Ch 13 Creditor-Debtor Relations and Bankruptcy

Default

Failure to pay as promised

Secured creditors

loans are backed by collateral

Collateral

specific property (such as a car or a house) pledged by a borrower to ensure repayment

unsecured creditors

not backed by collateral

Lien

A claim against specific property to satisfy a debt, under common or statutory law

Judicial liens

used by a creditor to collect on a debt before or after a judgment is entered by a court

mechanic's lien

A statutory lien on the real property of another to ensure payment to a person who has performed work and furnished materials for the repair or improvement of that property

Foreclosure

the process by which a creditor legally takes a debtor's property to satisfy a debt

artisan's lien

A possessory lien on personal property of another person to ensure payment to a person who has made improvements on and added value to that property

writ of attachment

A court's order to seize the debtor's property issued prior to a judgment in the creditor's favor

writ of execution

A court's order to seize the debtor's property issued after a judgment

Attachment

The legal process of seizing another's property under a court order to secure satisfaction of a judgment yet to be rendered, must do due process

writ of execution

A writ that puts in force a court's decree or judgment ( has them seize it if in county)

Garnishment

A legal process whereby a creditor appropriates a debtor's property or wages that are in the hands of a third party

Liquidated debts

definite, or fixed, in amount

creditors' composition agreement

An agreement formed between a debtor and the creditors in which the creditors agree to accept a lesser sum than that is owed by the debtor in full satisfaction of the debt

Suretyship

An express contract in which a third party (the surety) promises to be primarily responsible for a debtor's obligation to a creditor

Surety

A third party who agrees to be primarily responsible for the debt of another, creditor need not exhaust all legal remedies against the principal debtor before holding the surety responsible for payment

Guarantor

A person who agrees to satisfy the debt of another (the debtor) only after the principal debtor defaults, required to pay the obligation only after the principal debtor defaults, and usually only after the creditor has made an attempt to collect from the debtor

Releases from suretyship

Material modification, Surrender of property, Payment or tender of payment

Defenses by surety

incapacity and bankruptcy, statute of limitations, fraud

right of subrogation

The right of a surety or guarantor to stand in the place of (be substituted for) the creditor, giving the surety or guarantor the same legal rights against the debtor that the creditor had

right of reimbursement

The legal right of a person to be repaid or indemnified for costs, expenses, or losses incurred or expended on the behalf of another

Co-surety

A person who assumes liability jointly with another surety for the payment of an obligation

right of contribution

The right of a co-surety who pays more than her or his proportionate share on a debtor's default to recover the excess paid from other co-sureties

homestead exemption

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

Frequently exempt personal property

Household furniture, Clothing and certain personal possessions, vehicles for transportation, classified animals/livestock/pets, Equipment that the debtor uses in a business or trade, such as tools or professional instruments

Chapter 7

ordinary, or straight, bankruptcy, provides for liquidation proceedings (the selling of all nonexempt assets and the distribution of the proceeds to the debtor's creditors).

Chapter 11

reorganizations, creditors and the debtor formulate a plan under which the debtor pays a portion of the debts and is discharged of the remainder, corporate debtors

Chapter 12

for family farmers and family fishermen

Chapter 13

for individuals, provide for the adjustment of debts by persons with regular incomes

Consumer-debtor

One whose debts result primarily from the purchase of goods for personal, family, or household use

Liquidation

The sale of the nonexempt assets of a debtor and the distribution of the funds received to the debtor's creditors

bankruptcy trustee

A person who is appointed by a court or by creditors to manage a debtor's funds during bankruptcy (collect and reduce to cash)

petition in bankruptcy

the document that is filed with a bankruptcy court to initiate bankruptcy proceedings

U.S. trustee

A government official who performs certain administrative tasks that a bankruptcy judge would otherwise have to perform

Means test

used to determine a debtor's eligibility for Chapter 7, to keep higher-income people from abusing the bankruptcy process forcing them to use ch 13 instead, debtor's average monthly income in recent months is compared with the median income in the geographic area in which the person lives

order for relief

A court's grant of assistance to a debtor in bankruptcy that relieves the debtor of the immediate obligation to pay debts, trustee and creditors must be given notice of the order for relief by mail not more than twenty days after entry of the order

Involuntary action

debtor of twelve or more creditors three of which have unsecured claims totaling at least $16,750 or less than twelve just one petition

automatic stay

In bankruptcy proceedings, the suspension of almost all litigation and other action by creditors against the debtor or the debtor's property

adequate protection doctrine

A doctrine that protects secured creditors from losing their security as a result of an automatic stay in a bankruptcy proceeding

powers of avoidance

enable the trustee to set aside (avoid) a sale or other transfer of the debtor's property and take the property back for the debtor's estate

Preference

In bankruptcy proceedings, a property transfer or payment made by the debtor that favors one creditor over others

recoverable preferential payment

an insolvent debtor must have transferred property, for a preexisting debt, within ninety days before filing

preferred creditor

In the context of bankruptcy, a creditor who receives a preferential transfer from a debtor

trustee may avoid fraudulent transfers or obligations if

they were made within two years prior to the filing of the petition or were made with actual intent to hinder, delay, or defraud a creditor

Creditors' meeting

trustee calls a meeting of the creditors listed in the schedules filed by the debtor

Proof of claim

lists the creditor's name and address, as well as the amount that the creditor asserts is owed to the creditor by the debtor

no-asset case

no proof of claims filed, no payment to unsecured creditors, most debts discharged

reaffirmation agreement

An agreement between a debtor and a creditor in which the debtor voluntarily agrees to pay a debt dischargeable in bankruptcy

Workout

An out-of-court agreement between a debtor and creditors that establishes a payment plan for discharging the debtor's debts

debtor in possession (DIP)

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

cram-down provision

A provision of the Bankruptcy Code that allows a court to confirm a debtor's Chapter 11 reorganization plan even though only one class of creditors has accepted it

family farmer

one whose gross income is at least 50 percent farm dependent and whose debts are at least 50 percent farm related, < 10,000,000 in debt

family fisherman

one whose gross income is at least 50 percent fishing dependent and whose debts are at least 80 percent fishing related, < 2,044,225