Chapter 22 Vocabulary Flashcards
An initial cash payment made when an expensive item, such as a house, is purchased. The payment represents a percentage of the purchase price, and the remainder if financed.
Down Payment
A written instrument that gives a creditor an interest in, or lien on, a debtor’s real property as security for a debt.
Mortgage
A mortgage provision requiring the borrower to pay a penalty if the mortgage is repaid in full within a certain period.
Prepayment Penalty Clause
A form of property insurance that protects the holder against damage or loss of the holder’s home.
Homeowner’s Insurance
The legal process by which a lender repossesses and disposes of property that has secured a loan.
Foreclosure
A postponement of part of all of the payments on a loan for a limited time.
Forbearance
A contract that describes the respective rights and responsibilities of a borrower and a lender as they try to resolve the borrower’s default.
Workout Agreement
A sale of mortgaged property for less than the balance due on the mortgage loan.
Short Sale
The right of a mortgagor who has breached the mortgage agreement to redeem or purchase the mortgaged property prior to the foreclosure proceedings.
Equitable Right of Redemption
A right provided by statute in some states under which mortgagors can redeem or purchase their property after a judicial foreclosure for a limited time period, such as one year.
Statutory Right of Redemption
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.
Homestead Exemption
One whose debts result primarily from the purchases of goods for personal, family, or household use.
Consumer-Debtor
The sale of the nonexempt assets of a debtor and the distribution of the funds received to creditors.
Liquidation
A person appointed by the court to manage the debtor’s funds.
Bankruptcy Trustee
The termination of a bankruptcy debtor’s obligation to pay debts.
Discharge
The document that is filed with a bankruptcy court to initiate bankruptcy proceedings.
Petition in Bankruptcy
A court’s grant of assistance to a complaint. In bankruptcy proceedings, the order relieves the debtor of the immediate obligation to pay the debts listed in the bankruptcy petition.
Order for Relief
In bankruptcy proceedings, the suspension of almost all litigation and other action by creditors against the debtor’s property. The stay is effective the moment the debtor files a petition in bankruptcy.
Automatic Stay
All of the property owned by a person, including real estate and personal property.
Estate in Bankruptcy
In bankruptcy proceedings, a property transfer or payment made by the debtor that favors one creditor over others.
Preference
In the context of bankruptcy, a creditor who has received a preferential transfer from a debtor.
Preferred Creditor
An agreement between a debtor and a creditor in which the debtor voluntarily agrees to pay a debt dischargeable in bankruptcy.
Reaffirmation Agreement
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.
Debtor in Possession (DIP)
A provision of the Bankruptcy code that allows a court to confirm a debtor’s Chapter 11 reorganization plan even through only one class of creditors has accepted it.
Cram-Down Provision
