Ch 13 Creditor-Debtor Relations and Bankruptcy

Mechanic’s lien

A statutory lien on the real property of another to ensure payment for labor, services, or materials furnished for repair or improvement of that property.

Homestead exemption

A law permitting a debtor to retain the family home free from the claims of unsecured creditors or trustees in bankruptcy.

Non-dischargeable debts

Types of debts that cannot be eliminated in bankruptcy, including certain taxes, domestic support obligations, and debts incurred through fraud.

Chapter 7 bankruptcy

A type of bankruptcy providing for liquidation proceedings where nonexempt assets are sold and proceeds distributed to creditors.

Chapter 11 bankruptcy

A reorganization bankruptcy primarily for businesses, allowing them to create a plan to pay off debts while continuing operations.

Judicial lien

A claim against property that a creditor obtains through a court judgment.

Garnishment

A legal process through which a creditor collects a debt by seizing money directly from a debtor's paycheck or bank account.

Surety

A third party who agrees to be primarily responsible for the debt of another.

Cram-down provision

A bankruptcy code provision allowing a court to confirm a reorganization plan even if only one class of creditors accepts it.

Automatic stay

A court order that stops creditors from pursuing debt collection during a bankruptcy proceeding.

Liquidated debts

Debts that are definite or fixed in amount.

Writ of attachment

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

Debtor in Possession (DIP)

In Chapter 11 bankruptcy, the debtor who retains control of their business while undergoing a reorganization.

Creditors' meeting

A meeting called by the trustee where creditors listed in the schedules can ask questions about the debtor's finances.

Reaffirmation agreement

An agreement in which a debtor agrees to pay a debt that could be discharged in bankruptcy.

Suretyship

An express contract where a third party promises to be primarily responsible for a debtor's obligation to a creditor.

Right of subrogation

The right of a surety or guarantor to step into the shoes of the creditor to collect the debt from the principal debtor.

Proof of claim

A document filed by a creditor in a bankruptcy case to assert their right to receive a distribution from the debtor's estate.

Bankruptcy trustee

A person appointed to manage a debtor's estate in bankruptcy.

Preference payment

Payments made by a debtor that favor one creditor over others, which can be challenged in bankruptcy.

Means test

A means of determining whether a debtor qualifies for Chapter 7 bankruptcy based on income compared to the median in their area.

Involuntary bankruptcy

A bankruptcy proceeding initiated by creditors against a debtor, rather than by the debtor voluntarily filing.

Exempt property

Assets that a debtor is allowed to keep during bankruptcy, to protect them from being sold to pay creditors.

Reorganization plan

A plan under Chapter 11 that outlines how a debtor will pay off creditors while remaining in business.

Chapter 13 repayment plan

A court-approved plan that allows individuals with regular income to pay debts over time under the supervision of the bankruptcy court.