Unit 3 - Bankruptcy

preference

1. the act of a debtor in paying one or more of his creditors without paying the others. "preference" is often confused with priority. However, a priority exists by operation of law; a preference is a transaction that, depending upon the circumstances, the law may consider voidable. 2 . under the Bankruptcy Code, a transfer of property by an insolvent debtor to one or more creditors to the exclusion of others, enabling such creditors to obtain a greater percentage of their debt than the other creditors of the same class. Such a transaction may constitute a voidable preference and be disallowed by the trustee in bankruptcy. 3. the right of one person over the other persons. (n) partiality, election, advantage, priority, prejudice, promotion, upgrading, precedence

liquidation

1. the extinguishment of a debt by payment or straight bankruptcy 2. the ascertainment of the amount of a debt or demand by agreement or by legal proceedings See also bankruptcy; receivership (n) elimination, abolition, rescission

trustee in bankruptcy

A person appointed by a bankruptcy court to collect any amounts owed the debtor, sell the debtor's property, and distribute the proceeds among the creditors.

preferential debts

Debts that, under the Bankruptcy Code, are payable before all other debts. Ex: wages owed employees

Bankruptcy Abuse Prevention and Consumer Protection Act

Enacted in 2005, it is significant overhaul in bankruptcy and less favorable for debtors

Bankruptcy Code

Federal bankruptcy legislation. There have been 6 majors statutes, enacted respectively in 1800, 1841, 1867, 1898, 1978, 2005. The last of these is the Bankruptcy Abuse Prevention and Consumer Protection Act

unsecured creditor

One who has received no security for the debt owed by the person in bankruptcy.

general creditor

One who is not entitled to priority because the creditor's claim is not secured by a mortgage or other lien.

bankruptcy trustee

See trustee in bankruptcy

wage earner's plan

Under Chapter 13 of the Bankruptcy Code, a debtor who is a wage earner and who files a repayment plan acceptable to his creditors and the court will be given additional time in which to meet his obligations.

involuntary bankruptcy

a bankruptcy initiated by one's creditors. See also bankruptcy; bankruptcy proceedings

voluntary bankruptcy

a bankruptcy that the petitioner himself initiates, as opposed to an involuntary bankruptcy

petition in bankruptcy

a document filed in a bankruptcy court initiating bankruptcy proceedings. See also bankruptcy, petitioning creditor

bankruptcy judge

a judge of a bankruptcy court

receiver

a person appointed by the court to take custody of property in a receivership. In the case of the assets or other property of an insolvent debtor, whether an individual or corporation, the duty of a receiver is to preserve the assets for sale and distribution to the subject of litigation, the duty of a receiver is to preserve the property or fund in litigation, receive its rent or profits, and apply or dispose of them as the court directs. Such a receiver is called a pendente lite receiver. If the property in dispute is a business, the receiver may have the additional responsibility of operating the business as a going concern (n) trustee, supervisor, administrator, depository, overseer, manager, collector

receivership

a proceeding by which the property of an insolvent debtor, or property that is subject of litigation, may be preserved and appropriately disposed of by a person known as a receiver, who is appointed and supervised by the court. A corporation as well as an individual may be "in receivership"

bankruptcy estate

all of the property of the debtor at the time the petition in bankruptcy is filed

preferential assignment

an assignment for the benefit of creditors by which the assignor gives a preference to certain of her creditors; any assignment that prefers one creditor over another

bankruptcy proceedings

any proceedings under the Bankruptcy Code; any proceedings related to bankruptcy

non-dischargeable debt

any voidable or fraudulent preferences, taxes, child support, or other debts that cannot be legally discharged in bankruptcy. See also voidable preferences, fraudulent preference

garnishment

attachment of debtor's wages by a creditor

exemptions

earnings and property allowed to be retained by a debtor free from claims of creditors in bankruptcy

bankruptcy courts

federal courts that hear and determine only bankruptcy cases

proof of claim

in bankruptcy, a statement in writing, signed by a creditor, setting forth the amount owed and the basis of the claim

secured creditor

one who has security for a debt owed in the form of an encumbrance on the property of the person in bankruptcy

assets

property of any value

preferential transfer

see preference

creditor's meeting

the 1st meeting of creditors of a debtor, required for the purpose of allowing the claims of creditors, questioning the debtor under oath, and electing a trustee in bankruptcy

