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Law Office of William C. Shaw  Legal Practice Serving Brevard County - the Space Coast -Florida Bankruptcy, Probate Administration, Estate Planning, Mortgage Foreclosures |
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Bankruptcy Law GlossaryAdversary Proceeding: A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the bankruptcy court. Examples are complaints to determine the dischargeability of a debt and complaints to determine the extent and validity of liens.Assume: An agreement to continue performing duties under a contract or lease. Automatic Stay: An injunction that automatically stops lawsuits, foreclosure, garnishments, and all other collection activity against the debtor the moment a bankruptcy petition is filed. Avoidance: The Bankruptcy Code permits the debtor to eliminate (avoid) some kinds of liens that interfere with (or impair) an exemption claimed in the bankruptcy. Most judgment liens that have attached to the debtor's home can be avoided if the total of the liens (mortgages, judgment liens and statutory liens) is greater than the value of the property in which the exemption is claimed. This is sometimes called "lien stripping." Avoidance Powers: Rights given to the bankruptcy trustee or the debtor in possession to recover certain transfers of property such as preferences or fraudulent transfers or to void liens created before the commencement of a bankruptcy case. Bankruptcy Code: The informal name of Title 11 of the United States Code, which governs bankruptcy proceedings. Bankruptcy is a matter of federal law and is, with the exception of exemptions, the same in every state. When federal bankruptcy law conflicts with state law, federal law controls. 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.) From the estate, an individual debtor can claim certain property exempt. The balance of the estate is liquidated in a Chapter 7 bankruptcy to pay the administrative costs of the proceeding and the claims of creditors, according to their priority. 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, which must be used. Bankruptcy Trustee: A private individual or corporation appointed in all chapter 7, 12, and 13 cases to represent the interest 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 business purposes. Chapter 7: A chapter of the Bankruptcy Code providing for "liquidation." (The sale of the 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 proceeding, 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: A chapter of the Bankruptcy Code providing for adjustment of debts of a "family farmer," as that term is defined in the Bankruptcy Code. Chapter 13: The chapter of the Bankruptcy Code providing for adjustments 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. Collateral: The property which is subject to a lien. A creditor with rights in collateral is a secured creditor and has additional protections in the Bankruptcy Code for the claim secured by collateral. The measure of the secured claim is the value of the collateral available to secure the claim: it is possible to have a lien on property that is subject to a senior lien or liens such that the security available to pay the claim is really without value to the junior creditor. The general rule with respect to liens is "First in time, first in right." 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: The court order which approves the terms of the plan for repayment of debts in a Chapter 11, 12 or 13 binding. The terms of the confirmed plan replace the pre petition rights of the debtor and creditor. 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, needs. Contingent Claim: A claim that may be owed by the debtor under certain circumstances. For example, where the debtor is a co-signer on another person's loan, and that person fails to pay. Conversion: Cases under the Code may be converted from one chapter to another chapter; for example, a Chapter 7 case may be converted to a case under Chapter 13 if the debtor is eligible for Chapter 13. Even though the chapter of the Code which governs it changes, it remains the same case as originally filed. Creditor: A person or organization to whom 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 bankruptcy laws. Defendant: An individual or business against whom a lawsuit is filed. Debtor in Possession: In a Chapter 11 case, the debtor usually remains in possession of its assets and assumes the duties of a trustee. The debtor in possession is a fiduciary for the creditors of the estate, and owes them the highest duty of care and loyalty. Denial of discharge: Penalty for debtor misconduct with respect to the bankruptcy case or creditors as a whole. The grounds on which the debtor's discharge may be denied are found in 11 U.S.C. 727. When the debtor's discharge is denied, the debts that could have been discharged in that case cannot be discharged in any subsequent bankruptcy. The administration of the case, the liquidation of assets and the recovery of avoidable transfers, continues for the benefit of creditors. Discharge: A release of a debtor from 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 contacts. However, anylien which secures the debt may survive the bankruptcy case. Dischargeable Debts: Debts that can be eliminated in bankruptcy. Certain debts are not dischargeable; that is, they may not be discharged through bankruptcy or may only be discharged through Chapter 13. Family support and criminal restitution are examples of debts which cannot be discharged. Debts incurred by fraud can only be discharged in Chapter 13. 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. Dismissal: The termination of the case without either the entry of a discharge or a denial of discharge; after a case is dismissed, the debtor and the creditors have the same rights as they had before the bankruptcy case was commenced. Exempt: Property that is exempt is removed from the bankruptcy estate and is not available to pay the claims of creditors. The debtor selects the property to be exempted from the statutory lists of exemptions available under the law of his state. The debtor gets to keep exempt property for use in making a fresh start after bankruptcy. Exemptions: Exemptions are the lists of the kinds and values of property that is legally beyond the reach of creditors or the bankruptcy trustee. What property may be exempted is determined by state and federal statutes, and varies from state to state. Equity: The value of a debtor's interest in property that remains after liens and other creditors' interests are considered. For example, if a house valued at $60,000 is subject to a $40,000 mortgage, there is $20,000 of equity in the house. 