adversary proceeding A lawsuit arising in or related to a bankruptcy
case that is commenced by filing a complaint with the court.
assume An agreement to continue performing duties under a contract
automatic stay An injunction that automatically stops lawsuits,
foreclosure, garnishments, and all collection activity against the debtor
the moment a bankruptcy petition is filed.
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 United
States 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.
Bankruptcy Code The informal name for title 11 of the United
States Code (11 U.S.C. §§ 101 - 1330), the federal bankruptcy
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 mill A business not authorized to practice law that
provides bankruptcy counseling and prepares bankruptcy petitions.
bankruptcy petition A formal request for the protection of the
federal bankruptcy laws. (There is an official form for bankruptcy petitions.)
bankruptcy trustee A private individual or corporation appointed
in all chapter 7, chapter 12, and chapter 13 cases to represent the interests
of the bankruptcy estate and the debtor's creditors.
business bankruptcy A bankruptcy case in which the debtor is
a business or an individual involved in business and the debts are for
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 7 trustee A person appointed in a chapter 7 case to represent
the interests of the bankruptcy estate and the unsecured creditors. (The
trustee's responsibilities include reviewing the debtor's petition and
schedules, liquidating the property of the estate, and making distributions
to creditors. The trustee may also bring actions against creditors or the
debtor to recover property of the bankruptcy estate.)
chapter 11 A reorganization bankruptcy, 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," as that term is defined in the 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 13 trustee A person appointed to administer a chapter
13 case. (A chapter 13 trustee's responsibilities are similar to those
of a chapter 7 trustee; however, a chapter 13 trustee has the additional
responsibilities of overseeing the debtor's plan, receiving payments from
debtors, and disbursing plan payments to creditors.)
claim A creditor's assertion of a right to payment from a debtor
or the debtor's property.
complaint The first or initiatory document in a lawsuit that
notifies the court and the defendant of the grounds claimed by the plaintiff
for an award of money or other relief against the defendant.
confirmation Approval of a plan of reorganization by a bankruptcy
consumer bankruptcy A bankruptcy case filed to reduce or eliminate
debts that are primarily consumer debts.
consumer debts Debts incurred for personal, as opposed to business,
contingent claim A claim that may be owed by the debtor under
certain circumstances, for example, where the debtor is a cosigner on another
person's loan and that person fails to pay.
creditor A person to whom or business to which the debtor owes
money or that claims to be owed money by the debtor.
debtor A person who has filed a petition for relief under the
defendant An individual (or business) against whom a lawsuit
discharge A release of a debtor from personal liability for certain
dischargeable debts. (A discharge releases a debtor from personal liability
for certain debts known as dischargeable debts (defined below) and prevents
the creditors owed those debts from taking any action against the debtor
or the debtor's property 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
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 $60,000 is subject to a $30,000 mortgage, there is $30,000
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
exempt A description of any property that a debtor may prevent
creditors from recovering.
exemption Property that the Bankruptcy Code or applicable state
law permits a debtor to keep from creditors.
exempt property Property or value in property that a debtor is
allowed to retain, free from the claims of creditors who do not have liens.
face sheet filing A bankruptcy case filed either without schedules
or with incomplete schedules listing few creditors and debts. (Face sheet
filings are often made for the purpose of delaying an eviction or foreclosure.)
family farmer An individual, individual and spouse, corporation,
or partnership engaged in a farming operation who meet certain debt limits
and other statutory criteria for filing a petition under chapter 12.
fraudulent transfer A transfer of a debtor's property made with
intent to defraud or for which the debtor receives less than the transferred
fresh start The characterization of a debtor's status after bankruptcy,
i.e., free of most debts. (Giving debtors a fresh start is one purpose
of the Bankruptcy Code.)
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 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.
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
lien A charge upon specific property designed to secure payment
of a debt or performance of an obligation.
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.
motion to lift the automatic stay A request by a creditor to
allow the creditor to take an action against a debtor or the debtor's property
that would otherwise 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.
nondischargeable debt A debt that cannot be eliminated in bankruptcy.
objection to discharge A trustee's or creditor's objection to
the debtor's being released from personal liability for certain dischargeable
objection to exemptions A trustee's or creditor's objection to
a debtor's attempt to claim certain property as exempt, i.e., not
liable for any prepetition debt of the debtor.
party in interest A party who is actually and substantially interested
in the subject matter, as distinguished from one who has only a nominal
on technical interest in it.
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 a 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.)
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.
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.
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
proof of claim A written statement, filed by a creditor, describing
the reason a 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 after the bankruptcy, usually for
the purpose of keeping collateral or mortgaged property that would otherwise
be subject to repossession.
secured creditor An individual or business holding a claim against
the debtor that is secured by a lien on property of the estate or that
is subject to a right of setoff.
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.
schedules Lists submitted by the debtor along with the petition
(or shortly thereafter) showing the debtor's assets, liabilities, and other
financial information. (There are official forms a debtor must use.)
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.
substantial abuse The characterization of a bankruptcy case filed
by an individual whose debts are primarily consumer debts where the court
finds that the granting of relief would be an abuse of chapter 7 because,
for example, the debtor can pay its debts.
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 A meeting of creditors at which the debtor is questioned
under oath by creditors, a trustee, examiner, or the United States trustee
about his/her financial affairs.
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 United States trustee or Bankruptcy Administrator.
typing service A business not authorized to practice law that
prepares bankruptcy petitions.
United States 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.
undersecured claim A debt secured by property that is worth less
than the amount of the debt.
unlawful detainer action A lawsuit brought by a landlord against
a tenant to evict the tenant from rental property--usually for nonpayment
unliquidated claim A claim for which a specific value has not
unscheduled debt A debt that should have been listed by a 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.
voluntary transfer A transfer of a debtor's property with the