An agreement between the debtor and a creditor to continue performing duties under a contract or lease.
The moment a new bankruptcy case is filed, the Court automatically enters an order that immediately stops foreclosures, repossessions, lawsuits, garnishments, and all collection activity against the debtor. The automatic stay also stops the equitable division of property in a pending divorce case. Under BAPCPA, the automatic stay does not stop the establishment or enforcement of child support or alimony, nor does it stop most criminal proceedings.
The power of the bankruptcy court to stop or set aside certain obligations or transactions commenced by a debtor prior to filing bankruptcy. It is generally used to reverse a preferential treatment of creditors, which occurs when the debtor gives property or money to a creditor prior to filing a bankruptcy case. A debtor can also avoid a judicial or judgment lien that purports to act as an involuntary lien on the homestead property.
A legal process under federal law giving protection to debtors, whether individuals or corporations, who are insolvent.
The informal name for Title 11 of the United States Code §§ 101-1330.
The Federal District Court where cases under the Bankruptcy Code are filed and, if necessary, litigated.
The non-exempt property in which the debtor has an interest, whether in the possession of the debtor or other person, that is subject to the jurisdiction of the bankruptcy court.
A judicial officer of the United States district court who presides over federal bankruptcy cases. The bankruptcy judge’s rulings are subject to review by U.S. District Courts of Appeal and may be overturned if contrary to established bankruptcy law.
The document filed with the bankruptcy court to initiate a bankruptcy proceeding. It contains general information about the debtor(s) and is signed by the debtors and their attorney.
BAPCPA is the acronym for the Bankruptcy Abuse Prevention and Consumer Prevention Act of 2005. Also known as “The New Bankruptcy Law,” it is a major overhaul of the bankruptcy system by Congress in an attempt to make it more difficult for consumers to erase debt by forcing more of them to file under Chapter 13 (reorganization) rather than Chapter 7 (liquidation). The overwhelming consensus among all bankruptcy practitioners, both debtor and creditor, is that BAPCPA is poorly written and, in the final analysis, does not affect the vast majority of consumers’ ability to actually file Chapter 7 bankruptcy. It has, however, increased the work required by attorneys, trustees and court officials, so as a result, bankruptcy attorney fees and court costs are higher after BAPCPA.
The deadline for creditors to file a claim against the debtor.
A bankruptcy categorized by the U.S. courts as primarily involving business debts. Under BAPCPA, a debtor with primarily business debts does not have to file a means test nor has to get a certificate of credit counseling. Data from the U.S. Administrative Office of the Courts subdivides bankruptcies into business and non-business for statistical purposes.
The Bankruptcy Code is organized into Chapters. Chapters 1, 3, and 5 cover matters of general application. Chapter 7 concern liquidation (business or non-business); Chapter 11 concerns business reorganization; and Chapter 13 concerns personal (i.e. non-business) reorganization.
The chapter of the Bankruptcy Code providing for “reorganization” of the business debtor’s financial circumstances. The debtor usually maintains control of the business in Chapter 11, but the Court can appoint a trustee. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. Individuals can also seek relief in chapter 11 if their debts are too great for Chapter 13.
This is also known as a wage-earner plan. Chapter 13 is typically filed by individuals behind in house and/or car payments. A debtor can file a Chapter 13 Plan, which is a written proposal for bringing his/her secured debts current over a period of 36 – 60 months. The debtor keeps and uses his/her property while the bankruptcy case is pending. If a debtor “fails” the means test under Chapter 7, he/she must file bankruptcy under Chapter 13 and repay a portion of the unsecured debt.
The chapter of the Bankruptcy Code providing for “liquidation” of the debtor’s non-exempt assets. A Chapter 7 debtor can be an individual or business.
A creditor’s assertion of a right to payment from the debtor or the debtor’s property. Claims are divided into different classes, such as secured, unsecured, and priority.
Each of the different categories of claims against a debtor.
The final approval by the bankruptcy court of a debtor’s plan of reorganization. In Chapter 11, confirmation takes place after the plan has been approved by creditors. In Chapter 13, a creditor can file an objection to the proposed plan, which will be heard prior to confirmation.
A debtor whose debts are primarily (ie. greater than 50%) consumer debts.
Debts incurred for personal, as opposed to business, needs. A personal credit card used in one’s business is considered a business debt.
Those matters, other than objections to claims, that are disputed by the debtor, creditor or trustee, but are not within the definition of adversary proceeding contained in Rule 7001.
