Bankruptcy law3

Examiner:

An individual appointed in a Chapter 11 proceeding to conduct an independent investigation of some or all of a debtor's financial affairs. Someone who examines the debtor's affairs.

Unlisted debt

Debt is not included in a debtor's schedules. The second type of debt that is automatically nondischargeable.

Federal exceptions

Exemptions permitted under federal law, specifically Section 522(d) of the Bankruptcy Code.

Ordinary course of business

Generally, normal everyday business transactions.

First day orders

Sought at the beginning of the case.

Debtor

The entity that is bankruptcy and owes the debts.

Exempt

Therefore free from the reach of the creditors or the trustee.

Assisted person

A person whose debts are primarily consumer debts and whose nonexempt property has a value of less than $186,825.

Schedules

An extended form of an accrual-based financial statement disclosing all liabilities and all assets of the debtor.

Trustee

An independent third party who liquidates the estate's assets and distributes the dividends to the creditors.

Contested matter

An opposed motion. A contested matter is treated as an adversary proceeding under Federal Rule of Bankruptcy Procedure 9014. A disputed issue is resolved by way of an evidentiary hearing.

Current monthly income

As a debtor's average monthly income received from all sources in the 180 days before filing, without regard to whether or not income is taxable. Not include social secured benefits and payments to victims of terrorism.

Bankruptcy petition preparer

As a person other than the debtor's attorney or the attorney's employee under that attorney's direct supervision who prepares for compensation document for filing with the Bankruptcy Court.

Liquidation value

As a practical matter, the realistic market value of an asset is usually the asset's liquidation value, except in the case of real property.

Catch all exemption

Consists of any unused portion of the federal homesteaded exemption (11U.S.C. 522(d) (1) supra), up to the amount of $ 11,500, plus $1,225, for a total of $ 12,725 in any property of any kind.

Prepetition credit counseling

Counseling that a debtor must receive from a credit counseling agency as a prerequisite to seeking individual bankruptcy relief. Corporation and partnerships are not subject to this requirement.

Exemptions

Exemptions allow a debtor to protect property from the reach of creditors or the trustee in a bankruptcy proceeding. Property for which an exemption is claimed and allowed is not subject to administration by a trustee and is not available for liquidation to pay a dividend to creditors.

Joint case

Filed by an individual and the individual's spouse. No other related entities may file a joint case.

Reorganization

Proceeding a debtor seeks to avoid liquidation by proposing a viable plan of reorganization to the creditors that can be successfully confirmed and performed.

Substantive consolidation

The court may consolidate two or more proceeding for all purposes. This medidum is known as substantive consolidation.

Voluntary Petition

The petition is the first step in initiating any bankruptcy proceeding. If the petition is filed by the debtor is a voluntary petition.

Venue

The proper Bankruptcy Court (federal judicial district) in with to commence a proceeding.

Interim trustee

The trustee appointed by the United States Trustee to administer a bankruptcy estate before the meeting of creditors called for by Section 341(a) of the Bankruptcy Code. The interim trustee will become the permanent trustee unless the creditors elect a different trustee at the meeting of creditors.

Creditors

They are entities to whom the debts are owed.

Homestead exemption

This exemption exists in spite of the practical reality that many individual debtors do not own real property.

Bankruptcy assistance

To an assistant person.

Needs based bankruptcy or means testing

The providing of new consideration in a transaction between a debtor and creditor. An avoidable preference will not exist where a transaction occurs for new value. This definition is unique to avoidable preferences.

Turnover complaint

The right of a bankruptcy trustee under 11 U.S.C. & 542 to recover property of an estate in the possession of the debtor or another third party. A trustee obtains a turnover by filing a turnover complaint.

Avoiding powers

The right of a trustee to set aside certain pre- or post-filing transactions that might otherwise be valid under the nonbankruptcy law. Preferences, fraudulent transfers, and the ability to set aside unauthorized post-petition transfer are the most traditional avoiding powers.

Order for relief

The specific relief or judgment sought by the petitioning creditors is the entry of an order for relief.

Ipso facto clause

A clause in a contract defining insolvency or a bankruptcy filing as an act of default. These clauses are not enforceable in bankruptcy proceedings.

Serial filing

A debtor who files a second (or third) bankruptcy proceeding after a dismissal of one or more prior proceeding.

Dismissal

A dismissal will terminate a bankruptcy proceeding and render the proceeding ineffective.

United States Trustee

A division of the Department of Justice responsible for monitoring the-the administration of bankruptcy cases. The office of the United State Trustee is charged with monitoring the progress of all cases, regardless of Chapter, and to act appropriately to prevent undue delay.

