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Absolute Priority

The order of payment to the different classes of creditors mandated by the Bankruptcy Code.

Accord and Satisfaction

An agreement to settle a contract dispute by accepting less than what’s due.

Adequate Protection

The right of a party with an interest in the debtor’s property to assurances its interest will not be diminished during the individual’s bankruptcy proceedings.

Adjustable Rate Mortgage

A mortgage loan with an interest rate that goes up and down in accordance with a designated market indicator.

Administration Claim

The debt incurred by the debtor after the bankruptcy commences with court approval.

Adversary Proceeding

A lawsuit arising related to a bankruptcy case.

Appraisal

A professional and legitimate determination of the value of some property or assets like a house or a car.

Arrangement

The agreements worked out concerning the conditions under which a bankrupt entity may operate.

Assume

An agreement to continue the guidelines laid out in a contract or lease.

Automatic Stay

An injunction effective immediately after a bankruptcy petition is filed that stops lawsuits, foreclosures, wage garnishments, and all other collection activities against the debtor/filer.

Avoidance Power

When the court negates certain transactions a debtor has prior to the bankruptcy filing.

Balloon Payment

A large final payment due at the end of a contract your monthly payments didn’t cover, typicall or texty for a car or a home loan.

Ballot Date

The deadline to which all votes on a reorganization plan is accepted.

Bankruptcy

Bankruptcy is a legal proceeding afforded to people who are unable to handle a financial crisis by relieving you of paying off your debts or by providing you with protection while attempting to pay off those debts. Bankruptcy is available so that you can have a fresh start.

Bankruptcy Code

The more common name for title 11 of the United States Code — the federal bankruptcy law.

Bankruptcy Court

The specialized court in where bankruptcy-related matters under the Federal Bankruptcy Act are handled.

Bankruptcy Estate

All legal or equitable interests in property of the debtor at the time of the bankruptcy filing.

Bankruptcy Judge

A judicial officer of the United States district court who is the court official with decision-making power.

Bankruptcy Petition

The official forms filed which opens the bankruptcy case.

Bankruptcy Trustee

A person appointed by the bankruptcy court to oversee the case filed.

Bar Date

The deadline creditors have to file against a debtor.

Bulk Sales Law

A law that regulates the transfer of business assets so business owners cannot dispose of assets that avoid creditors.

Capitalized Interest

The accrued interest added to the principal balance of a loan while you are not making payments; or your payments are insufficient to cover both the principal and interest due.

Chapter 7

The chapter of the Bankruptcy Code providing for “liquidation.” Chapter 7 Bankruptcy was enacted to allow persons who are hopelessly burdened by debt to have an opportunity for a new beginning by wiping out unsecured debts (debts that aren’t tied to any specific item of property, most commonly credit cards).

Chapter 11

The chapter of the Bankruptcy Code providing for reorganization — usually involving a corporation or business partnership.

Chapter 12

The chapter of the Bankruptcy Code providing for adjustment of debts of a “family farmer” or a “family fisherman.”

Chapter 13

The chapter of the Bankruptcy Code designed to enable individual debtors the option of applying a percentage of their future earnings to a portion of their current debts over an extended period of time. Chapter 13 authorizes the wage earner to keep the property (like your home and car) while consolidating and reorganizing debt, allowing the debtor a reasonable opportunity to arrange installment-payments of what is owed out of future income.

Claim

A creditor’s assertion of a right to payment by the debtor.

Class

The different levels of claims against a debtor.

Collateral

Property used to guarantee payment of a secured debt.

Collection Agency

A company hired by a creditor to collect a debt that it is owed.

Confirmation

Approval of a plan of reorganization or liquidation by a bankruptcy judge.

Consumer Debtor

A debtor who owes primarily consumer debts.

Consumer Debts

Debts incurred for personal needs.

Contested Matter

Those legal issues that are disputed, but are not within the definition of adversary proceedings.

Consumer Leasing Act

A federal law that requires lease agreements to include certain defined terms.

Contingent Claim

A claim that may be owed by the debtor’s cosigner on another person’s loan and the cosigner also fails to pay.

Consumer Credit Counseling Service (CCCS)

A national non-profit agency that helps debtors plan budgets and repay their debts.

Contract

A legally binding agreement involving two or more people or businesses that sets forth what the parties will or will not do.

Conversion

Changing bankruptcy chapters such as a debtor mobbing from a Chapter 7 to a Chapter 13.

Cooling Off Rule

The act that allows you to cancel a contract within a specified time period after signing it.

