Abatement
Permission from the Court to skip a plan payment.  Back

Abuse
A disregard of financial capability.  For example, purchasing luxury items on pre-bankruptcy shopping sprees with no reasonable or probable means of repayment.  Back

Absolute Priority
The order of payment to the different classes of creditors mandated by the Bankruptcy Code.  In theory, claims with higher priority are paid in full before other claims receive anything.  Junior creditors and shareholders are paid after senior creditors.  Specifically, the usual order is: first, administrative claims; second, statutory priority claims such as tax claims, rent claims, consumer deposits, and unpaid wages and benefits from before the filing; third, secured creditors' claims; fourth, unsecured creditors' claims; and fifth, equity claims.  Back

Adequate Protection
The right of a party with an interest in the debtor's property (such as a secured creditor) to assurance that its interest will not be diminished during the bankruptcy proceedings.  Back

Administrative Claim (or administrative expense claim)
Debt incurred by the debtor, with court approval, after the bankruptcy filing including necessary costs of preserving the bankruptcy estate, wages, salaries, court costs, lawyers' fees, accountants' fees, trustees' expenses, etc.  Back

Adversary Proceeding
A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the bankruptcy court.  Back

Allowed Claim (or allowed interest)
A claim of a creditor (or an equity interest) that is approved by the court for satisfaction under the plan of reorganization.  Back

Appeal
A request to the U.S. District Court or the Bankruptcy Appellate Panel, if there is on in the circuit, to review a decision of the Bankruptcy Court.  A request to the Circuit Court of Appeals to review a decision of the U.S. District Court.  Back

Arrearage
The amount of money or number of payments behind on a debt.  Back

Arrangement
May refer to a variety of formal or informal agreements worked out concerning the conditions under which a bankrupt company may operate; often, it refers to an extension of time in which debt can be paid off.  This was the term used under old Chapter XI.  Back

Asset
Any property belonging to the debtor, or to which the debtor is entitled at the time of filing.  An economic resource or item owned by a business that is expected to benefit its future operations.  Back

Assume 
An agreement to continue performing duties under a contract or lease.  Back

Automatic Stay
An automatic injunction requiring the suspension of collection activity on any debts listed in bankruptcy.  The automatic stay goes into effect upon the filing of the bankruptcy, not when the creditor receives the notice of bankruptcy.  This action protects the debtor from creditors seeking to seize its assets.  It also protects some creditors in that it prevents one creditor from obtaining an excessive share of the assets of the bankrupt to the exclusion of the other creditors.  Back

Avoidance Power
The power of the court to invalidate certain obligations or transactions undertaken by a debtor prior to filing bankruptcy.  It is generally intended to reverse transfers of property that favor one creditor over another.  Back

Ballot Date
Concerning a bankruptcy reorganization, the date and time, set by the bankruptcy court, by which all votes for accepting or rejecting the plan of reorganization must be received.  Back

Bankrupt
The entity that files a bankruptcy; the debtor; the insolvent entity.  This is a non-technical term and is not used in the Bankruptcy Code.  Back

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).  Back

Bankruptcy Act of 1898
The basis of the federal bankruptcy statutes used until the Bankruptcy Reform Act of 1978; provided primarily for liquidation of companies; reorganization could be effected indirectly under the 1898 Act through equity receiverships (these were used to keep creditors from seizing the assets of distressed companies).  Back

Bankruptcy Act of 1933
A statutory expansion of reorganization for companies; (see Section 77); the Bankruptcy Act of 1933 and the Bankruptcy Act of 1934 were superseded by the Chandler Act of 1938.  Back

Bankruptcy Act of 1934
A further statutory expansion of reorganization for companies; the Bankruptcy Act of 1933 and the Bankruptcy Act of 1934 were superseded by the Chandler Act of 1938.  Back

Bankruptcy Amendments of 1984
A set of amendments to the Bankruptcy Reform Act of 1978.  It contains a number of provisions including: limiting the jurisdiction of the bankruptcy court, limiting the right of companies to invalidate labor contracts while in bankruptcy and providing for the prevention of "substantial abuse."  Back

Bankruptcy Administrator 
An officer of the judiciary serving in the judicial districts of Alabama and North Carolina who, like the United States trustee, is responsible for supervising the administration of bankruptcy estates, cases, and trustees, monitoring plans and disclosure statements, monitoring fee applications, and performing other statutory duties.  Back

Bankruptcy Code
The informal name for title 11 of the United States Code (11 U.S.C. §§101-1330), the federal bankruptcy law.  The name given to the statutory body of bankruptcy laws after the Bankruptcy Reform Act of 1978.  Back

Bankruptcy Court
The bankruptcy judges in regular active service in each district; a unit of the district court.  Back

Bankruptcy Estate
All legal or equitable interests, whether real or personal, of the debtor in property at the time of the bankruptcy filing.  (The estate includes all property in which the debtor has an interest, even if it is owned or held by anther person.)  (Co-debtors' or spouse's income or property may be part of the bankruptcy estate.)  Back

