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A
adversary proceeding
A lawsuit arising in or related to a
bankruptcy case that is commenced by filing a complaint with the court.
A nonexclusive list of adversary proceedings is set forth in Fed. R.
Bankr. P. 7001.
assume
An agreement to continue 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 moment a bankruptcy petition is filed.
B
bankruptcy
A legal procedure for dealing with 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 administrator
An officer of the judiciary serving in the
judicial districts of Alabama and North Carolina who, like the U.S.
trustee, is responsible for supervising the administration of bankruptcy
cases, estates, and trustees; monitoring plans and disclosure
statements; monitoring creditors' committees; monitoring fee
applications; and performing other statutory duties. Compare U.S.
trustee.
Bankruptcy Code
The informal name for title 11 of the United
States Code (11 U.S.C. §§ 101-1330), the federal 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 in which 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 power over
federal bankruptcy cases.
bankruptcy petition
The document filed by the debtor (in a
voluntary case) or by creditors (in an involuntary case) by which opens
the bankruptcy case. (There are official forms for bankruptcy
petitions.)
C
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 includes cities and towns,
as well as villages, counties, taxing districts, municipal utilities,
and school districts).
chapter 11
The chapter of the Bankruptcy Code providing
(generally) for reorganization, usually involving a corporation or
partnership. (A chapter 11 debtor usually proposes a plan of
reorganization to keep its business alive and pay creditors over time.
People in business or individuals can also seek relief in chapter 11.)
chapter 12
The chapter of the Bankruptcy Code providing
for adjustment of debts of a "family farmer," or a
"family fisherman" as those terms are defined in the
Bankruptcy Code.
chapter 13
The chapter of the Bankruptcy Code providing
for adjustment of debts of an individual with regular income. (Chapter
13 allows 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 approval of a plan of
reorganization or liquidation in chapter 11, or payment plan in chapter
12 or 13.
consumer debtor
A debtor whose debts are primarily consumer
debts.
consumer debts
Debts incurred for personal, as opposed to
business, needs.
contested matter
Those matters, other than objections to
claims, that are disputed but are not within the definition of adversary
proceeding contained in Rule 7001.
contingent claim
A claim that may be owed by the debtor under
certain circumstances, 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
Generally refers 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 exceptions to both
requirements for certain categories of debtors, exigent circumstances,
or if the U.S. trustee or bankruptcy administrator have determined that
there are insufficient approved credit counseling agencies available to
provide the necessary counseling.
creditors' meeting
see 341 meeting
current monthly income
The average monthly income received 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.
11 U.S.C. § 101(10A).
D
debtor
A person who has filed a petition for relief
under the Bankruptcy Code.
debtor education
see credit counseling
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 prohibits creditors from communicating with the
debtor regarding the debt, including telephone calls, letters, and
personal contact.)
dischargeable debt
A debt for which the Bankruptcy Code allows
the debtor's personal liability to be eliminated.
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 enable them to evaluate
the chapter 11 plan of reorganization.
E
equity
The value of a debtor's interest in property
that remains after liens and other creditors' interests are considered.
(Example: If a house valued at $100,000 is subject to a $80,000
mortgage, there is $20,000 of equity.)
executory contract or lease
Generally includes 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.
I
insider (of individual debtor)
Any relative of the debtor or of a general
partner of the debtor; partnership in which the debtor is a general
partner; general partner of the debtor; or a corporation of which the
debtor is a director, officer, or person in control.
insider (of corporate debtor)
A director, officer, or person in control of
the debtor; a partnership in which the debtor is a general partner; a
general partner of the debtor; or a relative of a general partner,
director, officer, or person in control of the debtor.
J
joint administration
A court-approved mechanism under which two
or more cases can be administered 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.
L
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
proceeds to be used for the benefit of creditors.
liquidated claim
A creditor's claim for a fixed amount of
money.
M
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 requiring dismissal or conversion of the case (generally to chapter
13). Abuse is presumed if the debtor's aggregate current monthly income
(see definition above) over 5 years, net of certain statutorily allowed
expenses is more than (i) $10,950, or (ii) 25% of the debtor's
nonpriority unsecured debt, as long as that amount is at least $6,575.
The debtor may rebut a presumption of abuse only by a showing of special
circumstances that justify additional expenses or adjustments of current
monthly income.
motion to lift the automatic stay
A request by a creditor to allow the
creditor to take action against the debtor or the debtor's property that
would otherwise be prohibited by the automatic stay.
N
no-asset case
A chapter 7 case where there are no assets available to satisfy any
portion of the creditors' unsecured claims.
nondischargeable debt
A debt that cannot 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. Some
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 nondischargeable only if a creditor timely files and
prevails in a nondischargeability action.
O
objection to dischargeability
A trustee's or creditor's objection to the
debtor being released from personal liability for certain dischargeable
debts. Common reasons 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 attempt to claim certain property as exempt from liquidation by
the trustee to creditors.
P
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 authorized to practice law
that prepares bankruptcy petitions.
plan
A debtor's detailed description of how the
debtor proposes 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 commencement of the case.
prebankruptcy planning
The arrangement (or rearrangement) of a
debtor's property to allow the debtor to take maximum 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 determines the order in which unsecured claims
will be paid if there is not enough money to pay all unsecured claims in
full. For 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 in which 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.
R
reaffirmation agreement
An agreement by a chapter 7 debtor to
continue paying a dischargeable debt (such as an auto loan) after the
bankruptcy, usually for the purpose of keeping collateral (i.e. the car)
that would otherwise be subject to repossession.
S
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 satisfaction 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 special 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 contains certain provisions designed to reduce the time
a small business debtor is in bankruptcy.
statement of financial affairs
A series of questions the debtor must answer
in writing concerning sources of income, transfers of property, lawsuits
by creditors, etc. (There is an official form a debtor must use.)
statement of intention
A declaration made by a chapter 7 debtor
concerning 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 required by section
341 of the Bankruptcy Code at which the debtor is questioned under oath
by creditors, a trustee, examiner, or the U.S. trustee about his/her
financial affairs. Also called creditors' meeting.
T
transfer
Any mode 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, principally 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.
U
U.S. trustee
An officer of the Justice Department
responsible for supervising the administration of bankruptcy cases,
estates, and trustees; monitoring plans and disclosure statements;
monitoring creditors' committees; monitoring fee applications; and
performing other statutory duties. Compare, bankruptcy administrator.
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 has not
been determined.
unscheduled debt
A debt that should have been listed by the
debtor in the schedules filed with the court but 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 assurance of payment, such as a mortgage or lien; a debt for
which credit was extended based solely upon the creditor's assessment of
the debtor's future ability to pay.
V
Voluntary transfer
A transfer of a debtor's property with the
debtor's consent.
Z
from http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Glossary.aspx
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