A claim (or debt) that may be owed by the debtor under certain circumstances, such as where the debtor is the guarantor of another person’s loan. A personal guarantor only owes the money if the primary obligor defaults under the terms of the obligation.
The legal process of changing chapters in bankruptcy, such as changing from a Chapter 13 to a Chapter 7 or vice-versa. Although a conversion is typically initiated by the debtor, the trustee can also ask the judge to convert a case against the debtor’s wishes.
Those proceedings inherent in and fundamental to the administration of a bankruptcy case. Core proceedings are subject to the jurisdiction of the bankruptcy court. Non-core proceedings may be conducted outside the jurisdiction of the bankruptcy court.
A bankruptcy Judge’s confirmation of a plan of reorganization over the objections of one or more classes of creditors, if the bankruptcy judge believes it is in the best interest of all parties. Usually, a cramdown refers to splitting a secured creditor’s debt into secured and unsecured portions. The secured portion is equal to the fair market value of the property, with the remaining balance of the debt treated as unsecured.
A dubious but absolute requirement prior to filing a bankruptcy case by a non-business debtor. An analysis of financial circumstances from a credit counseling agency approved by the U.S. Trustee’s Office. Credit Counseling is often referred to as the “ticket into bankruptcy.” Compare to “debtor education.”
Anyone to whom the debtor owes money or who claims to be owed money by the debtor.
The average monthly income received by the debtor’s household over the six calendar months preceding the month in which the bankruptcy case is filed. CMI does not including social security income and certain other payments enumerated in 11 U.S.C. § 101.
A person who has filed a petition for relief under the Bankruptcy Code for the purpose of seeking protection from creditors.
An instructional course in personal financial management by an agency approved by the U.S. Trustee’s Office that must be completed by all non-business debtors. The course is often referred to as the “ticket out of bankruptcy.” Compare to “credit counseling.”
A bankruptcy petition that is filed without all of the necessary accompanying forms, such as Schedules A – J, Statement of Financial Affairs, Statement of Intentions, etc. Failure to file all necessary forms shortly thereafter will result in the case being administratively dismissed.
The court order that legally wipes out certain debts described in the Bankruptcy Code. A discharge releases a debtor from personal liability for “dischargeable debts” and prevents the creditors from collecting, or communicating about, those debts.
A debt for which the Bankruptcy Code allows the debtor’s personal liability to be eliminated.
Disposable income is the difference between monthly income and monthly expenses. This is frequently a contested point between the debtor and the Chapter 13 Trustee. The Trustee often scrutinizes the debtor’s monthly expenses in an effort to increase the amount paid to general unsecured creditors in a Chapter 13 Plan.
An official list of all motions, pleadings, memoranda and orders in a debtor’s case compiled by the Clerk of Bankruptcy Court.
The difference between the value of a debtor’s property and the amount owed to the creditor holding a security interest in the property. In other words, if the debtor were to sell the property, it is the amount of money left over after paying the secured creditor.
A contract in which parties to the agreement have duties remaining to be performed. A debtor is allowed to assume or reject certain executory contracts.
Certain property owned by an individual debtor that the Bankruptcy Code or applicable state law allows the debtor to keep from unsecured creditors. Exempt property is not property of the bankruptcy estate.
The amount charged by the Clerk of Court to initiate a bankruptcy case, adversary proceeding or certain motions. Lately, it seems filing fees are changing as frequently as the cost of a First Class Stamp, so consult with a local bankruptcy attorney or the clerk’s office for the current fee chart.
A transfer of a debtor’s property made with intent to defraud creditors the bankruptcy estate. A transfer is usually considered fraudulent if the debtor receives less than the transferred property’s value and/or the transfer is to an “insider” (e.g. a friend or family member).
Giving debtors a financial “fresh start” is the stated purpose of bankruptcy system.
The value of a business if it remains operational versus liquidating its assets.
Someone with a close connection to the debtor, typically a friend or relative or close business acquaintance. Transactions between the debtor and insiders are scrutinized by the bankruptcy trustee to ensure that they are fair and reasonable.
Generally, a condition of not being able to pay one’s debts as they come due.
A bankruptcy case initiated by at least three creditors holding unsecured claims totaling at least $5000 against the debtor. Data from the U.S. Administrative Office of the Courts subdivides bankruptcies into voluntary and involuntary.