Term
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Definition
| any entity that has a claim against the debtor. |
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Term
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Definition
| Example: When credit card companies give you a card, they are basically loaning you money with the understanding that you will pay them back with interest. They have a claim against you since they are loaning you money |
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Term
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Definition
| any entity that owes a claim to the creditor. |
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Term
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Definition
| Example: In the above example, you are the debtor. |
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Term
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Definition
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Term
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Definition
| when a bankruptcy case is filed, all legal and equitable interests of the debtor in nonexempt property become property of the estate. Creditors are generally limited to satisfaction of their debts from the estate, not the debtor, so it is treated as a separate legal entity distinct from the debtor. |
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Term
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Definition
| Example: If you go bankrupt, your estate may become your house, cars, vacation homes, etc. as long as those items are not exempt from bankruptcy law. |
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Term
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Definition
| relief from liability for all debts except those the Bankruptcy Code specifies as not dischargeable. |
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Term
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Definition
| a third party that supervises the bankruptcy case and can control disposition (dispersal) of assets. The trustee gains the rigths and powers o the creditor with judicial lien (an interest in property obtained by court action to secure payment of a debt). |
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Term
Chapter 7
(Types of Bankruptcy Proceedings) |
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Definition
| Liquidation for either individuals or businesses. Liquidation is the termination of a business operation in order to use business assets to discharge existing liabilities (debts). |
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Term
Chapter 9
(Types of Bankruptcy Proceedings) |
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Definition
| Reorganization for Municipalities or other government units. |
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Term
Chapter 11
(Types of Bankruptcy Proceedings) |
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Definition
| Reorganization for most businesses. |
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Term
Chapter 12
(Types of Bankruptcy Proceedings) |
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Definition
| Reorganization for family farms |
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Term
Chapter 13
(Types of Bankruptcy Proceedings) |
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Definition
| Wage earner plan for individuals |
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Term
Joint Filings Chapter 7 or 13
(Types of Bankruptcy Proceedings) |
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Definition
| Spouses may file proceedings together |
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Term
The filing of a petition
(Commencement of bankruptcy cases) |
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Definition
| begins jurisdiction in the bankruptcy court. |
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Term
Voluntary petitions
(Commencement of bankruptcy cases) |
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Definition
| filed by the debtor (person who owes money). This option is available to any debtor even if they are solvent. A consumer debtor must receive credit counseling before filing for bankruptcy. |
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Term
Involuntary petitions
(Commencement of bankruptcy cases) |
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Definition
| filed by a creditor. May be filed only under Chapter 7 or 11 if the debtor is not paying his debts as they become due; the debtor may answer the petition. |
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Term
must contain
(The Petition) |
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Definition
i. Identification of the debtor.
ii. Lists of assets.
iii. Lists of debts.
iv. Identification of creditors. |
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Term
If it is incomplete
(The Petition) |
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Definition
| may result in no or incomplete relief from the debts owed. |
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Term
Automatic Stay
(Case Administration) |
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Definition
| upon the filing of a petition and giving notice in other proceedings, it prevents attempts by creditors to recover on claims outside of the bankruptcy court; it even freezes pending litigation in state courts. |
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Term
Notice to creditors
(Case Administration) |
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Definition
| if assets exist, creditors are given the opportunity to file a claim in order to use those assets as a means to satisfy the debts owed to them by the debtor.(Case Administration) |
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Term
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Definition
| Example: if you file a petition for bankruptcy because you have insufficient funds to make your credit card payments, any other proceedings which the credit card company has started against you will be frozen. |
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Term
Meeting of creditors (Section 341 meeting)
(Case Administration) |
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Definition
| states that the debtor must appear before his creditors and answer questions about his petition and financial situation. |
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Term
Voidable preferences
(Terms) |
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Definition
| the Bankruptcy Code invalidates certain preferential transfers made before the date of bankruptcy from the debtor to favored creditors. |
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Term
| Voidable Preferences (extra) |
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Definition
| Any payment on an antecedent debt (not made in the ordinary course of business) within 90 days of filing a bankruptcy petition is a _____ _____. |
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Term
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Definition
| Example: If you owe money to a family friend’s business, paying that business first before your other creditors would satisfy the qualifications of a ____ _____. |
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Term
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Definition
| the trustee may avoid (set aside) _____ _____ made on or within one year before the date of bankruptcy. A ____ ____ is one intended to hide or protect assets. |