Bankruptcy Judge
A judicial officer of the United States district court who is the court official with decision-making power over federal bankruptcy cases.  Back

Bankruptcy Mill
A business not authorized to practice law that provides bankruptcy counseling and prepares bankruptcy petitions.  Back

Bankruptcy Petition
A formal request for the protection of the federal bankruptcy laws. (There is an official from for bankruptcy petitions.)  Back

Bankruptcy Reform Act of 1994
Most comprehensive piece of bankruptcy legislation since the Bankruptcy Reform Act of 1978; signed into law on October 22, 1994 with most provisions effective immediately; included in the 1994 Act are: provisions to expedite bankruptcy proceedings; provisions to standardize fees; provisions to encourage individual debtor to use Chapter 13 to reschedule their debts rather than use Chapter 7 to liquidate; provisions to aid creditors in recovering claims against bankrupt estates; creation of a National Bankruptcy Commission to investigate further changes in bankruptcy law; etc.  Back

Bankruptcy Reform Act of 1978
First substantive bankruptcy code revision since the Chandler Act of 1938; took effect on October 1, 1979; some of the major elements of this act were 1) upgrading the jurisdiction of the U.S. bankruptcy courts to deal with cases handled by other courts (subsequently modified); 2) allowing the filing of a single joint petition of bankruptcy by husband and wife; 3) reorganizing the Chapters of bankruptcy; in particular, concerning business reorganization, Chapters X, XI and XII of the old code are replaced by Chapter 11; 4) expanding the number of people eligible and the type of relief available to people in a new Chapter 13, wage-earner reorganization bankruptcy; 5) altering the appellate procedure allowing direct appeal to the U.S. courts of appeal (subsequently modified); and 6) generally, making federal exemption provisions and options for debtors more extensive.  Back

Bankruptcy Rule 2004
A provision of the Bankruptcy Code that allows one party in a bankruptcy proceeding to compel discovery or other examination against another party.  Back

Bankruptcy Tax Act of 1980
The Bankruptcy Reform Act of 1978 did not specify how certain tax matters concerning bankruptcies should be handled.  The Bankruptcy Tax Act of 1980 was passed to specify the tax treatment of bankruptcy tax issues.  It specifies the tax treatment of, among other things, tax loss carry-forwards and exchanges of equity for debt.  Back

Bankruptcy Trustee 
A private individual or corporation appointed in all Chapter 7, chapter 12, and Chapter 13 cases to represent the interests of the bankruptcy estate and the debtor's creditors.  Back

Bar Date
Last date for a creditor to timely file a Complaint to Determine Dischargeability of a debt.  For non-governmental creditors, this date is 90 days after the conclusion of the Meeting of creditors (341 Meeting).  Governmental units, such as the IRS, have 180 days from the date the petition was filed to file a claim.  Back

Business Bankruptcy 
A bankruptcy case in which the debtor is a business or an individual involved in business and the debts are for business purposes.  Back

Cash Collateral
Cash and cash equivalents held by the debtor in Chapter 11 subject to liens of other parties.  Back

Chandler Act of 1938
Legislation providing substantial modifications to the Bankruptcy Act of 1898.  Back

Chapter
The Bankruptcy Code is organized into Chapters.  Except for chapter 12, the Chapters of the present code are all odd-numbered and are enumerated with Arabic numerals.  (Before the Bankruptcy Reform Act of 1978, the Chapters were numbered with Roman numerals.)  Chapters 1, 3, and 5 cover matters of general application.  Chapters 7, 9, 11, 12 and 13 concern, respectively: liquidation (business or non-business); municipality bankruptcy; business reorganization; family farm debt adjustment; and wage-earner or personal (i.e. non-business) reorganization.  Back

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.  Back

Chapter 7 Trustee 
A person appointed in a chapter 7 case to represent the interests of the bankruptcy estate and the unsecured creditors.  (The trustee's responsibilities include reviewing the debtor's petition and schedules, liquidating the property of the estate, and making distributions to creditors.  The trustee may also bring actions against creditors or the debtor to recover property of the bankruptcy estate.)  Back

Chapters X, XI and XII
Before the Chapter 11 of the Bankruptcy Reform Act of 1978, these three chapters of bankruptcy existed for company bankruptcies that involved reorganization.  Chapter X involved reorganization for big companies that held public debt or equity, Chapter XI was for readjustment of debts of smaller, non-publicly held companies and Chapter XII was for companies with extensive holdings of real property.  Back

Chapter 10
A new chapter of the bankruptcy code proposed in 1992.  The proposed Chapter 10, like Chapter XI of the old code, is designed for small business reorganizations.  This chapter has never passed the legislature and is therefore not part of the bankruptcy code.  Back

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.  People in business or individuals can also seek relief in chapter 11.)  The debtor maintains control of the business in Chapter 11 (unless the Court appoints a trustee.)  Back

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.  Back

Chapter 13
Bankruptcy proceedings for an individual with the intention of rescheduling the individual's debt (rather than liquidating the individual's assets and debt; an individual files under Chapter 7 to liquidate); Chapter 13 is referred to as wage-earner bankruptcy, personal bankruptcy or consumer bankruptcy; Chapter 13 cannot be used by a partnership or a corporation; it can be used by a sole proprietorship.  Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.  Back