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. 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. Fiduciary: one who is entrusted with duties on behalf of another. The law requires the highest level of good faith, loyalty and diligence of a fiduciary, higher than the common duty of care that we all owe one another. The debtor in possession in a Chapter 11 is a fiduciary for the creditors, owing loyalty to the creditors and not the shareholders of the debtor. Fraudulent Transfer: A transfer of a debtor's property made with the intent to defraud or for which the debtor receives less that the transferred property's value 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: 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 General, unsecured claim: Creditor's claim without a priority for payment for which the creditor holds no security (or collateral). If the available funds in the estate extend to payment of unsecured claims, the claims are paid in proportion to the size of the claim relative to the total of claims in the class of unsecured claims. Joint Petition: One bankruptcy petition filed by a husband and wife together. Lien: An interest in real or personal property which secures a debt; the lien may be voluntary, such as a mortgage in real property, or involuntary, such as a judgment lien or tax lien. Liquidation: A sale of a debtor's property with the proceeds to be used for the benefit of creditors Liquidated Claim: A claim that is for a known number of dollars is liquidated. An unliquidated debt is one where the debtor has liability, but the exact monetary measure of that liability is unknown. Tort claims are usually unliquidated until a trial fixes the amount of the liability of the tort feasor. 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. Non-Dischargeable Debt: A debt that cannot be eliminated in bankruptcy. 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 pre petition 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 or technical interest in it. Perfection: When a secured creditor has taken the required steps to perfect his lien, the lien is senior to any liens that arise after perfection. A mortgage is perfected by recording it with the county recorder; a lien in personal property is perfected by filing a financing statement with the secretary of state. An unperfected lien is valid between the debtor and the secured creditor, but may be behind liens created later in time, but perfected earlier than the lien in question. An unperfected lien can be avoided by the trustee. Personal property: Property that is not real property or affixed to real property, such as cars, stock, furniture, etc. Petition: The document that initiates a bankruptcy case. The filing of the petition constitutes an order for relief and institutes the automatic stay. Events are frequently described as "pre petition", happening before the bankruptcy petition was filed, and "post petition", after the bankruptcy. 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. Pre bankruptcy Planning: The arrangement, or rearrangement, of a debtor's property to allow the debtor to take maximum advantage of exemptions. Pre bankruptcy planning typically includes converting nonexempt assets into exempt assets. Preference: A transfer to a creditor in payment of an existing debt made within certain time periods before the commencement of the case. Preferences may be recovered by the trustee for the benefit of all creditors of the estate. Pre-petition: Claims or events arising before the commencement of the bankruptcy case, that is, before the filing of the bankruptcy petition. Generally only pre petition debts may be discharged in a bankruptcy proceeding. Priority: The Bankruptcy Code's 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. All claims in a higher priority must be paid in full before claims with a lower priority receive anything. All claims with the same priority share pro rata. Claims are paid in this order: 1) costs of administration 2) priority claims and 3) general unsecured claims. Secured claims are paid from the proceeds of liquidating the collateral which secured the claim. Priority claims: Certain debts, such as unpaid wages, spousal or child support, and taxes are elevated in the payment hierarchy under the Code. Priority claims must be paid in full before general unsecured claims are paid. Proof of claim: The form filed with the court describing the reason a debtor owes a 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. Reaffirm: The debtor can chose to reaffirm debts that would otherwise be discharged by the bankruptcy. Generally, when a debt is reaffirmed, the parties to the reaffirmed debt have the same rights and liabilities that each had prior to the bankruptcy filing: the debtor is obligated to pay and the creditor can sue or repossess if the debtor doesn't pay. Relief from stay: A creditor can ask the judge to lift the automatic stay and permit some action against the debtor or the property of the estate. If the motion is granted, the moving party (but no one else) is free to take whatever action the court permits. Relief can be absolute, for example, permitting the creditor to foreclose on property, or limited, as for example, allowing the recordation of a notice of default. 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 or 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 properly, lawsuits by creditors, et. There is an official form a debtor must use. Statement of Intention: A declaration made by the 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 all or a substantial portion of his debts. 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 or her financial affairs. Trustee: The court appoints a trustee in every Chapter 7 and Chapter 13 case to review the debtor's schedules and represent the interests of the creditors in the bankruptcy case. The role of the trustee is different under the different chapters. 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. 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. Further definitions are found in Section 101 of the Bankruptcy Code Please contact us with your questions or comments. |
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Law Office of William C Shaw v: 321.631.6750 e: w: www.lawshaw.com |
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