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Term
| The 2005 Act amends fraudulent transfers |
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Definition
| was amended to include a payment to a corporate insider that is not made in the ordinary course of business. |
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Term
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Definition
| Example: If you know that you are going to file bankruptcy and transfer a valuable asset (such as a vacation home) to a friend or family member, then that transfer will meet the qualifications of _____ _____. |
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Term
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Definition
| the right of certain claims to be paid before claims of lesser rank. |
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Term
Secured claims
(Property of claims) |
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Definition
| (claims with liens on property of the debtor) have absolute priority over all claims. |
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Term
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Definition
| Example: Creditors who are likely to have ____ ____ are mortgage lenders, automobile finance companies, jewelry dealers, and car title lenders. |
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Term
Priority unsecured claims
(Property of claims) |
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Definition
| these claims are not secured by liens on property, but after the secured claims have been paid these claims have the next priority. These debts can rarely be discharged through bankruptcy. |
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Term
| Priority unsecured claims |
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Definition
| Example: Priority creditors include wage claims and tax claims. |
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Term
Unsecured claims
(Property of claims) |
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Definition
| these claims are not secured with liens against property. These claims have the lowest priority. ____ ____ may also be portions of claims that exceed the value of the debtor’s property securing the claims. Most claims are this: |
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Term
| (1-9 The Priority of Claims are as follows) |
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Definition
| Domestic support obligations |
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Term
| (2-9 The Priority of Claims are as follows) |
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Definition
Expenses of administration of debtor’s estate.
Example: payments to the trustee for services rendered. |
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Term
| (3-9 The Priority of Claims are as follows) |
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Definition
| Gap creditors (for debts incurred between the filing of the claim and order for relief). |
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Term
| (4-9 The Priority of Claims are as follows) |
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Definition
| Up to $10,000 for wages, salaries, or commissions of employees of businesses filing the petition. |
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Term
| (5-9 The Priority of Claims are as follows) |
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Definition
| Contributions to employee benefit plans for employees of businesses filing the petition. |
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Term
| (6-9 The Priority of Claims are as follows) |
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Definition
| Up to $4,925 for grain or fish producers against a storage facility. |
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Term
| (7-9 The Priority of Claims are as follows) |
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Definition
| Up to $2,225 for consumer deposits. |
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Term
| (8-9 The Priority of Claims are as follows) |
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Definition
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Term
| (9-9 The Priority of Claims are as follows) |
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Definition
| Claims arising from DUI convictions. |
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Term
Liquidation
(Chapter 7 Liquidation) |
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Definition
| involves terminating the business of the debtor, distributing the nonexempt assets, and discharging all dischargeable debts. |
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Term
The distribution of estate
(Chapter 7 Liquidation) |
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Definition
i. Secured creditors
ii. Creditors entitled to priority
iii. Unsecured creditors
iv. Fines and interest
v. The debtor |
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Term
Discharge
(Chapter 7 Liquidation) |
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Definition
| granted unless the debtor has committed an offense under the Bankruptcy Code or has received a discharge within the past eight years. |
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Term
Purpose
(Chapter 11 Reorganization) |
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Definition
| to preserve a distressed entity (like the business of a debtor) and its value as a going concern. |
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Term
Proceedings
(Chapter 11 Reorganization) |
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Definition
| debtor usually remains in possession and management of the estate. Debtor serves as the trustee, under the direction of a committee of creditors. |
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Term
Plan of Reorganization
(Chapter 11 Reorganization) |
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Definition
Acceptance of plan
Confirmation of plan
Effect of confirmation |
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Term
Acceptance of plan
(Plan of Reorganization) |
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Definition
| requires a specified proportion of creditors to approve the plan. |
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Term
Confirmation of plan
(Plan of Reorganization) |
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Definition
| requires good faith, feasibility, cash payments to some creditors, and acceptance by creditors. |
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Term
Effect of confirmation
(Plan of Reorganization) |
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Definition
| binds debtor and creditors and discharges the debtor after the plan payments are made. |
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Term
Purpose
(Chapter 13 Wage Earner Plan) |
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Definition
| to permit an individual debtor to file a repayment plan (called a wage earner plane) to discharge most debts. |
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Term
Confirmation of Plan
(Chapter 13 Wage Earner Plan) |
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Definition
| requires good faith, that the value of property distributed to creditors cannot be less than the amount that they would receive under Chapter 7 bankruptcy, the creditors accept the plan, and the debtor be able to make payments and comply with the plan. |
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