Chapter 13 Trustee
A person appointed to administer a Chapter 13 case.  (A chapter 13 trustee's responsibilities are similar to those of a Chapter 7 trustee; however, a chapter 13 trustee has the additional responsibilities of overseeing the debtor's plan, receiving payments form debtors, and disbursing plan payment to creditors.)  Back

Chapter 20
An unofficial term describing the filing of a Chapter 7 proceeding followed by a Chapter 13.  The Chapter 7 filing eliminates unsecured debts while the Chapter 13 filing handles continuing liens.  Back

Chapter 22
An unofficial term describing a company that has filed for Chapter 11 twice.  Back

Chapter 33
An unofficial term describing a company that has filed for Chapter 11 three times.  Back

Claim
A creditor's assertion of a right to payment from a debtor or the debtor's property.  Rights to repayment made by creditors against a debtor; they may be liquidated, unliquidated, fixed, contingent, matured, unmatured, secured, unsecured, subordinated, legal or equitable.  Back

Class
Each of the different categories of claims against a debtor.  Back

Co-Debtor
An individual who signs a contract for credit with another debtor.  Back

Co-Debtor Stay
There is an automatic stay that protest persons who did not file bankruptcy but are liable on the same debt along with the person or entity who did file.  Joint cardholders or co-signers of the debt could be protected by the automatic stay.  This co-debtor protection is available only in Chapter 13 cases.  Back

Co-Signed Debt
Debt for which more than one person is legally responsible.  Back

Collateral
Property pledged for the payment of a loan or line of credit.  Back

Community Property
Only applicable in community property states; this consists of all property acquired by either spouse during the term of marriage.  For example, during marriage the wages of either spouse would be considered community property.  Back

Complaint
The first or starting 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.  Back

Complaint to Determine Dischargeability
The official complain a creditor's attorney files with the court to decide the dischargeability of a particular debt.  This action must be commenced prior to the Bar Date.  Back

Confirmation
The final approval by the bankruptcy court of a debtor's plan of reorganization.  Confirmation takes place after the plan has been approved by creditors.  Back

Contested Matter
A dispute among the parties to a bankruptcy proceeding, instituted by the filing of a motion of the court.  Back

Conversion
Changing chapters in bankruptcy (e.g., converting from Chapter 11 to Chapter 7 or vice-versa).  Back

Consumer Bankruptcy
A bankruptcy case filed to reduce or eliminate debts that are primarily consumer debts.  Back

Consumer Debts
Debts incurred for personal, family, or household purposes, as opposed to business purposes.  Back

Contingent Claim
A claim that may be owed by the debtor under certain circumstances, for example, where the debtor is cosigner on another person's loan and that person fails to pay.  Back

Core Proceedings
Those proceedings that are 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.  Back

Cramdown
Also known as lien stripping.  This is the process where a creditor's secured claim is split into secured and unsecured amounts based on the market value of the collateral.  The creditor ends up with two separate claims.  Back

Credit Grantor
Business or individual who gives a loan or line of credit; also referred to as the creditor.  Back

Creditor
A person to whom or business to which the debtor owes money or that claims to be owed money by the debtor.  Back

Creditors' Committee
A committee of representatives of a debtor's creditors appointed by the U.S. Trustee.  The committee acts on behalf of all creditors on negotiating a plan of reorganization and other major actions.  In large, complex cases, there may be more than one such committee.  Back

Cure Defaults
Bring accounts up-to-date that were past due at the time of filing.  Back

Debt
Something that is owed to another: normally money or property.  Back

Debtor
The person or entity who owes the debt.  A person who has filed a petition for relief under the bankruptcy law.  Back

Debtor-in-Possession
The debtor which remains in control of operations; as opposed to having a trustee operate the company.  Back

Default
The failure by a person or entity to abide by the covenants in a loan, debt obligation or other agreement to which they are a party.  The most common default is non-payment of interest or principal.  Back

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

Deficiency
The amount left owing on a debt following repossession of the collateral.  Back

Delinquent
Overdue, not pain on the agreed due date.  Back

Dependant
Someone who looks to the debtor for their support, maintenance, food, clothing, comfort, and protection.  Dependants include the debtor's spouse, children, and any other family members who reside with the debtor.  Back

Deposition
The testimony of a witness taken down in writing under oath.  This is normally taken outside of the courtroom in an informal setting.  Back

Discharge
A release of a debtor form personal liability for certain dischargeable debts.  (A discharge releases a debtor from personal liability for certain debts known as dischargeable debts and prevents the creditors owed those debts from taking any action against the debtor or the debtor's property to collect the debts.  The discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and personal contact.)  Back

Discharge Order
An order that relieves the legal obligation to repay a debt.  Back

Dischargeability
The extent to which a debt may be legally released.  Back

Dischargeable Debt
A debt for which the Bankruptcy Code allows the debtor's personal liability to be eliminated.  Back

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 and vote on the chapter 11 plan of reorganization.  Back

