Brock & Stout
Common Bankruptcy Terms
The first meeting of the creditors, debtor is required to attend. The debtor will be questioned under oath by a trustee and/or creditors, if the creditors choose to attend.
Relief created to protect the value of a secured creditor’s lien so it does not depreciate during the debtor’s bankruptcy filing.
A lawsuit filed in the bankruptcy court in relation to the debtor’s bankruptcy case. This is a complaint which can be filed by the bankruptcy trustee, by the debtor if a creditor violates the bankruptcy automatic stay, or by other parties..
Any item of value owned by the debtor – any form of property including intangible things such as stock options or the right to sue anyone.
An agreement to maintain your current obligation under a lease or contract.
The injunction (provision) issued automatically when you file a bankruptcy case which stops all collection actions against the debtor, the debtor’s property, or the property of the estate. This includes all lawsuits, garnishments, foreclosure, and repossessions.
The bankruptcy court has the authority to invalidate certain transactions and obligations made prior to the debtor filing for bankruptcy.
A legal procedure declared by an individual saying they no longer have the ability to pay creditors; specifically, a case filed under one of the chapters of Title 11 of the United States Code, (the Bankruptcy Code).
The name given for Title 11 of the United States Code, the federal bankruptcy laws.
A division of the United States District Court (federal court) where bankruptcy cases are reviewed and litigated under the U.S. Bankruptcy Code.
All property the debtor has an interest in; said property is subject to authority of the bankruptcy court.
A judicial officer of the United States district court with decision-making power over federal bankruptcy cases, appointed by the majority of judges of the United States court of appeals for a 14 year term.
Legal documents that must be filed with the court for a bankruptcy case to officially begin.
An individual appointed by the U. S. Department of Justice in a bankruptcy case to represent the interests of the bankruptcy estate and the debtor’s creditors.
The most common type of personal bankruptcy that sets forth provisions relating to liquidation of a debtor’s non-exempt assets to help pay off debts..
Chapter 7 Trustee
The person appointed to represent the interests of the bankruptcy estate and the unsecured creditors in a Chapter 7 bankruptcy case, whose responsibilities include reviewing the debtor’s bankruptcy petition and schedules, liquidating the non-exempt property of the estate, and distributing the proceeds to creditors in accordance with set priorities.
A type of personal bankruptcy often referred to as “reorganization of debts” where the debtors work with the bankruptcy court to establish a repayment plan of some or all of the debts over a three to five year period to eliminate their obligations to creditors.
Chapter 13 Trustee
The person appointed to represent the interests of the bankruptcy estate and creditors in a Chapter 13 bankruptcy case, whose responsibilities include reviewing the debtor’s bankruptcy petition and schedules, overseeing the debtor’s plan, receiving payments from debtors, and disbursing plan payments to creditors.
A creditor’s assertion of a right to payment from a debtor or debtor’s property whether or not secured, unsecured, contingent, liquidated, disputed, equitable, or matured.
A term that means the original creditor does not expect to collect on the debt. However, this does not mean the debt cannot be legally enforced.
An asset given as security for a loan, to ensure repayment.
The bankruptcy court’s final approval for a plan of reorganization or sale of assets by a bankruptcy judge.
A dispute among parties involved in the bankruptcy case resulting in filing a motion with the bankruptcy court.
A claim that might be owed by the debtor under certain circumstances, such as, where the debtor is a cosigner on someone else’s loan and that person fails to pay.
Changing from one chapter in bankruptcy to another after the case has already been filed; for example, a Chapter 13 case can be converted to a Chapter 7 case if the debtor is eligible for a Chapter 7. The case would remain the same as originally filed, even though the chapter of the Code which governs it changes.
Cramdown allows the bankruptcy courts to modify loan terms based on certain conditions in an attempt to have all parties come out better than they would without such changes being made.
Someone a debtor owes money to.
Someone who has filed a petition for relief under the bankruptcy laws; someone who owes money to a creditor.