discharge in bankruptcy

the release of the debtor from an obligation to pay, pursuant to a bankruptcy proceeding (v) to perform an obligation or duty; to satisfy a debt. usage: "all his debts were discharged by bankruptcy"

dismissal

the release of the debtor's case in totality from protection and jurisdiction of the bankruptcy court

homestead exemption

under homestead exemption statutes, the immunity of real property from execution for debt, provided the property is occupied by the debtor as the head of the family. This can vary by state law, with some states allowing for 100% immunity even for mansions

debtor

1. a person who owes money to another person 2. a person who owes another person anything. See also (n) borrower, buyer, deadbeat

arrangement with creditors

1. a proceeding, also called a composition, by which a debtor who is not insolvent may have her failing finances rehabilitated by a bankruptcy court under an agreement with her creditors. See also composition with creditors 2. The plan worked out by a bankruptcy court; also referred to as an arrangement for the benefit of creditors. see also bankruptcy

Composition with creditors

1. an agreement between a debtor and her creditors under which, in exchange for prompt payment, the creditors agree to accept amounts less than those actually owed in satisfaction of their claims. See also arrangement with creditors. 2. proceeding under Ch. 13 of the Bankruptcy Code for debt readjustment

priority

1. in Bankruptcy Law, the right of a secured creditor to receive satisfaction before an unsecured creditor. 2. the status of that which is earlier or previous in point of time, degree, or rank; precedence. (n) lead, order, superiority, primacy, preference, precedence, right, seniority, rank

fraudulent conveyance

1. the act of a debtor in making payment to one of her creditors by paying him with the intention of defrauding other creditors. 2. under the Bankruptcy Code, a transfer of property to a creditor that gives him an advantage over other creditors. Although such a transfer may be disallowed by the trustee in the bankruptcy, it is not necessarily a criminal act. See also preference

bankruptcy

1. the circumstances of a person who is unable to pay his debts as they come due. 2. the system under which a debtor may come into court (voluntary bankruptcy) or be brought into court by his creditors (involuntary bankruptcy) either seeking to have his assets administered and sold for the benefit of his creditors and to be discharged from his debts ( a straight bankruptcy) or to have his debts reorganized ( a business reorganization or a wage earner's plan) a straight bankruptcy is called a Ch. 7 proceeding because it is conducted under Ch. 7 of the Bankruptcy Code. Under Ch. 11, the debtor is permitted to continue business operations until a reorganization plan is approved by 2/3 of his creditors. Under Ch. 13 proceeding an individual debtor who is a wage earner and who files a repayment plan acceptable to his creditors will be given additional time in which to meet his obligations. Ch 12 proceedings regard family farms (n) insolvency, failure, disaster, defaulting

voidable preference

Under the Bankruptcy Code, a preference is voidable if it takes place within a specified number of days before the filing of the petition in bankruptcy and if it allows the creditor to obtain more than she would have received from the bankruptcy court.

lien

a claim on personal or real property for the payment of a debt or mortgage

petitioning creditor

a creditor who initiates proceedings against his debtor in a bankruptcy court. See also bankruptcy proceedings; petition in bankruptcy

creditory beneficiary

a creditor who is the beneficiary of a contract made between the debtor and a 3rd person

debtor in possession

a debtor who continues to operate his business while undergoing a business reorganization under the jurisdiction of the bankruptcy court. See also bankruptcy

moratorium

a period during which a person, usually a debtor, has a legal right to postpone meeting an obligation. An individual creditor may declare a moratorium with respect to her debtor, or a moratorium, may be imposed by legislation and apply the debtors to a class (n) grace period

petitioner

a person seeking relief by a petition. (n) pleader, litigant, applicant, asker, supplicant ("the petitioner asked for relief")

creditor

a person to whom a debt (secured by collateral or unsecured) is owed by a debtor. See also general creditor, secured creditor, and unsecured creditor (n) lender, assignee

debtee

a person who lends to a debtor. (n) creditor, lender

schedule in bankruptcy

a schedule filed by a bankrupt listing, among other things, all of his property, its value, his creditors and the nature of their claims

stay

the Bankruptcy Code provides for automatic stops to further proceedings, usually temporarily; to restrain; to hold back; to suspend foreclosures or executions on certain types of debts upon filing of bankruptcy petition. See also moratorium (v) arrest, hinder, postpone, intermit, obstruct, suspend ("stay the creditor's foreclosure") (n) deferment, halt, remission, reprieve, standstill, suspension