Discovery
The disclosure of pertinent facts or documents by either party prior to trial.  This includes such things as interrogatories, requests for production of documents, requests for admissions, and oral or written depositions.  Back

Dismissal
The termination of a bankruptcy proceeding.  An order terminating the bankruptcy.  After approval by the bankruptcy court, this order allows creditors to begin collecting on the debt involved in the bankruptcy.  See also conversion.  Back

Disposable Income
Funds the debtor has available that are not required for reasonable living expenses.  Back

Distressed
Used to describe securities, companies and related items in or near bankruptcy or insolvency.  The term does not have a strict, technical or legal definition.  For example, a distressed security might be a security where the issuer has defaulted or a security that is selling at a substantially discounted price where a default is expected in the future.  Back

Docket
The schedule on which the clerk of the court records all motions, pleadings, memoranda, orders and all other court filings.  Back

Effective Date
The date on which a plan of reorganization is implemented; usually it occurs after all the conditions to a plan of reorganization have been satisfied.  Back

Equitable Subordination
The lowering of priority of a claim because the holder of the claim is found to be guilty of some kind of improper conduct.  Back

Equity 
The difference between what is owed on a debt and the value of the collateral securing the debt.   (Example: If a house valued at $600,000 is subject to a $400,000 mortgage, there is $200,000 of equity.)  Back

Examiner
A professional appointed by the bankruptcy court to investigate and oversee certain aspects of the debtor or the proceedings. (By way of comparison, the role of the trustee is to operate the business of the debtor whereas the role of the examiner is to investigate and report to the court.)  Back

Exchange Offer
An offer by an issuer of debt securities to exchange new securities with less onerous provisions for currently outstanding securities.  Companies often make exchange offers in an attempt to avoid bankruptcy.  Back

Exclusivity (Period of)
A debtor in Chapter 11 has the exclusive right to file a plan of reorganization for the first 120 days of its bankruptcy.  Thereafter, unless the period of exclusivity is extended by the court, other parties may file reorganization plans.  Back

Executory Contract or Lease
Generally includes contracts or leases under which both parties to the agreement have duties remaining to be performed.  The debtor-in-possession (or trustee) is allowed to reject unilaterally certain executory contracts.  Back

Exempt
A description of any property that a debtor may prevent creditors from recovering.  Back

Exemption
Certain property belonging to the debtor is allowed to be excluded from the bankruptcy.  The Bankruptcy Code sets forth guidelines where property can be exempted.  This means the debtor is allowed to keep certain property in order to have a "fresh start."  The Bankruptcy Code also sets forth provisions allowing each state to create their own exempts.  The debtor usually has the option to choose which exemptions will be followed: the exemptions designed by the state in which he or she resides or the federal exemptions set forth in the Bankruptcy Code.  Back

Exempt Property 
Property or value in property that a debtor is allowed to retain, free from the claims of creditors who do not have liens.  Back

Face Sheet Filing
A bankruptcy case filed either without schedules or with incomplete schedules listing few creditors and debts.  (Face sheet filings are often made for the purpose of delaying an eviction or foreclosure.)  Back

Fair Mark Value
The liquidation value of property (that is, the amount of money that might be received from the sale of the item or items).  This is NOT the original cost of the item(s) or the replacement value.  Back

Family Farmer
An individual, individual and spouse, corporation, or partnership engaged in a farming operation who meet certain debt limits and other statutory criteria for filing a petition under chapter 12.  Back

Feasibility
Likelihood of being successfully completed.  Back

Fee Examiner
Appointed by the court to monitor fees paid to professionals in bankruptcy cases.  Back

Filing Fees
As of May 2004 the filing fee for Chapter 7 is $209, for Chapter 11 the filing fee is $839, for chapter 12 the filing fee is $239, and for Chapter 13 the filing fee is $194.  Back

First Meeting of Creditors
A mandatory meeting between creditors and the debtor.  It is usually held within a month of the filing of bankruptcy but often occurs later when the debtor has filed its schedules of financial information.  Also known as the "341 meeting."  Back

Foreclosure
To take legal title to and possession of collateral after a the default of a secured debt.  Back

Fraud
Intentional misrepresentation or deceit by the debtor.  For example, false information given in bankruptcy schedules, an inaccurate income statement, or a false Social Security Number on a credit card application.  Proof of fraud usually involves proving the debtor's intent at the time.  Back

Fraudulent Conveyance
The transfer of valuable assets from a debtor which 1) occurs when the debtor is technically insolvent, 2) renders the debtor insolvent, or 3) is made for less than adequate consideration.  Back

Fraudulent Transfer
A transfer of a debtor's property made with intent to defraud or for which the debtor receives less the transferred property's value.  Back

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.)  Back

Gap Period
The period between the filing of an involuntary petition and the dismissal of the petition, the entry of an order for relief or the filing of a voluntary petition (whichever is the outcome).  Back

Gap Creditor
A creditor that advanced funds to a debtor in a pending Chapter 13 case that is thereafter converted to a Chapter 7 case.  Most gap debts are discharged y the Chapter 7 discharge order.  However, any unpaid attorney fees from the Chapter 13 case are nondischargeable upon conversion to Chapter 7.  Back