The legal elimination of debt through a bankruptcy case, meaning it relieves the debtor from personal liability and prevents the creditors who are owed for those debts from taking any action against the debtor or debtor’s property to collect the debts. Creditors are prohibited from communicating with the debtor regarding the discharged debt, letters, phone calls and any personal contact.
Debts where the Bankruptcy Code allows the debtor to no longer be personally liable for the debt.
The termination of a bankruptcy case, without a discharge or denial of discharge. The creditors and debtor have the same rights as they had prior to the bankruptcy filing once the case is dismissed, i.e., the creditors can resume all collection efforts against debtor.
An assets value after all liens and creditors’ interests are considered. (Example: If a house is valued at $75,000 and has a $50,000 mortgage, there is $25,000 equity in the home.)
Executor Contract or Lease
Leases or contracts where both parties of the agreement have duties remaining to be performed. If a contract or lease is executor, a debtor may assume or reject it.
Any assets the bankruptcy court cannot liquidate and is free from any liability to satisfy a judgment. Exempt property is removed from the bankruptcy estate and cannot be used to pay the claims of creditors.
Property that the Bankruptcy Code and state laws permit the debtor to keep from creditors
A casual term used to describe the characterization of a debtor’s status after bankruptcy, as in free from debt – starting over.
(Mortgage Foreclosure) When the owner of a house fails to meet the terms of the mortgage agreement, the bank or mortgage company can reclaim ownership of the property.
When a debtor owes a creditor money, and a portion of the debtor’s pay is ordered to be given to the creditor to cover the debt owed.
An interest or claim on personal property that secures payment of a debt.
The act of converting a debtor’s property to cash with the proceeds used for the benefit creditors..
A mailing list of a debtor’s creditors.
A method used to determine who is eligible for protection under Chapter 7 of the U.S. Bankruptcy Code, based on disposable income available, unsecured debts owed and median income comparisons.
Motion to Lift the Automatic Stay
When a creditor requests permission to take action against the debtor or debtor’s property that otherwise would be prohibited by the automatic stay.
A Chapter 7 bankruptcy case where there are no assets that can be liquidated to satisfy any portion of the creditors’ unsecured claims.
Debt that legally cannot be eliminated in bankruptcy.
Detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time.
An unsecured claim that is entitled to be paid before any other unsecured claims that are not entitled to priority status. Priority refers to the order the unsecured claims are to be paid. Certain unsecured debts hold priority over others, such as child support and taxes.
Proof of Claim
A form filed with the bankruptcy court by creditors that lists out its claims against the debtor that is filing for bankruptcy.
An agreement made by a debtor in a Chapter 7 bankruptcy case to keep paying a dischargeable debt after the bankruptcy for the purpose of keeping collateral, such as a vehicle, that would otherwise be subject to repossession.
When a creditor reclaims ownership of property if payments are not made on time.
Documents that are filed with the court along with the petition that show the debtor’s assets, liabilities, and income.
Someone who holds a claim against the debtor who has the right to take and either hold or sell the property of the estate for satisfaction of a portion or the entire claim.
Debt that is backed by collateral, mortgage or lien, such as vehicle loans, home mortgages and tax liens where the creditor has the right to pursue said property upon default.
Statement of Financial Affairs
An official form containing a series of questions that the debtor is required to answer regarding transfers of property, lawsuits by creditors and income.
The person appointed to represent the interests of the bankruptcy estate and creditors in a bankruptcy case who is under the general supervision of the court and the direct supervision of the United States trustee or Bankruptcy Administrator.
United States Trustee
An officer of the U.S. Department of Justice who is responsible for supervising the administration of bankruptcy cases. The U.S. trustee appoints committees, trustees and examiners as well as other statutory duties.
A claim for debt where there is no collateral that is security for the debt.
Creditors that do not hold any type of collateral or lien on the property of the debtor, where the credit was given based upon the creditor’s assessment of the debtor’s ability to pay.
Debt that is not backed by any type of collateral or lien.
A transfer of a debtor’s property in which the debtor gives consent.