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Automatic Stay: An injunction that automatically stops lawsuits, foreclosure, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.
Bankruptcy: A legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of Title 11 of the United states Code (the Bankruptcy Code).
Bankruptcy Estate: All legal or equitable interests of the debtor in property at the time of the bankruptcy filing.
Bankruptcy Petition: A formal request for the protection of the federal bankruptcy laws.
Chapter 7: The chapter of the Bankruptcy Code providing for “liquidation”, i.e., the sale of a 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.
Chapter 11: A reorganization bankruptcy, 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.
Chapter 12: The 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.
Claim: A creditor’s assertion of a right to payment from a debtor or the debtor’s property.
Complaint: The first or initiary 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: Approval of a plan or reorganization by a bankruptcy judge.
Creditor: A business to which the debtor owes money.
Debtor: A business that has filed a petition for relief under the bankruptcy laws.
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.
Executory Contract: A contract under which both parties to the agreement have duties remaining to be performed.
Exempt: Property that a debtor may prevent creditors from recovering.
Face Sheet Filing: A bankruptcy case filed either without schedules or with incomplete schedules listing few creditors and debts.
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.
Insider: A director, officer, or person in control of the debtor; a partnership in which the debtor is a general partner; a general partner of the debtor; or a relative of a general partner, director, officer, or person in control of the debtor.
Joint Administration: A court-approved mechanism under which two or more cases can be administered together.
Liquidation: A sale of a debtor’s property with the proceeds to be used for the benefit of creditors.
Liquidated Claim: A creditor’s claim for a fixed amount of money.
Motion to Lift the Automatic Stay: A request by a creditor to allow the creditor to take an action against a debtor that would otherwise be prohibited by the automatic stay.
Plan: A debtor’s detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time.
Pre-bankruptcy Planning: The arrangement of a debtor’s property to allow the debtor to take maximum advantage of exemptions – typically includes converting nonexempt assets into exempt assets.
Preferential Debt: A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy that gives the creditor more than he would receive in the debtor’s Chapter 7 case.
Payment Priority: The Bankruptcy Code’s statutory ranking of unsecured claims that determines the order in which unsecured claims will be paid.
Priority Claim: An unsecured claim that is entitled to be paid ahead of other unsecured claims that are not entitled to priority status.
Proof of Claim: A written statement describing the reason a debtor owes a creditor money.
Secured Creditor: A 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 of 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 showing the debtor’s assets, liabilities, and other financial information.
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 the business’ financial affairs.
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.
Unliquidated Claim: A claim for which a specific value has not been determined.
Unscheduled Debt: A debt that should have been listed by a debtor in the schedules filed with the court but was not.
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.