Interim fee application

A fee application brought during the pendency of a proceeding is commonly known as an interim fee application.

Evidentiary hearing

A hearing held to take sworn testimony to permit a Bankruptcy Court to make a decision in a contested matter that is not a separate adversary proceeding. An evidentiary hearing is similar to a trial in a nonbankruptcy environment. A "trial" on a contested motion for relief from the automatic stay is properly called an evidentiary hearing.

Creditor's meeting

A mandatory hearing held within 40 days after the entry of an order for relief in any Chapter proceeding. At the meeting of creditors, the trustee and creditors may examine the debtor regarding the assets and liabilities of the bankruptcy estate.

Serial bankruptcy

​A debtor who files a second (or third) bankruptcy proceeding after a dismissal of one or more prior proceedings.

Adequate protection

A method of protecting a creditor's interest in property of the estate during a pendency of the automatic stay. The making of a periodic payment or the providing of additional or replacement collateral are methods of adequate protection. Section 361.

Noticed Motion or exparte

A motion brought by a party in interest seeking a ruling from the Bankruptcy Court. When the segment "after notice and hearing" is using in a particular Code section, there are two basic ways to proceed: noticed motion or an ex parte application.

Conversion

A party in interest, such as the debtor, may seek to have a case converted from on chapter to another. For example, that a debtor's chapter 7 liquidation case is changed to a chapter 11 or a chapter 13 reorganization case or vice versa.

Party in interest

A party with a stake in the outcome of a bankruptcy proceeding. The debtor, creditors, trustee, United State Trustee and equity security holders are all parties in interest.

Fresh cash rule

A portion of a debt incurred by use of a false written financial statement. Previous case law had focused only on the existence of any new credit that was extended. This medium is known as the fresh cash rule.

Consumer no asset bankruptcy

A proceeding filed by an individual debtor or joint debtors in which there will normally be no assets available for the trustee to administer to distribute dividends to unsecured creditors. Any assets owned by the debtor will be either secured or exempt.

Statement of financial affair

A questionnaire designed to elicit information sufficient to determine whether the debtor should receive a discharge or to reveal the existence of preferences or other avoidable transaction.

Purchase money security interest

A security interest in collateral when the purchase of the loan is to purchase the collateral. The security interest is a purchase-money security interest.

Nonpurchase money security interest

A security interest in collateral where the purpose of the loan is other than to purchase the collateral. Nonpurchase-money means that you didn't use the money you borrowed to purchase the collateral.

Adversary proceeding

A separate lawsuit filed in connection with a bankruptcy proceeding. For example, an action to set aside a preference is commenced as an adversary proceeding. A contested motion will be treated as an adversary proceeding under Federal Rule of Bankruptcy Procedure.

Automatic stay

A statutory bar to the conducting of any collection activity by creditors after a bankruptcy petition has been filed. All litigation involving the debtor as a defendant stays. Foreclosures and repossessions have stayed. A creditor may seek relief from the stay in some situations. The automatic stay is effective the moment a petition ​is filed. The automatic stay is one of the three major elements of debtor relief provided by the Bankruptcy Code and is the subject of Bankruptcy Code Section 362.

Custodian

A third party appointed to administer a debtor's assets under nonbankruptcy law. A court-appointed receiver or assignee for the benefit of creditors are examples of custodians. This term distinguishes bankruptcy trustees from nonbankruptcy fiduciaries.

Spendthrift trust:

A trust containing a clause precluding invasion of the trust assets to satisfy the debts of a beneficiary. A spendthrift trust exists when the trust instrument contains provisions restricting the transfer of a beneficial interest in the trust.

Administrative expenses

All expenses incurred by a bankruptcy estate after a bankruptcy filing. Trustee's fees, auctioneer fees, attorneys' fees, and post-petition rent are typical Chapter 7 administrative expenses.

Complaint to determine dischargeability of a debt

An adversary proceeding initiated by a creditor or debtor to determine the discharge ability of a particular debt under Bankruptcy Code Section 523(c). A lender must begin such complaint within 60 days of the date first set for the creditors' meeting. A debtor may initiate such a claim at any time.

Complaint to determine discharge

An adversary proceeding initiated by a trustee or an interested party to entirely avoid a debtor's discharge. Any creditor, the trustee, or the United States Trustee may file a complaint to determine discharge under Section 727(a).

Composition Agreement

An agreement between a person and one or more creditors for the repayment of existing debt. A formal composition agreement comes into being when an individual and multiple creditors agree to a revision of current obligations.

Final fee application

An application to approve compensation is always required at either the close of the proceeding or hen all services to be rendered are complete.