Gap Debt
A debt incurred by a debtor after the filing of a Chapter 13 and before conversion of the case to a Chapter 7 case.  Back

Going Concern Value
What a company is worth if sold as a continuing business, as opposed to its liquidation value.  Back

Good Faith
Honesty of purpose and full and complete disclosure of the financial facts of the debtor.  Back

Guarantor
Person who promises to repay a debt incurred by another (also referred to as co-maker or co-signer).  Back

Impairment
When a Chapter 11 plan of reorganization alters the contractual rights of a class of holders of claims, that class is deemed to be impaired.  A class that is unimpaired is deemed to automatically accept a plan of reorganization.  Back

Individual Filing
A bankruptcy case filed by an individual, whether married or not.  A married individual may file a bankruptcy case as an individual.  Back

Insider (of individual debtor)
Any relative of the debtor or of a general partner of the debtor; partnership in which the debtor is a general partner; general partner of the debtor; or corporation of which the debtor is a director, officer, or person in control.  Back

Insider (of corporate debtor)
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.  Back

Insolvent
The inability to pay debts as they fall due in the usual course of business or the inability of the debtor to pay current obligations as they become due.  There is no requirement of insolvency in the Bankruptcy Code.  Back

Interrogatories
A formal quest or a series of questions that are proposed in writing by one party of an action to another.  The answers can be used later in court for various reasons.  This is a form of discovery used by attorneys when investigating a case.  Sanctions can be levied for willfully refusing to respond timely to interrogatories.  Back

Involuntary Chapter 7
Liquidation bankruptcy that is forced by creditors.  A bankruptcy initiated by at least three creditors holding unsecured claims aggregating at least $11,625 against the debtor.  Back

Joint Bankruptcy
A debtor filing bankruptcy together with a spouse.  Back

Joint Administration
A court-approved mechanism under which two or more cases can be administered together.  (Assuming no conflicts of interest, these separate firms or individuals can pool their resources, hire the same professionals, etc.)  Frequently, the cases of affiliated entities are jointly administered.  Joint administration does not necessarily result in substantive consolidation.  Back

Joint Petition
One bankruptcy petition filed by a husband and wife together.  Back

Jurisdiction
Geographical region over which a court has power.  Back

Last Day to File Complaint to Determine Dischargeability
(also known as Bar Date) This is the last day a Complaint to Determine Dischargeability can be filed against the debtor.  Back

Liability
Another word for debt.  Back

Lien
An interest in specific property designed to secure payment of a debt or performance of an obligation.  Back

Liquidating Reorganization
An informal term for a Chapter 11 proceeding when the company is essentially liquidated through one or more asset sales.  Back

Liquidation
A sale of debtor's non-exempt property with the proceeds to be used for the benefit of creditors.  A conversion of assets to cash in order to pay creditors all or a portion of the debt owed.  Back

Liquidation Value
The aggregate value of a debtor's assets if they are sold piecemeal.  Back

Liquidated Claim
A creditor's claim for a fixed amount of money.  Back

Luxuries
Purchases made that provide pleasure or comfort but are not absolutely necessary.  Back

Matrix
List of names and addresses of each creditor.  One of the required forms filled out for a bankruptcy case.  Back

Meeting of Creditors
(also known as the 341 Meeting or First Meeting of Creditors)  This is an opportunity for the Trustee and the creditors to question the debtor, with the debtor's attorney present, about assets, statements made by the debtor in the bankruptcy schedules, etc.  All questions are answered under oath.  Back

Modification of Plan
A repayment plan, normally filed in a Chapter 13 or Chapter 11 bankruptcy, can be modified to change the amount paid to classes within the plan.  This can only be done with the Court's approval.  Back

Motion
A formal request to a court to allow or require a specific legal action.  Back

Motion to Dismiss
A formal request filed in Court by the Trustee as a result of some sort of non-compliance with the bankruptcy case.  Typically, these tend to be a result of the debtor's failure to provide requested documentation, to file tax returns, or to make timely plan payments.  In the event that the motion is granted by the bankruptcy judge, an Order for Dismissal is filed and the case is closed, thereby removing the protection offered by the Automatic Stay.  Back

Motion to Lift the Automatic Stay
A request by a creditor to allow the creditor to take an action against a debtor or the debtor's property that would otherwise be prohibited by the Automatic Stay.  Back

National Bankruptcy Review Commission
An independent commission established pursuant to the Bankruptcy Reform Act of 1994 to investigate and study issues relating to the Bankruptcy Code.  The Commission completed a final report and ceased to exist as of November 19, 1997.  Click here to go to the National Bankruptcy Review Commission's website where you can find lots of information including the commissions final report.  Back

Necessities
Purchases that are required for the sustenance of life without being excessive.  For example, food, clothing, shelter, etc.  Back

Net Disposable Income
The amount of income left over after all expenses for the maintenance and support of the debtor or a dependent of the debtor are paid.  Back

