Bankruptcy Information
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Bankruptcy- Bankruptcy Terminology, 45 Terms to Know and Understand Many debtors and creditors recognise little of the bankruptcy process. These terms are to help aid humans in understanding bankruptcy. The terms provided are as specified from the Public Information Series of the Bankruptcy Judges Division. TERMS & DEFINITIONS Adversary Proceeding - A lawsuit arising in or affiliated to a bankruptcy case that is commenced by filing a complaint with the bankruptcy court. Automatic Stay - An injunction that mechanically stops lawsuits, foreclosure, garnishments, and all collection action versus the debtor the moment a bankruptcy petition is filed. Bankruptcy - A legal procedure for dealing with debt difficulties of people and businesses; specifically, a case filed beneath one of the chapters of title 11 on the United States Code (the Bankruptcy Code). Bankruptcy Judge - A judicial officer of the United States district court who is the court official with the decision-making power over federal bankruptcy cases. Bankruptcy Mill - A business not authorized to exercise law that provides bankruptcy counseling and prepares bankruptcy petitions. Bankruptcy Petition - A formal request for the shelter of the federal bankruptcy laws. (There is an official form for bankruptcy petitions.) Bankruptcy Trustee - A private person 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. 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 the creditors. The trustee may also fetch activenesses versus creditors or the debtor to recover property of the bankruptcy estate.) Chapter 13 - The chapter of the Bankruptcy Code providing for adjustment of debts of an person with regular income. (Chapter 13 allows a debtor to keep property and recompense debt over time, normally three to five years.) 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 permitted to retain, free from the claims of creditors who do not have liens. Lien - A charge upon specific property designed to secure payment of a debt or a performance obligation. Liquidation - A sale of a debtor’s property with the proceeds to be applied for the gain of the creditors. Claim - A creditor’s assertion of a right to payment from a debtor or the debtor’s property. Complaint - The introductory or initiatory document in a lawsuit that notifies the court and the defendant of the grounds claimed by the plaintiff for an award of cash or other relief versus the defendant. Confirmation - Approval of a plan of reorganization by a bankruptcy judge. Consumer Debts - Debt incurred for personal, as opposed to business, needs. Contingent Claim - A assert that may be owed by the debtor underneath sure 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 cash or that claims to be owed cash by the debtor. Debtor - A person who has filed a petition for relief under the bankruptcy laws. Defendant - An person (or business) versus whom a lawsuit is filed. Discharge - A release of a debtor from personal liability for sure dischargeable debts. (A discharge releases a debtor form personal liability for sure debts known as dischargeable debts (defined below) and prevents the creditors owed those debts from taking any action versus the debtor or the debtor’s property to gather the debts. The discharge also prohibits creditors from communication with the debtor with regards to their 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 valuate the chapter 11 plan of reorganization. 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 of equity.) Liquidated Claim - A creditor’s assert for a fixed amount of money. No-Asset Case - A chapter 7 case where there are no sum totals available to satisfy any portion of the creditor’s unsecured claims. Non Dischargeable Debt - A debt that can not be annihilated in bankruptcy. Objection to Discharge - A trustee’s or creditor’s objection to the debtor’s being freed from personal liability for sure dischargeable debts. Objection to Exemptions - A trustee’s or a creditor’s objection to a debtor’s try to assert sure property as exempt, i.e., not liable for any prepetition debt of the debtor. Party in Interest - A party who is genuinely and substantially mesmerized in the subject matter, as distinguished from one who has only a nominal or technical interest in it. Plan - A debtor’s elaborated description of how the debtor proposes to compensate creditors’ claims over a fixed amount of time of time. Plaintiff - A person or business that files a formal complaint with the court. Preferential Debt Payment - A debt payment made to a creditor in the 90-day amount of time 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 a chapter 7 case. Priority - The Bankruptcy Code’s statutory rating of unsecured claims that determines the order in which unsecured claims will be paid if there is not sufficient cash to compensate all unsecured claims in full. Proof of Claim - A written statement describing the reason a debtor owes a creditor money. (There is an official form for this purpose.) Reaffirmation Agreement - An agreement by a chapter 7 debtor to proceed paying a dischargeable debt after the bankruptcy, normally for the aim of keeping the collateral or mortgaged property that would other than as supposed or expected be subject to repossession. Secured Creditor - An person or business keeping a assert versus the debtor that is secured by a lien on the 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. 341 Meeting - A meeting of creditors at which the debtor is questioned under oath by creditors, a trustee, examiner, or the United States trustee in regards to his/her financial affairs. Typing Service - A business not authorized to exercise 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. Unscheduled Debt - A debt that will have to 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.) These terms are for the general public to have a better understanding of bankruptcy and the terminology that comes with the filing or inquiry of a bankruptcy. Article written by Rick Munster |
