Bankruptcy Law, The Law of Debtors and Creditors Problem Set Answers, Warren Westbrook Sixth Edition - Problem Set 11

• Problem Set 11, p.228
  
  
• John Harry, §507(a)(4) the 4^th priority; limited to 180 days before the filing of petition or the cessation of the business which occurs earlier
• §507(a)(8)(C) social security is a governmental pension system, 16% of the payroll tax, of which the employer pays 8% and the employee pays 8%; for the self-employed business, pays 15%; here is the withhold by the employer for the employee, so use §507(a)(8)(C); §507(a)(8)(D) cover the employer’s part;
• property tax: §507(a)(8)(B) limited to one year; without penalty; the earlier two years than one year have only general claims

What is the meaning of “last payable”? Like the deadline for the individual income return is April 15 in the following year; so today, February 16, so the 2006 income tax is not last payable if you file a bankruptcy petition today.

4. down payment: §507(a)(7) deposit in connection with the purchase of property
5. IRS §507(a)(8)(A) three years
6. Utility following bankruptcy: this is a tricky question. The claims following bankruptcy are not allowable to the property of the estate

Should it be paid before the priority claims? No. the debtor can pay the utility by his wages after the filing, or by his exempt property. But notably the after-filing debt is not dischargeable, so utility companies can negotiate with the debtor for a higher price or something.

7. Attorney fee?

Under 330, the compensation of officers in the bankruptcy will get the priority in the distribution. But §330(a)(1) the list of the officers does not include the attorney, however, §330(a)(1)(A) does include the attorney. The Congress interprets it as a typo error, so the attorney cannot get the priority and can only be a general creditor. In response, the attorney usually requires to be paid in advance before rendering the service, because he cannot get the priority in the distribution.

Here the attorney fee is divided into the will service and filing service. It is a pitfall. There is no difference between these two debts, and both cannot get the priority.

8. The negotiable note held by his ex-wife: is it a domestic support obligation under§507(a)(1)(A)? It seems that, but it is not. The negotiable note is a dollar bill and does not rely on any substantial claims. So it is only a general claim.

§101(14A) definition of domestic support obligation

Although this negotiable note has no priority under §507(a)(1)(A), is it exempted from the discharge under §523(a)(5) or (15)? By the same token, I think it is not.

9. Trustee and his counsel: §507(a)(2)
10. insurance premium, §507(a)(2)
11. cost of sale, $2800; §507(a) (2); It also could be the secured creditors.
12. other claims: general claims; no priority.

Problem Sets: Table of Contents

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