Test 1

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Bankruptcy systems

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The methods developed by societies to resolve the effects of financial crisis between debtors and creditors.

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Composition agreement

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An agreement between a debtor and multiple creditors for the repayment of debt. The various reorganization proceedings of the Bankruptcy Code.

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Debt collection

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The process of collecting a debt.

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Debtor relief

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What an individual filing personal bankruptcy seeks: a discharge, exemptions, and the benefits of the automatic stay.

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Discharge

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Legal relief from a personal obligation to satisfy a debt provided for by Section 524 of the bankruptcy code. One of three elements of debtor relief provided by the Bankruptcy Code.

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Exemptions

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Statutorily defined property that an individual debtor may protect from administration by a bankruptcy estate. A primary element of debtor relief.

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Bankruptcy Code

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The name of the bankruptcy laws in effect in the United States since October 1, 1979

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Creditor

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An entity with a claim arising before the filing of a bankruptcy petition. Defined by Section 101(10). An entity a debit is owed to.

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Debtor

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An entity that owes a debt. The entity filing a voluntary bankruptcy proceeding or against whom an order for relief is entered in an involuntary bankruptcy. Defined by Section 101(13).

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Liquidation

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The sale of an estate's assets to repay creditors.

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Reorganizations

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A bankruptcy proceeding where a debtor seeks confirmation of a plan that will repay creditors while permitting the debtor to retain assets or continue in business.

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Trustee

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A fiduciary appointed by the United States Trustee to administer a bankruptcy estate.

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Administrative consolidation

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When the court consolidates two or more proceedings for less than all purposes.

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Alleged debtor

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The debtor in an involuntary proceeding.

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Assisted person

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Any person whose debts are primarily consumer debts and whose nonexempt assets are less than $192,450 pursuant to 11 U.S.C. 101(3). Entitled to written retainer agreements and prepetition written disclosures from Debt Relief Agencies.

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Bankruptcy assistance

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Goods or services provided to an assisted person for the purpose of providing advice, counsel, document preparation, or court appearance in a bankruptcy proceeding.

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Debt relief agency

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A bankruptcy attorney or bankruptcy petition preparer and any person providing bankruptcy assistance to assisted persons for money or other valuable consideration pursuant to 11 U.S.C 101(12A). Subject to written retainer and disclosure requirements.

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First day order

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Common name of critical orders entered within the first day or two of a large corporate Chapter 11 filing.

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Involuntary petition

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A bankruptcy proceeding initiated by one or more creditors (or general partners of a partnership) by filing a petition seeking the entry of an order for relief, a judgment that the debtor is bankrupt.

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Joint cases

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A bankruptcy proceeding involving an individual and the individual's spouse.

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Order for relief

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A statutory term of art, which signifies that a debtor has filed for bankruptcy relief.

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Petitioning creditors

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Creditors initiating an involuntary petition against a debtor.

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Prepetition credit counseling

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Counseling that a debtor must receive from an approved credit counseling agency as a prerequisite to seeking individual bankruptcy relief.

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Statements and Schedules

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Common name of the Statement of Financial Affairs and Schedules of Assets and Liabilities filed by any debtor within the bankruptcy system. These pleadings will be the most important initial pleadings in any bankruptcy proceeding.

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Statement of Financial Affairs

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A fundamental bankruptcy pleading consisting of a questionnaire concerning a debtor's financial affairs.

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Substantive consolidation

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When a court consolidates two more more proceedings for all purposes.

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Venue

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The proper Bankruptcy Court (federal district) in which a bankruptcy proceeding should be commenced. Where the debtor resides or where the debtor business's primary business address or assets are located. May be changed by a motion of a party in interest.

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Voluntary petition

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A bankruptcy proceeding initiated by a debtor filing a petition for relief.

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Due process

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Notice and an opportunity to be heard.

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Evidentiary hearing

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A hearing held to take sworn testimony to permit a Bankruptcy Court to make a decision in a contested matter that is not a separate adversary proceeding. Similar to a trial in a non-bankruptcy environment.

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Ex parte

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An application made to the court without notice or with limited notice to limited parties. Applications specifically permitted for various ministerial functions. A legitimate extraordinary circumstance must exist for the court to consider.

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Motion for relief from the automatic stay

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A motion made by a creditor, pursuant to 11 U.S.C., to be freed from the effect of the automatic stay.

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Noticed motion

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A motion brought by a party in interest seeking a ruling from the Bankruptcy Court with notice provided to all interested parties.

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Regular income

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Income sufficient and stable enough to support performance of a Chapter 13 plan by an individual. Not limited to wages and salary. Pension, Social Security, and commission income may all constitute.

