Bankruptcy Definitions

 

Adequate protection: “Such action as is judicially determined to protect a secured creditor’s interest in property that is part of a bankrupt estate.”

 

Adversary proceeding: “A lawsuit arising in or related to a bankruptcy case that begins by filing a complaint with the court, that is, a "trial" that takes place within the context of a bankruptcy case.”

 

Assets: “An asset is anything with a monetary value attached. Assets may be real or personal property, which may be used for payment of debts. Assets may also include intangibles, such as business good will, trademarks, and rights to market a product.”

 

Automatic stay: “An Automatic stay is a temporary measure that is put into place automatically once a petition for bankruptcy has been filed by an individual or a company.”

 

Avoidance: “The Bankruptcy Code permits the debtor to eliminate (avoid) some kinds of liens that interfere with (or impair) an exemption claimed in the bankruptcy.”

 

Bankruptcy Code: “The informal name for title 11 of the United States Code (11 U.S.C. §§ 101-1330), the federal bankruptcy law.”

 

Bankruptcy estate: “The estate of a debtor in bankruptcy that includes all the debtor’s legal and equitable interests in property as set out in the bankruptcy laws.”

 

Chapter 7: “The chapter of the Bankruptcy Code providing for "liquidation," that is, the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors. In order to be eligible for Chapter 7, the debtor must satisfy a "means test." The court will evaluate the debtor s income and expenses to determine if the debtor may proceed under Chapter 7.”

 

Chapter 11: “Law dealing with company bankruptcies: a section of the U.S. Federal Bankruptcy Code that allows an insolvent company to be reorganized, sometimes providing for repayment of debts or the creation of a new corporate entity.”

 

Chapter 12: “Chapter 12 was added to the Bankruptcy Code in 1986. It is designed specifically for the reorganization of family farms.”

 

Chapter 13: “Section of US bankruptcy code under which a debtor’s future earrnings are collected by a court appointed trustee (receiver)  and paid to unsecures creditors."

 

Charged Off: “A charge off is the term that creditors use when they determine that they are not able to collect a debt that is owed to them and they write that debt off as a loss against their income taxes.”

 

Consumer Debt: “Debt incurred by an individual primarily for a personal, family, or household purpose.” (11 USCS § 101)

 

Conversion: “Cases under the Code may be converted from one chapter to another chapter; for example, a Chapter 7 case may be converted to a case under Chapter 13 if the debtor is eligible for Chapter 13.  Even though the chapter of the Code which governs it changes, it remains the same case as originally filed.”

 

Creditor: “A person or organization which extends credit to others.”

 

Debtor: “One who owes a fixed sum of money to another; a person or entity filing, or becoming the subject of, a bankruptcy action?”

 

Debtor in Possession: “A debtor allowed by the bankruptcy court to continue operation of the business during the proceedings."

 

Denial of discharge: “Penalty for debtor misconduct with respect to the bankruptcy case or creditors as a whole. The grounds on which the debtor’s discharge may be denied are found in 11 U.S.C. 727.  When the debtor’s discharge is denied, the debts that could have been discharged in that case cannot be discharged in any subsequent bankruptcy.  The administration of the case, the liquidation of assets and the recovery of avoidable transfers, continues for the benefit of creditors.”

 

Discharge: “A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts.”

 

Dischargeable: “Debts that can be eliminated in bankruptcy.  Certain debts are not dischargeable; that it, they may not be discharged through bankruptcy or may only be discharged through Chapter 13. Family support and criminal restitution are examples of debts which cannot be discharged. Debts incurred by fraud can only be discharged in Chapter 13.”

 

Dismissal: “The termination of a legal proceeding by the judge, before a trial or hearing, typically on the grant of a motion to dismiss by the adverse party, or because the claimant failed to proceed with the action or comply with an order of the court, or because the claimant has agreed to end the proceeding.”

 

Exempt: “Property that is exempt is removed from the bankruptcy estate and is not available to pay the claims of creditors.  The debtor selects the property to be exempted from the statutory lists of exemptions available under the law of his state.  The debtor gets to keep exempt property for use in making a fresh start after bankruptcy.”