Cosigner

A person who signs their name to a credit application, lease or loan agreement to help someone qualify and secure a loan or product. If the primary debtor does not pay, the cosigner is fully responsible for the loan or debt.

Creditor

The person or business the debtor owes (or claims to owe) money to.

Credit Counseling

In Bankruptcy, CC usually refers to two things: The “individual or group briefing” from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing. And the “instructional course in personal financial management” in Chapter 7 and Chapter 13 an individual debtor must complete before the discharge of debt.

Credit Bureau

A company that collects and sells information about an individual’s credit history.

Credit Insurance

Insurance a lender requires a borrower to purchase to cover the loan.

Credit Report

An account of an individual’s credit history and pertinent personal information.

Creditor

A person or entity that a debt is owed.

Current Monthly Income

The average monthly income received by the debtor over the six calendar months before commencement of the bankruptcy case.

Debt

An amount of money, service, or an item of property that is owed to somebody or some business entity.

Debt Collector

A person who works with the collections’ department of an original creditor to track down debtors who get them to pay what they owe.

Debtor

A person who owes money and has filed a petition for relief under the Bankruptcy Code.

Default

A failure to perform a legal duty like neglecting to make a mortgage or car loan payment on time.

Defendant

An individual (or business) a lawsuit is filed against.

Delinquency

Failure to make payments when they are due.

Discharge (of Debts)

A release of a debtor from personal liability for certain dischargeable debts set forth in the Bankruptcy Code.

Dischargeable Debt

An amount of money, service, or an item of property that can be eliminated through the Bankruptcy Code.

Disclosure Statement

A written document prepared by the Chapter 11 debtor in order to provide “adequate information” for creditors to evaluate the Chapter 11 plan of reorganization.

Effective Date

The point at when the plan of reorganization commences.

Equity

The value of a debtor’s interest in property that remains after liens and other creditor interests are considered.

Examiner

A court appointee with responsibilities to oversee certain parts of the proceedings.

Executory Contract or Lease

Includes contracts or leases under which both parties in the agreement have duties remaining to be performed.

Exemptions (Exempt Property)

Certain property owned by an individual debtor that the Bankruptcy Code or applicable state law permits the debtor to keep from unsecured creditors.

Fair Credit Billing Act (FCBA)

The federal law that gives you rights when an error occurs on your credit card statement.

Fair Credit Reporting Act (FCRA)

The federal law designed to prevent inaccurate information from entering or remaining on a credit report.

Fair Debt Collections & Practices Act (FDCPA)

The federal law that outlaws unfair debt-collection practices by debt collection agencies.

Family Farmer or Family Fisherman

An individual engaged in the business of farming or fishing who meets certain debt limits and other statutory criteria for filing a petition under Chapter 12.

Fee Examiner

Court appointee responsible for monitoring money as planned is paid to the proper professional organizations.

Forbearance

Voluntarily refraining from doing something, such as asserting a legal right.

Foreclosure

The forced sale of real estate to pay off a loan on which the owner of the property has defaulted.

Forfeiture

The loss of property (or a privilege) due to breaking a law.

Fraud

Intentionally deceiving another person causing that individual or business to suffer a loss.

Fraudulent Transfer

A transfer of a debtor’s property made with intent to defraud or for which the debtor receives less than 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.)

Garnishment

Court ordered method of debt collection where a percentage of an individual’s salary is paid to a creditor.

Grace Period

A period of time when an individual does not have to make payments on a debt.

Guarantor

A person who makes a legally binding promise to pay another person’s debt if the person they signed for defaults.

Insider (of Individual Debtor)

Any relative or general partner of the debtor.

Intangible Property

Personal property that has no physical existence.

Insolvency

When a business is failing.

Interest

A commission an individual pays the bank or other creditor for lending money or extending credit.

Joint Administration

A court approved mechanism under which two or more cases can be administered together.

Joint Petition

The combination of one or more bankruptcy petition; typicall or texty filed together by a husband and wife.

Lien

The right of a secured creditor to take, hold or sell the property of a debtor as security or payment.

Liquidation

A sale of a debtor’s property where the proceeds are used to benefit the creditors.

Liquidated Claim

A creditor’s claim for a fixed amount of money.

Loan Consolidation

The process of combining multiple loans into one.

Matrix

The debtor’s mailing list for their creditors.

Means Test

The section of the Bankruptcy Code applied to determine whether an individual debtor’s Chapter 7 filing is presumed to be an abuse of the Code requiring dismissal or conversion to a Chapter 13.

Meeting of Creditors

A meeting held between the filer and the bankruptcy trustee to review the case and files submitted.

