Bankruptcy is a legal procedure designed to protect an individual or business that cannot pay their debts, and seeks to have debts discharged or re-organized by the bankruptcy court.
Important Terms to Know
An injunction that automatically stops lawsuits, foreclosure, garnishments and all collection activity against the debtor the moment a bankruptcy petition is filed.
All legal or equitable interests of the debtor in property, both real and personal, 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 another person.)
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.
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.
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 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.)
A claim that may be owed by the debtor under certain circumstances, for example, where a debtor is a cosigner on another person’s loan and that person fails to pay.
A person or business to which the debtor owes money or that claims to be owed money by the debtor.
“Individual or group briefing” from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing under any chapter under the Bankruptcy Code.
A person who has filed a petition for relief under the bankruptcy laws.
A debt for which the Bankruptcy Code allows the debtor’s personal liability to be eliminated.
A description of any property that a debtor may prevent creditors from recovering.
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.
Calculation to determine whether an individual debtor’s chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case.
Abuse is presumed if the debtor’s aggregate current monthly income over 5 years is above the state median income for a family of a specific size.
A debt that cannot be eliminated in bankruptcy.
An agreement by a chapter 7 debtor to continue paying a dischargeable debt after the bankruptcy, usually for the purpose of keeping collateral or mortgaged property that would otherwise be subject to repossession.
If you have questions regarding bankruptcy, take advantage of all the resources at your disposal – call Ross & Matthews for advice and consultation.