Net Disposable Income Test
A review of the bankrupt debtor's income and expenses with the goal of ascertaining whether or not the debtor could pay all or part of his scheduled debts.  The resulting issues are whether or not there is substantial abuse under Section 707(b) or additional income that can be used for plan payments under Section 1325(b)(1)(B).  Back

Net Operating Loss
See Tax Loss Carry-Forward.  Back

No-Asset Case
A Chapter 7 case where there are no non-exempt assets available to satisfy any portion of the creditors' unsecured claims.  Back

Non-Dischargeable
The extent to which a debt may NOT be legally erased (typically child support, taxes, student loans, and certain judgments like criminal restitution).  Back

Nondischargeable Debt
Certain debts not included in the debtor's discharge.  Some are automatically excluded (for example, taxes, alimony, and debts incurred due to any drunk driving violations) and some require action by the creditor in the case.  If your debt is declared non-dischargeable, collection activity can resume, after your bankruptcy case is closed, regarding the debt.  Back

Non-Exempt Equity
The portion of equity that exceeds the maximum exemption allowed by law.  Back

Objection to Discharge
A trustee's or creditor's objection to the debtor's being released from personal liability for certain dischargeable debts.  Back

Object to Exemptions
A trustee's or creditor's objection to a debtor's attempt to claim certain property as exempt, i.e., not liable for any prepetition debt of the debtor.  Back

Offset
(also known as Setoff)  Using one debt to cancel another debt.  For example, the IRS keeping all or part of a tax refund to apply to debt owed to the IRS.  Back

Order
A formal ruling by a judge allowing or requiring a specific legal action.  Back

Over-Secured
A secured loan wherein the collateral is worth more than the debt owed against it.  Back

PACER (Public Access to Court Electronic Records)
A service provided by the court system that gives case filing information.  PACER access requires login and password which can be obtained from the PACER Service Center.  Back

Party in Interest
A party who is actually and substantially interested in the subject matter, as distinguished from one who has only a nominal on technical interest in it.  Back

Periodic
Occurring a regular intervals, usually monthly, quarterly, semi-annually or annually.  Back

Petition
(also known as Voluntary Petition when filed by a debtor)  A document used to begin a bankruptcy case.  It can also be referred to as the face-sheet of the bankruptcy schedules.  The petition must be filed in order to begin bankruptcy proceedings, while other bankruptcy documents (such as Schedules, Statement of Financial Affairs, Statement of Intention, etc.) can be filed within 15 days after the filing of the petition document.  Back

Petition Date
The date that a bankruptcy petition is filed with the Court.  Back

Plan
A debtor's detailed description of how the debtor proposes to pay creditors' claims over a fixed period of time.  Back

Plan Payment
The monthly payment required to keep a Chapter 13 bankruptcy active.  The plan payments may be made directly by the debtor to the Trustee or by payroll deduction.  Failure to make timely plan payments will result in the dismissal of your bankruptcy case.  Back

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

Post-Petition
Anything that occurs after the filing of a bankruptcy case with the Court.  Debt incurred following the filing of a bankruptcy is NOT included in the bankruptcy case.  Back

Post-Petition Arrearage
The amount of money or total payments that are behind after filing a bankruptcy petition.  Back

Post-Petition Indebtedness
Any debt incurred after the filing of the bankruptcy.  Post petition charges are not under the jurisdiction of the bankruptcy and the post petition dollar amount can generally be collected without violation of the automatic stay.  Back

Post-Petition Mortgage Payments
Mortgage payments that come due after a bankruptcy is filed with the Court.  In a typical Chapter 13 case, these payments are to be made by the debtor directly to the mortgage holder.  Back

Post-Petition Transfer
A transfer of a debtor's property made after the commencement of the case.  Back

Pre-Bankruptcy Planning
The arrangement (or rearrangement) of a debtor's property to allow the debtor to take  maximum advantage of exemptions.  (Prebankruptcy converting nonexempt assets into exempt assets.)  Back

Preference Period
A ninety-day window before the bankruptcy was filed.  The trustee may be able to recover payments made to creditors in that time frame.  Back

Preferential Payment
A payment made to a creditor in the 90-day period before a debtor files bankruptcy (or within one year if the creditor was an insider) that gives the creditor more than the creditor would receive in a debtor's Chapter 7 case.  Back

Prepackaged Bankruptcy
A situation where a company and its creditors agree to a Chapter 11 plan of reorganization before the company files a bankruptcy petition.  In a true prepackaged bankruptcy, a plan of reorganization is circulated and approved by creditors before the petition is filed.  The court then confirms the plan and the company emerges from bankruptcy quickly.  Back

Pre-Petition
Anything that occurs before the date a bankruptcy case is filed with the Court.  Back

Pre-Petition Arrearage
The mount of money or total payments that are behind before filing a bankruptcy petition.  Back

Presiding Officer
The trustee or a representative of the Trustee at a 341 meeting.  Back

Presumption Period
According to Section 523(a)(2)(C), purchases incurred over $1,225 for "luxury goods or services" within 60 days of the date of the bankruptcy filing or cash advanced over $1,225 made within 60 days of the bankruptcy filing are presumed to be non-dischargeable.  Back

