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54 terms

Bankruptcy

STUDY
PLAY
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