by the debtor at the time the bankruptcy petition is filed. The bankruptcy estate includes both real property and personal property. It also includes any property in which the debtor has an interest, even though the title may be held in someone else's name.

36. Who can tell me what exempt property is? This should be an easy one!! :-) ► In order to give the debtor enough resources to make a fresh financial start, there are certain assets that will be exempt from the bankruptcy proceedings. ► Exempt property cannot be touched or affected by most creditors. The bankruptcy law provides such a list (11 U.S.C. §522(b)(1). however, it also allows each state to substitute its own list of exemptions.

37. Now let’s talk more about Trustees…. Now let’s talk more about Trustees…. ► Depending on the type of bankruptcy proceeding, a trustee may be appointed. The trustee is responsible for the safekeeping of the property of the estate. He or she must make sure that the bankruptcy estate is not unnecessarily depleted during the bankruptcy proceedings. ► The powers of the trustee may include (1) collecting the property of the debtor, (2) examining and determining the validity of any transfers made by the debtor immediately before the bankruptcy was filed, (3) checking into the validity of any sales the debtor may have made to ensure that no fraudulent conveyances were made, (4) checking the validity of the creditors' claims, and (5) making sure that all assets have been accounted for and that all claims have been identified.

38. Who can tell me what Solutions are provided by Bankruptcy?? (this is what your paper is about this week!!) ► There are two basic solutions provided to debtors who file for bankruptcy. One is to liquidate the debtor's assets and pay the creditors. This usually occurs when the debtor is having drastic financial problems and will never be able to fully pay all outstanding debts. This is commonly referred to as liquidation or a Chapter 7 proceeding. ► The other solution offered by bankruptcy is to delay and/or reduce the amount of the debtor's debt. This approach does not require the debtor to liquidate all assets. Instead, the debtor is permitted to retain the assets under an approved reorganization plan. This type of bankruptcy proceeding is often referred to as reorganization, a Chapter 11, or a Chapter 13 proceeding.