Personal bankruptcy Lingo and Phrases Dictionary

Bankruptcy proceedings always tend to be full of a quite a lot of bankruptcy terms. It can be complicated to figure out what precisely is happening because you dont recognize all of the bankruptcy vocabulary being used. Heres a bankruptcy dictionary that can assist you know bankruptcy terms so you can follow the proceedings.

Adversary Proceeding

A legal case that comes in or based on a bankruptcy case that is commenced by filing a complaint with the court.

Assume

Any agreement to keep performing duties under a contract or lease.

Automatic Stay

An injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the instant a bankruptcy petition is registered.

Bankruptcy

A lawful approach to handling debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title 11 of the United States Code (the Bankruptcy Code).

Bankruptcy Code

The informal term for title 11 of the United States Code, the federal government bankruptcy law.

Bankruptcy Court

The bankruptcy judges in regular active service in each district; a unit of the district court.

Bankruptcy Estate

All legal or equitable interests of the debtor in property at the time of the bankruptcy filing. (The estate includes all property where the debtor has an interest, even if it is owned or held by another person.)

Bankruptcy Judge

A judicial officer of the United States district court who is the court official with decision-making authority over federal bankruptcy cases.

Bankruptcy Petition

The document filed by the debtor (in a voluntary case) or by creditors (in an involuntary case) during whichopens the bankruptcy case. (You'll findofficial forms for bankruptcy petitions.)

Chapter 7

The chapter of the Bankruptcy Code providing for "liquidation,"(i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors.)

Chapter 9

The chapter of the Bankruptcy Code providing for reorganization of municipalities (which coverscities and towns, together with villages, counties, taxing districts, municipal utilities, and school districts).

Chapter 11

The chapter of the Bankruptcy Code providing for reorganization, often regarding a corporation or partnership. (A chapter 11 debtor frequently proposes a plan of reorganization to keep its business existing and pay creditors with time. People in business or individuals can also seek relief in chapter 11.)

Chapter 13

The chapter of the Bankruptcy Code providing for modification of debts of an individual with regular income. (Chapter 13 lets a debtor to keep property and pay debts over time, usually three to five years.)

Chapter 15

The chapter of the Bankruptcy Code dealing with cases of cross-border insolvency.

Claim

A creditor's assertion of a right to payment from the debtor or the debtor's property.

Confirmation

Bankruptcy judges's endorsement of a plan of restructuring or liquidation in chapter 11, or payment plan in chapter 12 or 13.

Consumer Debtor

A debtor whose debts are principally consumer debts.

Consumer Debts

Debts acquired for private, as opposed to business, needs.

Contested Matter

Those matters, other than objections to claims, that are debated but are not within the designation of adversary proceeding contained in Rule 7001.

Contingent Claim

A claim that could be owed by the debtor under certain occasions, e.g., where the debtor is a cosigner on another person's loan and that person fails to pay.

Creditor

One to whom the debtor owes money or who claims to be owed money by the debtor.

Credit Counseling

Regularly pertains to two events in individual bankruptcy cases: (1) the "individual or group briefing" from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing under any chapter of the Bankruptcy Code; and (2) the "instructional course in personal financial management" in chapters 7 and 13 that an individual debtor must complete before a discharge is entered. There are exclusions to both requirements for certain categories of debtors, exigent situations, or if the U.S. trustee or bankruptcy administrator have established that there are insufficient approved credit counseling agencies available to provide the required counseling.

Creditors' Meeting

see 341 meeting

Current Monthly Income

The average monthly income acquired by the debtor over the six calendar months before commencement of the bankruptcy case, including regular contributions to household expenses from nondebtors and income from the debtor's spouse if the petition is a joint petition, but not including social security income and certain other payments made because the debtor is the victim of certain crimes.

Debtor

A person who has filed a petition for relief under the Bankruptcy Code.

Defendant

An individual (or business) against whom a lawsuit is filed.

