Chap. 15

Question 1

adequate protection doctrine

Answer 1

In bankruptcy law, a doctrine that protects secured creditors from losing their security as a result of an automatic stay on legal proceeding by creditors against the debtor once the debtor petitions for bankruptcy relief.

Question 2

artisan’s lien

Answer 2

a possessory lien given to a person who has made improvements and added value to another person’s personal property as security for payment for services performed

Question 3

automatic stay

Answer 3

In bankruptcy proceedings, the suspension of virtually all litigation and other action by creditors against the debtor or the debtor’s property; the stay is effective the moment the debtor files a petition in bankruptcy

Question 4

bankruptcy trustee

Answer 4

a person who is either appointed by the US department of Justice or by creditors in a bankruptcy case

Question 5

debtor in possession (DIP)

Answer 5

In Chapter 11 bankruptcy proceedings, a debtor who is allowed to continue in possession of the estate in property (the business) and to continue business operations

Question 6

garnishment

Answer 6

a legal process used by a creditor to collect a debt by seizing property of the debtor (such as wages) that is being held by a third party

Question 7

guarantor

Answer 7

A person who agrees to satisfy the debt of another only after the principal debtor defaults

Question 8

homestead exemption

Answer 8

a law permitting a debtor to retain the family home, either in its entirety or up to a specified dollar amount, free from the claims of unsecured creditors or trustees in bankruptcy

Question 9

insider

Answer 9

a corporate director or officer, or other employee or agent with access to confidential information and a duty not to disclose that information in violation of insider-trading laws

Question 10

lien

Answer 10

A claim against specific property to satisfy a debt

Question 11

petition in bankruptcy

Answer 11

The document that is filed with a bankruptcy court to initiate bankruptcy proceedings. The official forms required for a petition in bankruptcy must be completed accurately, sworn to under oath, and signed by the debtor

Question 12

preference

Answer 12

property transfers or payments made by the debtor that favor one creditor over others. the bankruptcy trustee is allowed to recover payments made both voluntarily and involuntarily to one creditor in preference over another

Question 13

right of subrogation

Answer 13

the right of a person to stand in the place of (be substituted for) another, giving the substituted party the same legal rights that the original party had

Question 14

surety

Answer 14

A person, such as a cosigner on a note, who agrees to be primarily responsible for the debt of another

Question 15

workout

Answer 15

a formal contract between a debtor and his or her creditors in which the parties agree to negotiate a payment plan for the amount due on the loan instead of proceeding to foreclosure

Question 16

writ of attachment

Answer 16

A court’s order, prior to trial to collect a debt, directing the sheriff or other officer to seize nonexempt property of the debtor; if the creditor prevails at trial, the seized property can be sold to satisfy the judgment

Question 17

writ of execution

Answer 17

A court’s order, after a judgment has been entered against the debtor, directing the sheriff to seize and sell any of the debtor’s nonexempt real or personal property