What are key terms used in bankruptcy?
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Bankruptcy law can be quite complex and in order to understand it better, it helps to familiarize yourself with various bankruptcy terms.The words and terms listed below are ones commonly used in bankruptcy:
After Notice and Hearing: this doesn't actually require a hearing. Notice to interest parties must be provided and the opportunity for a hearing must be provided. Depending on the issue and on the preferences of the individual bankruptcy judge, there may not be an actual hearing unless a party in interest requests one.
Automatic Stay: an injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.
Bankruptcy Estate: all legal and equitable interests of the debtor in property at the time of the bankruptcy filing.
Claim: means a right to payment, whether or not it has been reduced to a judgment, liquidated, fixed, contingent, matured, unmatured, disputed, secured or unsecured.
Confirmation: approval of a plan of reorganization by a bankruptcy judge.
Consumer Debt: means a debt incurred by an individual primarily for a personal, family, or household purpose, as opposed to business.
Creditor: is a party who has a claim against the debtor that originated at or before the time that the debtor filed the bankruptcy petition.
Debt: means liability or obligation to pay a claim.
Debtor: the person who has filed a petition for bankruptcy.
Dischargeable Debt: a debt for which the Bankruptcy Code allows the debtor’s personal liability to be eliminated.
Equity: the value of a debtor’s interest in property that remains after liens and other creditors’ interests are considered.
Exemption: property that the Bankruptcy Code or applicable state law permits a debtor to keep from creditors.
Joint Petition: one bankruptcy petition filed by a husband and wife together.
Liquidated Claim: a creditor’s claim for a fixed and known amount of money.
Means Test: determines whether a debtor can file a Chapter 7 liquidation case or be required to file a Chapter 13 case.
No-Asset Case: a Chapter 7 case where there are no assets available to satisfy any portion of the creditors’ unsecured claims.
Non-dischargeable Debt: a debt that cannot be wiped out (eliminated) in bankruptcy.
Objection to Discharge: a trustee’s or creditor’s objection to the debtor’s being released from personal liability for certain dischargeable debts.
Priority: the Bankruptcy Code’s statutory ranking of unsecured claims that determines the order in which unsecured claims will be paid if 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. Priority refers to the order in which these unsecured claims are to be paid.
Secured Creditor: an individual or 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.
Statement of Intention: a declaration made by a Chapter 7 debtor concerning plans for dealing with consumer debts that are secured by property of the estate.
Substantive Consolidation: putting the assets and liabilities of two or more related debtors into a single pool to pay creditors.
341 Meeting: a meeting of creditors at which the debtor is questioned under oath about his/her financial affairs. Despite the name, creditors rarely attend these meetings, and the questioning is done by the trustee.
Undersecured Claim: a debt secured by property that is worth less than the amount of the debt.
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.
Venue: which courthouse a case is heard in. For a bankruptcy case, venue typically lies in the district in which the debtor resides.