Discharge

A release of a debtor from personal liability for certain dischargeable debts set forth in the Bankruptcy Code. (A discharge releases a debtor from personal liability for certain debts known as dischargeable debts and prevents the creditors owed those debts from taking any action against the debtor to collect the debts. The discharge also prevents creditors from speaking with the debtor related to the debt, such as telephone calls, letters, and personal contact.)

Dischargeable Debt

A debt for which the Bankruptcy Code allows the debtor's personal legal responsibility to be removed.

Disclosure Statement

A written document prepared by the chapter 11 debtor or other plan proponent that is designed to provide "adequate information" to creditors to permit them to evaluate the chapter 11 plan of restructuring.

Equity

The value of a debtor's interest in property that remains after liens and other creditors' interests are considered.

executory contract or lease

In general consists of contracts or leases under which both parties to the agreement have duties remaining to be performed. (If a contract or lease is executory, a debtor may assume it or reject it.)

Exemptions, Exempt property

Certain property owned by an individual debtor that the Bankruptcy Code or applicable state law permits the debtor to keep from unsecured creditors. For example, in some states the debtor may be able to exempt all or a portion of the equity in the debtor's primary residence (homestead exemption), or some or all "tools of the trade" used by the debtor to make a living (i.e., auto tools for an auto mechanic or dental tools for a dentist). The availability and amount of property the debtor may exempt depends on the state the debtor lives in.

Joint Administration

A court-approved process under which two or more cases can be conducted together. (Assuming no conflicts of interest, these separate businesses or individuals can pool their resources, hire the same professionals, etc.)

Joint Petition

One bankruptcy petition filed by a husband and wife together.

Lien

The right to take and hold or sell the property of a debtor as security or payment for a debt or duty.

Liquidation

A sale of a debtor's property with the funds to be used for the benefit of creditors.

Liquidated Claim

A creditor's claim for a fixed quantity of money.

means test

Section 707(b)(2) of the Bankruptcy Code applies a "means test" to determine whether an individual debtor's chapter 7 filing is presumed to be an abuse of the Bankruptcy Code necessitating dismissal or conversion of the case (generally to chapter 13).

Motion to Lift the Automatic Stay

A bid by a creditor to allow the creditor to take action against the debtor or the debtor's property that would in any other case be prohibited by the automatic stay.

No-asset Case

A chapter 7 case where there are no assets available to satisfy any portion of the creditors' unsecured claims.

Non-dischargeable Debt

A debt that can not be eliminated in bankruptcy. Examples include a home mortgage, debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime. A number of debts, such as debts for money or property obtained by false pretenses and debts for fraud or defalcation while acting in a fiduciary capacity may be declared non-dischargeable only if a creditor timely files and prevails in a non-dischargeability action.

Objection to Dischargeability

A trustee's or creditor's objection to the debtor being free from personal liability for certain dischargeable debts. Frequent explanations include allegations that the debt to be discharged was incurred by false pretenses or that debt arose because of the debtor's fraud while acting as a fiduciary.

Objection to Exemptions

A trustee's or creditor's objection to the debtor's effort to claim certain property as exempt from liquidation by the trustee to creditors.

party in interest

A party who has standing to be heard by the court in a matter to be decided in the bankruptcy case. The debtor, the U.S. trustee or bankruptcy administrator, the case trustee and creditors are parties in interest for most matters.

Petition Preparer

A business not allowed to practice law that prepares bankruptcy petitions.

Plan

A debtor's complete depiction of how the debtor provides to pay creditors' claims over a fixed period of time.

Plaintiff

A person or business that files a formal complaint with the court.

Postpetition Transfer

A transfer of the debtor's property made after the initiation of the case.

Prebankruptcy Planning

The arrangement (or rearrangement) of a debtor's property to help the debtor to take optimum advantage of exemptions. (Prebankruptcy planning typically includes converting nonexempt assets into exempt assets.)

