Legal Terms Chapter 41 - The Law of Bankruptcy

Question 1

341 meeting

Answer 1

The first meeting of creditors in a bankruptcy proceeding.

Question 2

Adjustment of debts of individuals

Answer 2

A method by which an individual with regular income can pay his or her debts from future income over an extended period; also called Chapter 13 bankruptcy.

Question 3

Assets

Answer 3

Property; also called nonexempt assets.

Question 4

Automatic stay

Answer 4

A self-operating postponement of collection proceedings against a debtor; also called automatic suspension.

Question 5

Bankrupt

Answer 5

The state of a person, including a business, who is unable to pay debts as they become due; more about insufficient cash flow rather than more debts than assets.

Question 6

Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCA)

Answer 6

A 2005 revision to the federal bankruptcy code that makes it more difficult for people to declare bankruptcy and that extends the time allowed between repeat bankruptcy filings.

Question 7

Bankruptcy estate

Answer 7

The collection of the legal or equitable interests of the bankrupt debtor’s property at the time of the bankruptcy filing; Section 541 of the Bankruptcy Code.

Question 8

Chapter 7 Bankruptcy

Answer 8

A proceeding designed to liquidate a debtor’s property, pay off creditors, and discharge the debtor from most debts; also called liquidation and straight bankruptcy.

Question 9

Chapter 11 Bankruptcy

Answer 9

A method for businesses to reorganize their financial affairs, keep their assets, and remain in business; also called reorganization.

Question 10

Claim

Answer 10

Right to payment, or other equitable right, such as the right to receive specific performance of a contract.

Question 11

Creditor

Answer 11

Party to whom money is owed.

Question 12

Debtor

Answer 12

One who owes a debt to another.

Question 13

Debtor-in-possession

Answer 13

Another name for a debtor in Chapter 11, 12, and 13 bankruptcy cases.

Question 14

Discharge in bankruptcy

Answer 14

A release of a debtor from all debts that were proved in a bankruptcy proceeding.

Question 15

Disposable income

Answer 15

An amount of money that is left over after paying one’s monthly bills.

Question 16

Exemptions

Answer 16

Some items of property are excepted from bankruptcy proceedings and may be retained by the debtor.

Question 17

Equity

Answer 17

A market value above the loan outstanding for a house.

Question 18

Homestead exemption

Answer 18

Allows for the exemption from bankruptcy of one’s residence up to a certain amount depending on state or federal law.

Question 20

Involuntary bankruptcy

Answer 20

A bankruptcy proceeding that is initiated by one or more creditors.

Question 21

Liquidate

Answer 21

To turn into cash, accomplished by selling.

Question 22

Means test

Answer 22

A comparison of one’s income and expenses to a standard to determine whether a debtor meets eligibility requirements to be in Chapter 7 or Chapter 13 bankruptcy.

Question 23

Nondischargeable

Answer 23

Debts not eligible for bankruptcy.

Question 24

Order for relief

Answer 24

The acceptance of a case by a bankruptcy court.

Question 25

Preferences

Answer 25

Transfers made by the debtor to creditors before the bankruptcy proceeding, enabling them to receive a greater percentage of their claims than they would have otherwise received.

Question 26

Presumption of abuse

Answer 26

The ineligibility created when a second means testing demonstrates that a debtor's disposable income is above a threshold amount, making them ineligible for Chapter 7.

Question 27

Proof of claim

Answer 27

A signed, written statement setting forth a creditor's claim together with the basis for it.

Question 28

Prorated

Answer 28

Divided proportionately.

Question 29

Schedule

Answer 29

Listing.

Question 30

Secured creditors

Answer 30

Creditors who hold mortgages and other liens who receive payment to the exclusion of other creditors.

Question 31

Trustee in bankruptcy

Answer 31

A person appointed by a bankruptcy court to hold the debtor's assets in trust for the benefit of the creditors.

Question 32

Voluntary bankruptcy

Answer 32

A bankruptcy proceeding that is initiated by the debtor.