Priority 
The Bankruptcy Code's statutory ranking of unsecured claims that determines the order in which unsecured claim will be paid if there is not enough money to pay all unsecured claims in full.  Back

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.  Back

Projected Filing Date
The date assigned during the initial consultation with the attorney by which all fees must be paid.  This is also the target date for filing your case with the Court.  Back

Pro Per
Short for "Proper Person."  A debtor who makes court appearances in their own "proper person" without representation by legal counsel.  Also known as Pro Se.  Back

Pro Rata Basis
Divided proportionately.  For example if a debtor owes $100,000 in debts and there is $1,000 to be distributed to creditors in a bankruptcy case, a pro-rata distribution would mean that each creditor would receive $.01 for each dollar it is owed -- in this example a 1% dividend.  Back

Pro Se
Appearing for oneself, as in the case of a debtor who does not retain a lawyer and appears for himself in court.  Also known as Pro Per.  Back

Proof of Claim
A form used to file a claim in order to receive payment from the bankruptcy estate.  (Click here for the official form for this purpose.)  Back

Property of the Estate
All legal or equitable interests of the debtor in property as of the commencement of the case.  Back

Purchase Money Security Interest
A lien that allows the creditor which financed the purchase of a specific item of property to repossess that item purchased with its loan proceeds.  Back

Reaffirmation Agreement
You can voluntarily agree to pay back any of your debts.  If you sign a reaffirmation agreement, it binds you to repaying the debt despite the bankruptcy.  In some cases, the bankruptcy court Judge must approve the reaffirmation agreement.  Reaffirmed debt is not affected by the discharge.  If the debtor defaults on the reaffirmation agreement, the creditor may pursue all avenues of collection activity available after your bankruptcy.  Back

Receiver
Particularly in foreign proceedings, or state court proceedings, a person appointed by the court to take custody of a debtor's property.  Back

Recession Period
The debtor may rescind (cancel) a reaffirmation agreement at any time before discharge, or within 60 days after filing the agreement with the court, whichever occurs later.  Back

Redemption
A lump sum payment to redeem collateral in lieu of a reaffirmation of the debt or surrender of the collateral.  Back

Relief From Stay
In certain situations, a creditor may obtain an Order for Relief from Stay to allow them to enforce their claims, pursue collections on a co-debtor, or any other activity that would otherwise violate the automatic stay.  When an order for relief of stay is granted by the court, the automatic stay is canceled as to that creditor only.  Back

Restitution
In the context of bankruptcy recovery, the act of repaying debt incurred as a result of fraud or abuse.  The Court usually imposes this.  A state court will order the debtor to pay back all or a part of the debt usually as a result of a criminal conviction or a plea bargain agreement.  Criminal restitution is a non-dischargeable debt in bankruptcy.  Back

Restructuring
A general term applied to an out-of-court attempt to reorganize and satisfy debts.  Similar to workout.  Back

Retired Benefits Bankruptcy Protection Act
Passed on June 16, 1988, this act allows the debtor to continue to pay insurance premiums for employees during the course of a bankruptcy.  Back

Reverse Leveraged Buyout
When a company that was a leveraged buyout restructures its (usually unmanageable) debt by issuing new equity (usually in exchange for some or all of the outstanding debt incurred during the original leveraged buyout).  Back

Sanction
A monetary penalty placed upon a party or its attorney in response to a violation of the Bankruptcy Code or rules.  The penalty ranges in dollar amount depending on the violation, the intent of the party, and the district in which the violation occurred.  Back

Section 304
The section of the present U.S. Bankruptcy Code that handles multi-national bankruptcies; only a few of these are filed each year.  Back

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.  Back

Secured Debt
Debt backed by a mortgage, deed of trust, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default.  Back

Setoff
An equitable right to cancel or offset mutual debts or cross demands, commonly used by a bank in reducing a customer's checking account or other deposit account in satisfaction of a debt the customer owes the bank.  Back

Schedules
Written information given by the debtor filed with the bankruptcy court on the day of filing or by the 15th day after.  These forms give the bankruptcy court and trustee a financial picture of the debtor and are required to be filled out truthfully and accurately under penalty of perjury.  These schedules include item such as the Voluntary Petition, a list of all assets, debts, income and expenses, the Statement of Financial Affairs, etc.  Back

Skeleton Filing
A term used at bankruptcy courts to describe a bankruptcy filing in which not all the necessary forms have been filed.  Certain courts allow a case to commence if only certain important forms are filed so long as the balance of required forms are forthcoming within a certain period of time.  Should only be done in the case of an extreme emergency requiring the automatic stay (stopping a foreclosure sale, trustee sale, repossession sale, etc.).  Back

Sole Proprietorship
A business owned by an individual; not incorporated.  Back

Special Classification
Legally allowed to be treated differently.  In some cases a creditor in a Chapter 13 bankruptcy case can be classified as a "special class" creditor and be paid separately through the plan.  Co-signed debt is one example of a debt that can be legally classified for special treatment in a Chapter 13 plan.  Back

