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Assets

Things of value belonging to a debtor

Automatic stay

Upon filing of a petition all legal actions against or involving debtor, including debt collection and lawsuits to which a debtor is a party, arre stayed until court allows them to proceed

Bankruptcy

Financial situation in which one is unable to pay one's debts as they come due

Chapter 7

Section of Bankruptcy law that allows individual and business debtors to have assets liquidated and debts discharged.

Chapter 11

Section of Bankruptcy law that allows businesses to reorganize, continue functioning and pay creditors equitably according to a court-approved plan

Chapter 13

Section of Bankruptcy law that allows an individual with regualar income to work out a plan to settle debts and pay creditors equitably according to a court approved plan

Creditor's meeting

Post-filing procedure conducted by Trustee to allow creditors to examine debtor as to ability to pay

Creditor

Person or entity to whom debt is owed

Debtor in Possession

In Chapter 11 and 13, debtor who continues to operate and remains in possession of assets that would be liquidated under Chapter 7

Debtor's prison

Imprisonment of persons with unpaid debts. Eliminated in the US in 1833

Debtor

Person filing for Bankruptcy

Discharge

Conclusion of the Bankruptcy case: all debts that can be eliminated by the bankruptcy court are eliminated or reoganization plan is completed.

Exempt Assets

Assets which are exempt from the creditors' claims, such as secured assets the value of which does not exceed the amount of debt secured by them

Liabilities

Obligations of a debtor

Liquidation

Process by which non-exepmt assets are sold and assets are distributed equitably among creditors

Non-dischargable claims

Claims which may not be discharged in bankruptcy. Includes claims for money obtained by fraud, spousal and child support, student loans and damaged caused by a drunk driver.

Petition

Initial document filed by debtor that starts bankruptcy proceedings

Preferential transfer

Any payment to a creditor within 90 days prior to bankruptcy filing; may be set aside by Trustee

Priority unsecured claims

Claims which take priority over any others. Includes child support, unpaid taxes and unpaid wages.

Reaffirmation

Agreement between debtor and creditor to reaffirm a debt claimed in bankruptcy. Must be approved by court

Reorganization

A plan under Chapter 11 or 13 to allow a debtor to continue to function while paying off existing creditors on an equitable basis

Secured creditor

Creditor whose claim is supported by collateral, such as a lender on a mortgage

Trustee

Officer of bankruptcy court charged with managing bankruptcy cases

Unsecured creditor

Creditor whose claim is not supported by collateral, such as a credit card.

US District Court

Federal court having jurisdiction over all bankruptcy cases

Abandonment

Formal process of removing assets from the bankruptcy estate so they are no longer available for liquidation

Adversary proceeding

A lawsuit arising in or related to a bankruptcy case, started by filing a complaint in bankruptcy court

Avoidance Power

Power of Trustee to avoid (set aside) preferential transfers and recover asset transferred for benifit of estate

Bankruptcy Code

Informal name for Title 11 of the United States Code (11 USC secs 101-1330)

Bankruptcy Court

The bankruptcy judges in regular active service in each federal judicial district; a division of the federal district court

Bankruptcy Estate

All legal or equitable interests of the debtor in property at the time of the bankruptcy filing, including property owned or held by another person, in which the debtor has an interest

Claim

A creditor's assertion of the right to payment from the bankruptcy estate

Confirmation

Official court approval of a plan under Chapter 11 or 13

Consumer Debtor

A debtor whose debts are primarily consumer debts

Contested Matter

A disputed matter, other than an objection to a claim, that must be resolved by the court but does not arise to the level of an adversary proceeding

Contingent Claim

A claim that may be owed by the debtor under certain circumstances yet to occur (e.g., the debtor is a guarantor on another person's promissory note)

Conversion

Debtor in Chapter 11 or 13 reorganization may voluntary convert to a Chapter 7 liquidation

Cramdown

Process by which bankruptcy court imposes a plan for reorganization over the objections of one or more creditors

Creditor

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

Debtor in possession

In Chapter 11, debtor who remains in business and acts as his own trustee

Executory Contract

a contract in which one or more promises remain to be performed

Fraudulent Conveyance

Transaction by debtor within one year before filing petition in which debtor's actual intent is to defraud creditors or in which the debtor did not receive reasonably equivalent value in transaction

Individual

A natural person. Only "individuals" qualify to file under Chapter 13

Insider

A person with sufficiently close relationship with the debtor that he or she is not dealing at arms length with debtor

Liquidation

Primarily in Chapter 7, process by which debtor's assets are sold and cash distributed among creditors

Means test

In Chapter 7, determination by trustee that the presumption of abuse does not arise because the debtor cannot in fact meet debts as they come due or the debtor's liabilities substaintially exceed debtor's assets

Office of US Trustee

Part of bankruptcy court, responsible in general for overseeing all bankruptcy proceedings for court

Official Creditors Committee

In Chapter 11, US Trustee may appoint a committee of the 7 largest unsecured creditors to monitor actions of the Debtor in Possession

Ordinary Course of business

The way in which others in the same business as the debtor conduct business

Person

In Chapter 7 and 11, any individual as well as any entity recognized as an "artificial person" in the law may file Petition

Rule 2004 Examination

Expanded form of deposition in which creditor(s) may throughly examine debtor, insiders or other creditors

Serial Filer

An individual who files a second bankruptcy case within six months of dismissal of an original case if first case was dismissed voluntarily by debtor or because debtor failed to follow court orders or prosecute the case

Dismissal

Debtor's petition is dismissed not discharged; debtor is returned to same position as before filing.

Examiner

In chapter 11, where no trustee is appointed, may be appointed by the court to investigate debtor's financial affairs

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