Arizona Bankruptcy Info Terms and Definitions
adversary proceeding A lawsuit arising
in or related to a bankruptcy case that is commenced by filing a complaint with the court. A non exclusive list
of adversary proceedings is set forth in Fed. R. Bankr. P. 7001.
assume An agreement to continue
performing duties under a contract or lease.
automatic stay An injunction that
automatically stops lawsuits, foreclosures, garnishment's, and all collection activity against the debtor the
moment a bankruptcy petition is filed.
bankruptcy A legal procedure for dealing
with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title
11 of the United States Code (the Bankruptcy Code).
bankruptcy administrator An officer of
the judiciary serving in the judicial districts of Alabama and North Carolina who, like the U.S. trustee, is
responsible for supervising the administration of bankruptcy cases, estates, and trustees; monitoring plans and
disclosure statements; monitoring creditors' committees; monitoring fee applications; and performing other
statutory duties. Compare U.S. trustee.
Bankruptcy Code The informal name for
title 11 of the United States Code (11 U.S.C. §§ 101-1330), the federal bankruptcy law.
bankruptcy court The bankruptcy judges
in regular active service in each district; a unit of the district court.
bankruptcy estate All legal or equitable
interests of the debtor in property at the time of the bankruptcy filing. (The estate includes all property in
which the debtor has an interest, even if it is owned or held by another person.)
bankruptcy judge A judicial officer of
the United States district court who is the court official with decision-making power over federal bankruptcy
bankruptcy petition The document filed
by the debtor (in a voluntary case) or by creditors (in an involuntary case) by which opens the bankruptcy case.
(There are official forms for bankruptcy petitions.)
chapter 7 The chapter of the Bankruptcy Code providing for
"liquidation,"(i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to
chapter 9 The chapter of the Bankruptcy
Code providing for reorganization of municipalities (which includes cities and towns, as well as villages,
counties, taxing districts, municipal utilities, and school districts).
chapter 11 The chapter of the Bankruptcy
Code providing (generally) for reorganization, usually involving a corporation or partnership. (A chapter 11
debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People
in business or individuals can also seek relief in chapter 11.)
chapter 12 The chapter of the Bankruptcy
Code providing for adjustment of debts of a "family farmer," or a "family fisherman" as those terms are defined
in the Bankruptcy Code.
chapter 13 The chapter of the Bankruptcy
Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep
property and pay debts over time, usually three to five years.)
chapter 15 The chapter of the Bankruptcy
Code dealing with cases of cross-border insolvency.
claim A creditor's assertion of a right
to payment from the debtor or the debtor's property.
Bankruptcy judges' s approval of a plan of reorganization or liquidation in chapter 11, or payment plan in chapter
12 or 13.
consumer debtor A debtor whose debts are
primarily consumer debts.
consumer debts Debts incurred for
personal, as opposed to business, needs.
contested matter Those matters, other
than objections to claims, that are disputed but are not within the definition of adversary proceeding contained
in Rule 7001.
contingent claim A claim that may be
owed by the debtor under certain circumstances, e.g., where the debtor is a cosigner on another person's loan
and that person fails to pay.
creditor One to whom the debtor owes
money or who claims to be owed money by the debtor.
credit counseling Generally refers to
two events in individual bankruptcy cases: (1) the "individual or group briefing" from a nonprofit budget and
credit counseling agency that individual debtors must attend prior to filing under any chapter of the Bankruptcy
Code; and (2) the "instructional course in personal financial management" in chapters 7 and 13 that an
individual debtor must complete before a discharge is entered. There are exceptions to both requirements for
certain categories of debtors, exigent circumstances, or if the U.S. trustee or bankruptcy administrator have
determined that there are insufficient approved credit counseling agencies available to provide the necessary
creditor's meeting see 341 meeting
current monthly income The average
monthly income received by the debtor over the six calendar months before commencement of the bankruptcy case,
including regular contributions to household expenses from non debtors and income from the debtor's spouse if
the petition is a joint petition, but not including social security income and certain other payments made
because the debtor is the victim of certain crimes. 11 U.S.C. § 101(10A).
debtor A person who has filed a petition
for relief under the Bankruptcy Code.
debtor education See credit
defendant An individual (or business)
against whom a lawsuit is filed.
discharge A release of a debtor from
personal liability for certain discharge able debts set forth in the Bankruptcy Code. (A discharge releases a
debtor from personal liability for certain debts known as discharge able debts and prevents the creditors owed
those debts from taking any action against the debtor to collect the debts. The discharge also prohibits
creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and
dischargeable debt A debt for which the
Bankruptcy Code allows the debtor's personal liability to be eliminated.
