Question

To protect the interests of secured creditors who have claims against a debtor who has filed for bankruptcy, a court may:

a. require payment to the extent that the "automatic stay" may cause the value of debtor's collateral to depreciate.

b. require additional collateral to the extent the automatic stay may cause the value of the original collateral to decline

c. both a and b

d. neither a nor b

Assume that P just received a discharge in bankruptcy even though several creditors hold judgments agains P over debts in default while other creditors had initiated lawsuits against P for debt default prior to the bankruptcy proceeding.

The effect of the bankruptcy discahrge will:

	a.	void any judgment against discharged debts
	b.	prevent the continuance of the lawsuit on any discharged debts
	c.	both a and b
	d.	neither a nor b

Answer 1

Answer: c i,e both a and b

Reason:

Section 361 of the Bankruptcy Code offers little guidance. It suggests that adequate protection may consist of:

1. Periodic Payments. Usually, the payment is cash or a cash equivalent. The payment(s), however, may be less than the full principal and interest required under the loan documents.
2. Additional or Replacement Liens. Giving of an additional or replacement lien to the extent necessary to compensate for a decrease in value of the secured creditors' interest in property. If the debtor's property is fully encumbered, the granting of an additional or replacement lien does not constitute adequate protection.
3. Indubitable Equivalent. This occurs when the creditor receives something of value which will allow it to realize the "indubitable equivalent" of its security interest. Courts sometimes find this form of adequate protection to exist when the value of the collateral exceeds the debt owed to the secured creditor. The larger the excess value or "equity cushion," the more likely a court is to find a secured creditor is adequately protected by its current over secured position. The Bankruptcy Code sets forth some limits as to what satisfies the "indubitable equivalent" standard. Under 11 U.S.C. § 361(3), an administrative expense priority would not qualify.

Answer: c both a and b

Reason : Debt discharged

• Pre-filing debt. A pre-petition debt is an obligation incurred before the day that you file for bankruptcy. At the end of your case, the bankruptcy court will discharge all qualifying pre-petition debt, such as credit card balances, personal loans, and medical debt.
• Post-filing debt. The bills that you rack up after submitting your initial bankruptcy paperwork are post-petition debt. In all bankruptcy types, you remain responsible for paying for balances that you incur after the initial filing date, even though your case isn’t over.