 

Exemptions: “Exemptions are the lists of the kinds and values of property that is legally beyond the reach of creditors or the bankruptcy trustee.  The debtor in bankruptcy keeps the exempt property. What property may be exempted is determined by state and federal statutes, and varies from state to state.”

 

Lien: “Legal claim on somebody’s property: the legal right to keep or sell somebody else’s property as security for a debt.”

 

Means Test: “Examination of somebody’s income: an examination of somebody’s income and savings, carried out in order to determine whether the criteria for a type of assistance or financial aid are met.”

 

Meeting of creditors: “The debtor must appear at a meeting with the trustee to be examined under oath about assets and liabilities.  Creditors are invited but seldom attend.  The meeting is sometimes called the 341 meeting, after the section of the Bankruptcy Code that requires it.”.

 

Non dischargeable: “Non-dischargeable debt is an amount owed to a creditor which cannot be released even through bankruptcy. Bankruptcy cannot eliminate a non-dischargeable debt. Federal taxes, alimony or spousal maintenance, child support, and debts incurred due to drunken driving violations are examples of non-dischargeable debts.”

 

Perfection:  “When a secured creditor has taken the required steps to perfect his lien, the lien is senior to any liens that arise after perfection.  A mortgage is perfected by recording it with the county recorder;  a lien in personal property is perfected by filing a financing statement with the secretary of state.  An unperfected lien is valid between the debtor and the secured creditor, but may be behind liens created later in time, but perfected earlier than the lien in question.”

 

Personal property: “Tangible property other than land: in law, somebody’s tangible movable property, exclusive of land and including items such as automotive vehicles, boats, and money.”

 

Petition:  “The document that initiates a bankruptcy case. The filing of the petition constitutes an order for relief and institutes the automatic stay.   Events are frequently described as "prepetition", happening before the bankruptcy petition was filed, and "post petition", after the bankruptcy was initiated.”

 

Priority:  “The Bankruptcy Code establishes the order in which claims are paid from the bankruptcy estate.  All claims in a higher priority must be paid in full before claims with a lower priority receive anything.  All claims with the same priority share pro rata.  Claims are paid in this order:  1) costs of administration 2) priority claims and 3) general unsecured claims.  Secured claims are paid from the proceeds of liquidating the collateral which secured the claim."

 

Priority claims:  ”Certain debts, such as unpaid wages, spousal or child support, and taxes are elevated in the payment hierarchy under the Code. Priority claims must be paid in full before general unsecured claims are paid. “

 

Proof of claim:  “A proof of claim is an official bankruptcy form that shows the money owed by the debtor to a creditor and the reason for the debt. It is one of the main steps in a Chapter 7 or Chapter 13 bankruptcy case.”

 

Property of the estate: “The property that is not exempt and belongs to the bankruptcy estate.  Property of the estate is usually sold by the trustee and the claims of creditors paid from the proceeds. “

 

Reaffirm:  “The debtor can chose to waive the discharge as to a debt that is reaffirmed. Generally, the parties to the reaffirmed debt have the same rights and liabilities that each had prior to the bankruptcy filing: the debtor is obligated to pay and the creditor can sue or repossess if the debtor doesn’t pay. “

 

Relief from stay:  “Motion for Relief from Stay and Abandonment is one filed under the Bankruptcy code for conditioning, modifying or dissolving the automatic stay imposed by § 362 of the Bankruptcy Code and for abandonment of property under § 554 of the Bankruptcy Code. The automatic stay prevents secured creditors from enforcing their lien rights.”

 

Schedules:  “A formal list, table, catalog, inventory, or list of assets and liabilities”

 

Secured debt: “Debt backed by a mortgage, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default. Examples include home mortgages, auto loans and tax liens.”

 

Trustee: "The trustee is a representative of both the debtor and the creditors. "In order to liquidate the bankrupt’s property…., the trustee must take control of it. At this stage the trustee is the bankrupt’s successor or, in a broad sense, his or her representative."

 

Unsecured: “Not guaranteed or protected as to payment, performance, or satisfaction by a security interest or by property given or pledged as security.”

Leave a Reply

Privacy Policy