disclosure statement A written document
prepared by the chapter 11 debtor or other plan proponent that is designed to provide "adequate information" to
creditors to enable them to evaluate the chapter 11 plan of reorganization.
equity The value of a debtor's interest
in property that remains after liens and other creditors' interests are considered. (Example: If a house valued
at $100,000 is subject to a $80,000 mortgage, there is $20,000 of equity.)
executory contract or lease Generally includes contracts
or leases under which both parties to the agreement have duties remaining to be performed. (If a contract or
lease is executory, a debtor may assume it or reject it.)
exemptions, exempt property Certain
property owned by an individual debtor that the Bankruptcy Code or applicable state law permits the debtor to
keep from unsecured creditors. For example, in some states the debtor may be able to exempt all or a portion of
the equity in the debtor's primary residence (homestead exemption), or some or all "tools of the trade" used by
the debtor to make a living (i.e., auto tools for an auto mechanic or dental tools for a dentist). The
availability and amount of property the debtor may exempt depends on the state the debtor lives in.
family farmer or family fisherman An
individual, individual and spouse, corporation, or partnership engaged in a farming or fishing operation that
meets certain debt limits and other statutory criteria for filing a petition under chapter 12.
fraudulent transfer A transfer of a
debtor's property made with intent to defraud or for which the debtor receives less than the transferred
fresh start The characterization of a
debtor's status after bankruptcy, i.e., free of most debts. (Giving debtors a fresh start is one purpose of the
insider (of individual debtor) Any
relative of the debtor or of a general partner of the debtor; partnership in which the debtor is a general
partner; general partner of the debtor; or a corporation of which the debtor is a director, officer, or person
insider (of corporate debtor) A
director, officer, or person in control of the debtor; a partnership in which the debtor is a general partner; a
general partner of the debtor; or a relative of a general partner, director, officer, or person in control of
joint administration A court-approved mechanism under which two or
more cases can be administered together. (Assuming no conflicts of interest, these separate businesses or
individuals can pool their resources, hire the same professionals, etc.)
joint petition One bankruptcy petition
filed by a husband and wife together.
lien The right to take and hold or sell
the property of a debtor as security or payment for a debt or duty.
liquidation A sale of a debtor's
property with the proceeds to be used for the benefit of creditors.
liquidated claim A creditor's claim for
a fixed amount of money.
means test Section 707(b)(2) of the
Bankruptcy Code applies a "means test" to determine whether an individual debtor's chapter 7 filing is presumed
to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to chapter 13).
Abuse is presumed if the debtor's aggregate current monthly income (see definition above) over 5 years, net of
certain statutorily allowed expenses is more than (i) $10,950, or (ii) 25% of the debtor's non priority
unsecured debt, as long as that amount is at least $6,575. The debtor may rebut a presumption of abuse only by a
showing of special circumstances that justify additional expenses or adjustments of current monthly income.
motion to lift the automatic stay A
request by a creditor to allow the creditor to take action against the debtor or the debtor's property that
would otherwise be prohibited by the automatic stay.
no-asset case A chapter 7 case where
there are no assets available to satisfy any portion of the creditors' unsecured claims.
nondischargeable debt A debt that cannot
be eliminated in bankruptcy. Examples include a home mortgage, debts for alimony or child support, certain
taxes, debts for most government funded or guaranteed educational loans or benefit overpayment's, debts arising
from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for
restitution or a criminal fine included in a sentence on the debtor's conviction of a crime. Some debts, such as
debts for money or property obtained by false pretenses and debts for fraud or defalcation while acting in a
fiduciary capacity may be declared nondischargeable only if a creditor timely files and prevails in a
objection to dischargeability A
trustee's or creditor's objection to the debtor being released from personal liability for certain dischargeable
debts. Common reasons include allegations that the debt to be discharged was incurred by false pretenses or that
debt arose because of the debtor's fraud while acting as a fiduciary.
objection to exemptions A trustee's or
creditor's objection to the debtor's attempt to claim certain property as exempt from liquidation by the trustee
party in interest A party who has
standing to be heard by the court in a matter to be decided in the bankruptcy case. The debtor, the U.S. trustee
or bankruptcy administrator, the case trustee and creditors are parties in interest for most matters.
petition preparer A business not
authorized to practice law that prepares bankruptcy petitions.
plan A debtor's detailed description of
how the debtor proposes to pay creditors' claims over a fixed period of time.
plaintiff A person or business that
files a formal complaint with the court.
postpetition transfer A transfer of the
debtor's property made after the commencement of the case.
prebankruptcy planning The arrangement
(or rearrangement) of a debtor's property to allow the debtor to take maximum advantage of exemptions.