Preference or Preferential debt payment

A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy (or within one year if the creditor was an insider) that gives the creditor more than the creditor would receive in the debtor's chapter 7 case.

Presumption of abuse

see means test

Priority

The Bankruptcy Code's statutory ranking of unsecured claims that establishes the order by which unsecured claims will be paid if there is not sufficient money to pay all unsecured claims completely. As an example, under the Bankruptcy Code's priority scheme, money owed to the case trustee or for prepetition alimony and/or child support must be paid in full before any general unsecured debt (i.e. trade debt or credit card debt) is paid.

Priority Claim

An unsecured claim that is entitled to be paid ahead of other unsecured claims that are not entitled to priority status. Priority refers to the order wherein these unsecured claims are to be paid.

Proof of Claim

A written statement and verifying documentation filed by a creditor that describes the reason the debtor owes the creditor money. (There is an official form for this purpose.)

Property of the Estate

All legal or equitable interests of the debtor in property as of the commencement of the case.

Reaffirmation Agreement

An agreement by a chapter 7 debtor to continue paying a dischargeable debt (such as an auto loan) after the bankruptcy, commonly for the purpose of keeping collateral (i.e. the car) that would otherwise be subject to repossession.

schedules

Detailed lists filed by the debtor along with (or shortly after filing) the petition showing the debtor's assets, liabilities, and other financial information. (There are official forms a debtor must use.)

Secured Creditor

A creditor holding a claim against the debtor who has the right to take and hold or sell certain property of the debtor in fulfillment of some or all of the claim.

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.

Small Business Case

A particular type of chapter 11 case in which there is no creditors' committee (or the creditors' committee is deemed inactive by the court) and in which the debtor is subject to more oversight by the U.S. trustee than other chapter 11 debtors. The Bankruptcy Code carries certain provisions designed to lower the time a small business debtor is in bankruptcy.

Statement of Financial Affairs

A series of questions the debtor must answer in writing relating to sources of income, transfers of property, lawsuits by creditors, etc. (There does exist an official form a debtor must use.)

Statement of Intention

A declaration made by a chapter 7 debtor involving plans for dealing with consumer debts that are secured by property of the estate.

Substantive Consolidation

Putting the assets and liabilities of two or more related debtors into a single pool to pay creditors. (Courts are reluctant to allow substantive consolidation since the action must not only justify the benefit that one set of creditors receives, but also the harm that other creditors suffer as a result.)

341 meeting

The meeting of creditors mandatory by section 341 of the Bankruptcy Code at which the debtor is quizzed under oath by creditors, a trustee, examiner, or the U.S. trustee about his/her monetary affairs. Also called creditors' meeting.

Transfer

Any method or means by which a debtor disposes of or parts with his/her property.

Trustee

The representative of the bankruptcy estate who exercises statutory powers, mostly for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the U.S. trustee or bankruptcy administrator. The trustee is a private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases and some chapter 11 cases. The trustee's responsibilities include reviewing the debtor's petition and schedules and bringing actions against creditors or the debtor to recover property of the bankruptcy estate. In chapter 7, the trustee liquidates property of the estate, and makes distributions to creditors. Trustees in chapter 12 and 13 have similar duties to a chapter 7 trustee and the additional responsibilities of overseeing the debtor's plan, receiving payments from debtors, and disbursing plan payments to creditors.

undersecured claim

A debt secured by property that is worth less than the full amount of the debt.

Unliquidated Claim

A claim for which a specific value hasn't been established.

Unscheduled Debt

A debt that ought to have been listed by the debtor in the schedules filed with the court but in fact was not. (Depending on the circumstances, an unscheduled debt may or may not be discharged.)

Unsecured Claim

A claim or debt for which a creditor holds no special promise of payment, as in a mortgage or lien; a debt for which credit was extended based solely upon the creditor's investigation of the debtor's future capacity to pay.

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