Unit 17 - Bankruptcy

involuntary bankruptcy

A bankruptcy entitle by one's creditors.

voluntary bankruptcy

A bankruptcy that the debtor himself initiates, as opposed to an involuntary bankruptcy initiated by a creditor.

lien

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

judgment creditor

A creditor who has secured a judgment against his debtor that has not been satisfied.

petitioning creditor

A creditor who initiates proceedings against his debtor in a bankruptcy court.

creditor beneficiary

A creditor who is the beneficiary of a contract made between the debtor and a third person.

debtor in possession

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

petition in bankruptcy

A document filed in a bankruptcy court initiating bankruptcy proceedings.

bankruptcy judge

A judge of a bankruptcy court.

moratorium

A period during which a person, usually a debtor, has a legal right to postpone meeting on obligation.

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.

receiver

A person appointed by the court to take custody of property in a receivership.

petitioner

A person seeing relief by a petition.

creditor

A person to whom a debt (secured by collateral or unsecured) is owed by a debtor.

bankrupt

A person who is unable to pay his debts as they come due; an insolvent person.

debtee

A person who lends to a debtor.

debtor

A person who owes money to another person.

receivership

A proceeding by which the property of an insolvent debtor, or property that is the 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.

arrangement with creditors

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.

schedule in bankruptcy

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

bankruptcy estate

All of the property of the debtor at the time the petition in bankruptcy is filed.

composition with creditors

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.

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 relating to bankruptcy.

nondischargeable debt

Any voidable or fraudulent preferences, takes, child support, or other debts that can not be legally discharged in bankruptcy.

garnishment

Attachment of debtor's wages by a creditor.

Chapter 7

Called a straight bankruptcy proceeding - it is conducted under this chapter of the Bankruptcy Code. A debtor has his assets collected and sold for the benefit of his creditors, and then is discharged from his debts.

preferential debts

Debts that, under the Bankruptcy Code, are payable before all other debts.

exemptions

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

Bankruptcy Abuse Prevention and Consumer Protection Act

Enacted in 2005, it is a significant overhaul in bankruptcy that is less favorable than previous bankruptcy legislation for debtors.

Bankruptcy Code

Federal bankruptcy legislation. There have been six major statutes, enacted respectively in 1800, 1867, 1898, 1978, and 2005.

bankruptcy courts

Federal courts that hear and determine only bankruptcy cases.

priority

In bankruptcy law, the right of a secured creditor to receive satisfaction before an unsecured creditor.

proof of claim

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

unsecured creditor

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

secured creditor

One who has security for a debt owed in the form of an encumbrance on the property of 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.

assets

Property of any value.

stay

The Bankruptcy Code provides for automatic stops of further proceedings, usually temporarily; to restrain; to hold back; to suspend foreclosures or executions on certain types of debts upon filing of bankruptcy petition.

fraudulent conveyance

The act of a debtor in making payment to one of her creditors by paying him with the intention of defrauding other creditors.

preference

The act of a debtor in paying one or more of his creditors without paying the others.

bankruptcy

The circumstances of a person who is unable to pay his debts as they come due.

liquidation

The extinguishment of a debt by payment or straight bankruptcy.

creditors' meeting

The first 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.

homestead exemption

The immunity of real property from execution for debt, provided the property is occupied by the debtor as the head of the family.

discharge in bankruptcy

The release of a debtor from an obligation to pay, pursuant to a bankruptcy proceeding.

dismissal

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

bond

The written instrument that evidences a debt. Trustees and receivers appointed by the court are required to file this in order to take control of the property of the debtor, or to reorganize the debtor's business.

Chapter 12

This chapter of the Bankruptcy Code addresses the debts of "family farmers" or "family fishermen," with regular annual income. Debtors propose a plan to repay all or part of their debts to creditors over a period of three to five years.

forfeit

To lose, particularly as result of default or neglect, or commission of a crime.

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.

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 obtains more than she would have received from the bankruptcy court.

Chapter 11

Under this chapter of the Bankruptcy Code, the debtor is permitted to continue business operations until a reorganization plan is approved by his creditors.

Chapter 13

Under this chapter proceeding of the Bankruptcy Code, 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, generally three to five years.

automatic stay

When a bankruptcy petition is filed with the court clerk, a hold arises that bars creditors from all debt collection efforts against debtors.