Bankruptcy Terminology You Should Know
Many consumers that file bankruptcy do not have a clue about what the terminology used means. In this article, we will attempt to explain in non-technical language what some of the terms used in bankruptcy mean. We will go in alphabetical order to make it easier to follow.
The first term, Adversary is basically a term that means a lawsuit rising or related to a bankruptcy case that is commenced by filing a complaint with the bankruptcy court. This could be initiated by a debtors’ attorney against a creditor that has violated some part of the Bankruptcy Code, for example trying to collect the debt after the bankruptcy petition if filed which a stay is immediately in affect.
Assume is another term used in bankruptcy meaning an agreement to continue performing duties under a contract or lease. An example of this would be a debtor leasing an automobile and wants to keep the lease so they will assume it.
The next term, Automatic Stay is an injunction that automatically stops lawsuits, foreclosure, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.
Bankruptcy is a legal procedure for dealing with debt problems if individuals and businesses, specifically, a case filed under one of the chapters of title 11 of the United States Code (Bankruptcy Code).
Another term used in bankruptcy is the Bankruptcy Administrator, which is an officer of the judiciary serving in the judicial districts of Alabama and North Carolina who, like the U. S trustee, is responsible for supervising the administration of the bankruptcy cases, estates, and trustee’s; monitoring plans and disclosure statements as well as monitoring creditor’s committees. They also monitor fee applications as well as perform other judiciary duties of the bankruptcy court.
Bankruptcy Code of course is the informal name for title 11 of the U S Code (11 U.S.C. Section 101-1330), the federal bankruptcy law.
The Bankruptcy Estate means all legal or equitable interests of the debtor in property at the time of the bankruptcy filing, which includes all property in which the debtor has an interest, even if it’s owned or held by another person.
A Bankruptcy Judge is a judicial officer of the United States district court who is the court official with decision making power over federal bankruptcy cases.
The term Bankruptcy Petition is a document filed by the debtor, (in a voluntary case), or by creditors (in an involuntary case), which open the bankruptcy case, (there are official forms used for the bankruptcy petition). There are six (6) chapters of the Bankruptcy Code.
Chapter 7 bankruptcy, is a chapter of the Bankruptcy Code providing liquidation, for example, the sale of the debtor’s nonexempt property and the distribution of the proceeds to creditors.
Chapter 9, provides reorganization of municipalities (which includes cities, towns, villages, counties, taxing districts, municipal utilities and school districts.
Chapter 11, generally provides for reorganization involving a corporation or partnership, usually a chapter 11 debtor proposes a plan of reorganization to keep its business alive and pay creditors over time, consumers in business and individuals can also seek relief under a chapter 11.
Chapter 12, provides for adjustment of debts for family farmers and fisherman.
Chapter 13, provides for adjustments of debts for an individual with regular income, which allows a debtor to keep property and pay debts over time, usually 3 to 5 years but no longer.
Chapter 15, deals with cases of cross border insolvency.
Another term used is chapter 13 trustee, which is a person appointed to administer in a chapter 13 case, a chapter 13 trustee’s responsibilities are similar to those of a chapter 7 trustee however, the chapter 13 trustee has the additional responsibility of overseeing the debtors’ plan, receiving payments from the debtor and disbursing those funds to the creditors.
A claim, is a creditors’ assertion of a right to payment from the debtors or the debtors property. Complaint is a term used in bankruptcy, which is the first or initiatory 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.
The confirmation term is the bankruptcy judge’s approval of a plan of reorganization or liquidation in chapter 11 or payment plan in chapter 12 or 13. There are additional terms to learn about that we will continue in the next article. The terminology in bankruptcy is very important to know and understand. An experienced bankruptcy attorney can help you understand what these terms are in more detail as it pertains to your individual case.