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Serial filing

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A debtor who files a second (or third) bankruptcy proceeding after dismissal of one or more prior proceedings.

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Current monthly income

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The monthly income of a consumer debtor generally determined by the average of income received from all sources in the six months preceding the filing of a bankruptcy petition, as described in 11 U.S.C. 101(10A). Key element in determining whether or not a consumer debtor is abusing Chapter 7 pursuant to needs based bankruptcy.

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Means testing

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Title given to formula contained in 11 U.S.C. 707 b(2) to determine whether or not a consumer debtor is presumed to be abusing the bankruptcy system by filing Chapter 7.

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Median family income

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The most current figures provided by the Bureau of the Census as set forth in 11 U.S.C. 101(39A). Determines whether or not a debtor is subject to needs based bankruptcy analysis.

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Needs based bankruptcy

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Same as Means Testing

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Surplus monthly income

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Amount of monthly income available to repay unsecured creditors pursuant to means testing to fund a Chapter 13 plan.

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Claim

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A right to payment of any kind or a right to performance that may be compensated by damages.

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Community Claim

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A claim enforceable against community property under non-bankruptcy law.

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Corporation

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A business organized and registered according to non-bankruptcy or state law.

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Debt

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A liability upon a claim.

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Domestic Support Obligations

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Obligations for alimony, support, or maintenance, regardless of when incurred.

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Equity Security Holder

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An entity owning an interest in a debtor. The shareholders of a corporate debtor. The partners of a partnership.

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Individual with Regular Income

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Individuals who have regular income that is sufficiently stable to make monthly payments to the trustee under a Chapter 13 plan.

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Insiders

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Generally, an entity in control of a debtor or a debtor's relatives. Definition will vary depending upon the debtor's identity as an individual, partnership, or corporation.

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Insolvent

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And entity generally becomes this when its liabilities exceed its assets.

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Judicial Lien

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A lien arising by virtue of a court order or judgment. May be a prejudgment writ of attachment or a post-judgment writ of execution.

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Lien

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A right to property to secure repayment of a debt or the performance of an obligation. May be judicial, consensual, or statutory.

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Statutory Lien

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A lien created by operation of law other than a court order.

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Person

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Any kid of entity, individual, corporate or partnership, except a governmental unit.

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Security

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Commercial documents used to evidence an ownership interest in an entity, among other things.

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Security Agreement

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An agreement creating a security interest. A security interest is a consensual lien created by agreement.

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Transfer

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Any means that may be devised to dispose of property or an interest in property. This is an intentionally broad definition.

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Automatic Stay

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A statutory bar to the conducting of any collections activity by creditors after a bankruptcy petitions has been filed. All litigation involving the debtor as a defendant is stayed. Foreclosures and repossessions are stayed. A creditor may seek relief from the stay in some situations. Once of the three major elements of debtor relief.

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Bankruptcy Petition Preparer

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A person other than an attorney or an attorney's employee who prepares from compensation a document for filing with the Bankruptcy Court. An unsupervised paralegal may be one.

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Consumer no asset bankruptcy

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A Chapter 7 bankruptcy proceeding for an individual in which there are normally no assets available for distribution to creditors. The most common and simplest of all bankruptcy proceedings.

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Creditors' meeting

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Also known as a meeting of creditors. A mandatory hearing, held within 40 days after the entry of an order for relief in any Chapter proceeding.

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Disinterested person

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A person who is not a creditor, equity security holder, insider, or who does not have an interest materially adverse to an estate.

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Exempt

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Property protected from the reach of creditors or the trustee.

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Final fee application

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Application brought at the end of a bankruptcy proceeding or when all services to be rendered are complete to approve payment of professional compensation.

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Fresh Start

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The phrase most frequently used colloquially to describe the basic elements of debtor relief: discharge, exemptions, and automatic stay.

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Interim fee application

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Application brought during a bankruptcy proceeding to approve payment of professional compensation.

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Interim trustee

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The trustee appointed by the United States Trustee to administer a bankruptcy estate prior to the meeting of creditors. Will become a permanent trustee unless the creditors elect a different trustee at the meeting of creditors.

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Reaffirmation agreement

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A debtor's agreement to remain legally liable for repayment of a debt otherwise dis chargeable in a bankruptcy proceeding.

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Rule 2004 Examination

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An extended examination of any person pursuant to Federal Rule of Bankruptcy Procedure 2004 regarding one or more aspects of a debtor's financial affairs.

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Conversion

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The act of converting a bankruptcy proceeding from one Chapter to another. A typical scenario is failed reorganization.

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Dismissal

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The act of terminating a bankruptcy proceeding, the general effect of which is to restore the parties to their rights and liabilities as they existed prior to the bankruptcy filing.