(Prebankruptcy planning typically includes converting nonexempt assets into exempt assets.)
preference or preferential debt
A debt payment made to a creditor in the 90-day period before a debtor files
bankruptcy (or within one year if the creditor was an insider) that gives the creditor more than the creditor
would receive in the debtor's chapter 7 case.
presumption of abuse See means test
priority The Bankruptcy Code's statutory
ranking of unsecured claims that determines the order in which unsecured claims will be paid if there is not
enough money to pay all unsecured claims in full. For example, under the Bankruptcy Code's priority scheme,
money owed to the case trustee or for prepetition alimony and/or child support must be paid in full before any
general unsecured debt (i.e. trade debt or credit card debt) is paid.
priority claim An unsecured claim that
is entitled to be paid ahead of other unsecured claims that are not entitled to priority status. Priority refers
to the order in which these unsecured claims are to be paid.
proof of claim A written statement and
verifying documentation filed by a creditor that describes the reason the debtor owes the creditor money. (There
is an official form for this purpose.)
property of the estate All legal or
equitable interests of the debtor in property as of the commencement of the case.
reaffirmation agreement An agreement by
a chapter 7 debtor to continue paying a dischargeable debt (such as an auto loan) after the bankruptcy, usually
for the purpose of keeping collateral (i.e. the car) that would otherwise be subject to repossession.
schedules Detailed lists filed by the
debtor along with (or shortly after filing) the petition showing the debtor's assets, liabilities, and other
financial information. (There are official forms a debtor must use.)
secured creditor A creditor holding a
claim against the debtor who has the right to take and hold or sell certain property of the debtor in
satisfaction of some or all of the claim.
secured debt Debt backed by a mortgage,
pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged
property upon default. Examples include home mortgages, auto loans and tax liens.
small business case A special type of
chapter 11 case in which there is no creditors' committee (or the creditors' committee is deemed inactive by the
court) and in which the debtor is subject to more oversight by the U.S. trustee than other chapter 11 debtors.
The Bankruptcy Code contains certain provisions designed to reduce the time a small business debtor is in
statement of financial affairs A series
of questions the debtor must answer in writing concerning sources of income, transfers of property, lawsuits by
creditors, etc. (There is an official form a debtor must use.)
statement of intention A declaration
made by a chapter 7 debtor concerning plans for dealing with consumer debts that are secured by property of the
substantive consolidation Putting the
assets and liabilities of two or more related debtors into a single pool to pay creditors. (Courts are reluctant
to allow substantive consolidation since the action must not only justify the benefit that one set of creditors
receives, but also the harm that other creditors suffer as a result.)
341 meeting The meeting of creditors
required by section 341 of the Bankruptcy Code at which the debtor is questioned under oath by creditors, a
trustee, examiner, or the U.S. trustee about his/her financial affairs. Also called creditors' meeting.
transfer Any mode or means by which a
debtor disposes of or parts with his/her property.
trustee The representative of the
bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under
the general supervision of the court and the direct supervision of the U.S. trustee or bankruptcy administrator.
The trustee is a private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases
and some chapter 11 cases. The trustee's responsibilities include reviewing the debtor's petition and schedules
and bringing actions against creditors or the debtor to recover property of the bankruptcy estate. In chapter 7,
the trustee liquidates property of the estate, and makes distributions to creditors. Trustees in chapter 12 and
13 have similar duties to a chapter 7 trustee and the additional responsibilities of overseeing the debtor's
plan, receiving payments from debtors, and disbursing plan payments to creditors.
U.S. trustee An officer of the Justice
Department responsible for supervising the administration of bankruptcy cases, estates, and trustees; monitoring
plans and disclosure statements; monitoring creditors' committees; monitoring fee applications; and performing
other statutory duties. Compare, bankruptcy administrator.
undersecured claim A debt secured by
property that is worth less than the full amount of the debt.
unliquidated claim A claim for which a
specific value has not been determined.
unscheduled debt A debt that should have
been listed by the debtor in the schedules filed with the court but was not. (Depending on the circumstances, an
unscheduled debt may or may not be discharged.)
unsecured claim A claim or debt for
which a creditor holds no special assurance of payment, such as a mortgage or lien; a debt for which credit was
extended based solely upon the creditor's assessment of the debtor's future ability to pay.
Voluntary transfer A transfer of a
debtor's property with the debtor's consent.
Nothing on Arizona Bankruptcy Info should be construed as legal advice and should only be
considered as general information for educational purposes . If you are in need of
legal advice, or need more information on your bankruptcy please contact an attorney in your area. It is
almost certain that your creditors will have legal representation and we strongly recommend that you do.
If you need a recommendation for an attorney please contact us