Noncapital asset

An asset not used to operate a business. For example, inventory is generally a noncapital asset.

Capital asset

An asset used to operate a business, such as equipment or fixtures.

Debt relief agency

As defined under section 101 (12A), is any person, including a bankruptcy prepare, providing bankruptcy assistance.

Surplus monthly income

Available to a debtor after subtracting allowable deductions, multiplied by 60. Would permit general unsecured creditors to be paid at least 25% of their claims of $7,475, or $12,475 or more over a 60-month period, without regard to the percentage time repaid, then the chapter 7 filing is presumed and abuse of chapter 7.

Liquidation

Chapter 7, the most common type of bankruptcy proceeding. In a liquidation proceeding, all the debtor nonexempt assets are sold. The proceeds are then distributed to the creditors according to their priority.

Personally identifiable information

Information that may be used to contract or locate an individual, such as name and address, Social Security number, date of birth, and other similar information. Section 101(41A) of the Bankruptcy Code defines personally identifiable information.

Nondischargeable debts

Debt is not subject to a debtor's discharge; a debtor is not relieved from personal or legal liability for the distressed debt. Some types of nondischargeable debts require the filing of a Complaint to Determine Dischargeability of Debt for the debt to become nondischargeable.

Median family income

Defined as income calculated and reported by the Census Bureau for a family of similar size for the most recent year available, adjusted by the Consumer Price Index.

Replacement value

Defined as the price a retail merchant would charge property of that kind considering the age and condition of the property the time value is determined.

Disinterested person

Defined in Bankruptcy Code Section 101(14). A person who is not a creditor, equity security holder, or insider, or who does not have an interest materially adverse to an estate. Only disinterested persons may be employed by a bankruptcy estate or debtor-in-possession.

Involuntary Petition

If the petition is file by debtor's creditors.

Reaffirmation agreement

In United States bankruptcy law refers to an agreement made between a creditor and the debtor that waives discharge of debt that would otherwise be discharged in the pending bankruptcy proceeding.

Regular Income

Income is sufficient and stable enough to support a performance of a Chapter 13 plan by an individual. Regular income is not limited to wages or salary. Pension, Social Security, and commission income may all constitute ordinary income for Chapter 13 purposes.

Stacking

Individual joint debtors claiming state and federal exemptions.

Equity

It is used to describe the money value of property more than a claim, liens, or mortgages on the property. The amount of money remaining (if any) after the business repays its creditors.

Discharge

Legal relief from debt provided for by Section 524 of the Bankruptcy Code. The discharge is one of the tree elements of debtor relief provided for in the Bankruptcy Code, the other two being exemptions and the automatic stay.

Motion for relief from the automatic stay

Motion made by a creditor, under 11 U.S.C. 362(d), to be freed from the effect of the automatic stay.

Motion for relief from the automatic stay

Motion made by a creditor, under 11 U.S.C. 362(d), to be freed from the effect of the automatic stay. Motion made by a creditor, under 11 U.S.C. 362(d), to be released from the effect of the automatic stay.

Due Process

Notice and an opportunity to be heard.

Property of the estate

Property subject to administration by a bankruptcy trustee for the distribution of dividends to creditors.

Rule 2004 Examination

The Federal Rules of Bankruptcy Procedure provide a method that allows any party in interest to take the examination of any person concerning a debtor's financial affairs. This approach is called Rule 2004 Examination. Under the Bankruptcy Act, this was known as a Rule 2005 Examination.

Dismissal

The act of terminating a bankruptcy proceeding the general effect of wich is to restore the parties to their rights and liabilities as they existed before the bankruptcy filing.

Interim fee application

The application brought during a bankruptcy proceeding to approve payment of professional compensation.

Fresh start

The basic foundation of congressional intent in permitting individual debtors to seek bankruptcy relief.

Official Creditors' Committee

The primary monitor of a debtor-in-possession Chapter 11 financial affairs." "Entity created in a Chapter 11 proceeding to act on the collective behalf of unsecured creditors.

Fresh start

The primary reason for a consumer debtor to seek bankruptcy relief. Describe the essential elements of debtor relief: discharge, exemptions, and the automatic stay.

Petitioning creditors

Creditors are initiating an involuntary petition against a debtor.

Statements and schedules

The common name of the Statement of Financial Affairs and Schedules of Assets and Liabilities filed by any debtor within the bankruptcy system. These pleadings will be the most important initial pleading in any bankruptcy proceeding.

Debtor-in-possession

The essence of this concept is that the debtor acts as its own trustee. The fiduciary entity created by a debtor filing a Chapter 11 reorganization proceeding.

Market value

Value is determined by looking at the realistic market value of the particular assets claimed exempt.