Statement of Financial Affairs
A series of questions the debtor must answer in writing concerning sources of income, transfers of property, lawsuits by creditors, etc.  (Click here for the official form that debtors must use.)  Back

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.  Back

Stipulation
An agreement between adversaries in a legal proceeding.  Back

Stipulation for Judgment
An agreement between the bankrupt debtor and creditor that ends in lawsuit.  The document is filed with the court usually requiring repayment of a debt.  In the event of default, a judgment may be immediately entered in favor of the creditor.  Back

Straight Bankruptcy
An informal term for a Chapter 7 bankruptcy or liquidation; used more commonly to describe liquidation before the Bankruptcy Reform Act of 1978.  Back

Subpoena
A formal notice usually issued by a court, commanding specific action be taken under penalty of contempt of court.  Back

Substantial Abuse
The court may dismiss a bankruptcy case on the motion of a United States Trustee if the debts are primarily consumer debts and if the Trustee believes that the Chapter 7 petition represents substantial abuse under the Bankruptcy Code.  The main reason for a finding of substantial abuse is excess income under the Net Disposable Income Test.  (See Section 707(b) of the Bankruptcy Code.)  Back

Substantive Consolidation
Putting the assets and liabilities of two or more related debtors into a single pool to pay creditors.  (Courts are reluctant to allow substantive consolidation since the action must not only justify the benefit that one set of creditor receives, but also the harm that other creditors suffer as a result.)  Back

Summons
An order to answer a lawsuit within a specified time.  Back

Super-Priority Claim
An administrative claim that will be paid ahead of other administrative and priority claims.  Back

Tax Loss Carry-Forward
Losses, for tax purposes, that can be carried forward and applied to reduce taxable income in future years.  The Tax Reform Act of 1986 imposed stringent restrictions on the use of tax loss carry-forwards.  Back

To File for Bankruptcy
To take a set of prepared and signed bankruptcy documents (i.e. Voluntary Petition, Schedules, and Statement of Financial Affairs, etc.) to the Bankruptcy Court where they are stamped with the date, time, and a case number.  It is not necessary for debtors to be present at the filing.  Back

341 Meeting
This meeting is held at the Federal Courthouse by the Trustee assigned to your case.  The meeting, which lasts approximately 5 minutes, is mandatory and is conducted in every bankruptcy case, regardless of chapter.  During the meeting, the Trustee has the opportunity to clarify any issues in your particular case.  It is also an opportunity for creditors to appear on their own behalf.  Your attorney will be with you at your meeting.  Also known as the "first meeting of creditors."  Back

Transfer
Any mode or means by which a debtor disposes of or parts with his/her property.  Back

Trustee
The representative of the bankruptcy estate who exercise statutory powers principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the United States Trustee or Bankruptcy Administrator.  Back

Trustee (Chapter 7 Panel Trustee)
A person appointed to collect the non-exempt assets of the debtor and liquidate them to pay creditors.  Each judicial division within a judicial district will often have several trustees (a panel of trustees) that are assigned to Chapter 7 bankruptcy cases filed in that judicial district.  Back

Trustee (Chapter 13 Standing Trustee)
A person appointed to collect fund from the debtor and pay the funds over to creditors over a three- or five-year period pursuant to a court approved plan.  Each judicial division within a judicial district will often have only one trustee (a standing trustee) that is assigned to all Chapter 13 bankruptcy cases filed in that judicial district.  Back

Typing Service
A business not authorized to practice law that prepares bankruptcy petitions.  Back

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.  The Chapter 13 Standing Trustees and Chapter 7 Panel Trustees report to the United States Trustee.  The United States Trustee oversees the operation of the trustee offices and appoints and removes trustees from office.  Back

Undersecured Claim
A debt secured by property that is worth less than the amount of the debt.  Back

Unsecured Creditor
A creditor whose debt is not secured by property or collateral.  This would include credit card debts.  Back

Unsecured Debt
Any debt not secured by collateral (typically medical and credit card debt).  Back

Unlawful Detainer Action
A lawsuit brought by a landlord against a tenant to evict the tenant from rental property—usually for nonpayment of rent.  Back

Unliquidated Claim
A claim for which a specific value has not been determined.  Back

Unscheduled Debt
A debt that should have been listed by a debtor in the schedules filed with the court but was not, (Depending on the circumstances, an unscheduled debt may or may not be discharged.)  Back

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.  Back

VCIS (Voice Case Information System)
A touchtone telephone service provided by the court system that gives case filing information.  Back

Voluntary Petition
A bankruptcy petition filed by a debtor.  Back

Voluntary Transfer
A transfer of a debtor's property with the debtor's consent.  Back

Wage-Earner Bankruptcy
See Chapter 13 bankruptcy.  Back

Workout
An arrangement, outside of bankruptcy, by a debtor and its creditors for payment or re-scheduling of payment of the debtor's obligations.  Usually applies to an informal agreement between a business and its creditors, although it can be a formal agreement and it can apply to consumer debtors also.  Back