Mortgage

A loan when the borrower puts up a real estate title as collateral for a loan.

Motion to Lift the Automatic Stay

A request by a creditor to take action against the debtor that usually would be protected under the automatic stay.

Negotiable Instrument

A document that represents an unconditional promise to pay a specific amount of money upon the demand of its owner

No Asset Case

A Chapter 7 filing where there are no assets available to satisfy any portion of the creditors’ unsecured claims.

Non-Dischargeable Debt

A debt not allowed to be eliminated in bankruptcy.

Non-Exempt Property

The assets an individual risks losing to creditors after a Chapter 7 Bankruptcy is filed or when a creditor sues and wins a judgment.

Nuisance Fees

Money charged by some credit card companies to increase profits when the individual doesn’t use the credit card the way the creditor wants.

Objection to Dischargeability

Opposition by the trustee or creditor to the debtor being released from personal liability for specific eliminated debts.

Objection to Exemptions

A trustee or creditor’s objection to the debtor’s attempt to claim certain property as exempt from liquidation.

Party in Interest

A party who has standing in a matter dealing with a bankruptcy case to be heard by the court.

Petition

The document that once filed commences a bankruptcy proceeding.

Petition Preparer

A non-legal organization where bankruptcy petitions are arranged.

Personal Property

All personal effects other than the land attached to the estate.

Plan

The debtor’s detailed proposal to pay creditors’ claims over a fixed period of time.

Plaintiff

A person or business that files a formal complaint with the court.

Post-Petition Transfer

A transfer of the debtor’s property made after the commencement of the case.

Pre-Bankruptcy Planning

The arrangement of a debtor’s property to take maximum advantage of exemptions.

Preference or Preferential Debt Payment

A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy that provides the creditor with more than they would receive in the debtor’s Chapter 7 Bankruptcy case.

Principal

The person who appoints an attorney to represent them when creating a legal document or action.

Priority

The Bankruptcy Code’s statutory ranking of unsecured claims that determines the order in which those will be paid when there is not enough money to pay all unsecured claims in full.

Priority Claim

An unsecured claim that is entitled to be paid ahead of other unsecured claims that are not entitled to priority status.

Proceeds for Damaged Exempt Property

Money collected to pay for exempt property that is no longer exempt because it has been damaged or destroyed.

Proof of Claim

The written statement and other documentation filed by a creditor that describes the issues with the debtor.

Property (of the Estate)

All legal or equitable interests in property of the debtor at the time the case begins.

Reaffirmation agreement

An official understanding by a Chapter 7 debtor to continue paying a dischargeable debt after the bankruptcy.

Repossession

A creditor’s taking of property that has been pledged as collateral for a loan after the loan goes into default.

Restructuring

Out-of-court attempt by the debtor to reorganize financial matters in order to pay off what is owed.

Secured Creditor

A creditor holding a claim against the debtor who has the right to take and hold or sell certain property of the debtor in satisfaction of some or all of the claim.

Secured Debt

A debt when a creditor has a lien.

Set Off

A counter claim to discharge or reduce the debt.

Schedules

Detailed lists filed by the debtor along with the petition showing assets, liabilities, and other financial information.

Short Sale (of House)

A sale of an individual’s home where the proceeds fall short of what the owner still owes on the mortgage.

Skeleton Filing

Term applied when not all the proper paperwork for a bankruptcy case has been filed.

Statement of Financial Affairs

A series of questions concerning income, transfers of property, lawsuits by creditors, etc., the debtor needs to answer in writing before a bankruptcy is filed.

Statement of Intention

A declaration made by a Chapter 7 debtor regarding plans for dealing with consumer debts that are secured by property of the estate.

Substantial Abuse

Taking frequent requests regarding an individual debtor to file a bankruptcy petition.

Substantive Consolidation

Putting the assets and liabilities of two or more related debtors into a single pool to pay creditors.

Tangible Personal Property

Personal property that can be felt or touched.

Transfer

Where a debtor parts way by any means with their property.

Trustee

The representative of the bankruptcy court who exercises statutory powers.

Truth in Lending Act

The Federal Law that requires credit and charge card companies to disclose interest rates and other information.

U.S. Trustee

An officer of the United States Justice Department responsible for supervising the administration of bankruptcy cases.

Un-liquidated Claim

A request for a claim or debt where a value has not yet been determined.

Un-scheduled Debt

An amount owed that should have been listed by the debtor in the schedules filed with the court but was not.

Unsecured Claim

A claim or debt for when a creditor holds no special assurance of payment.

Voluntary Transfer

A transfer of a debtor’s property with the debtor’s consent.