Bankruptcy Terms

Automatic Stay - Precludes and halts all collection activities from creditors and even the IRS. You can even get seized property back from the IRS in a chapter 13 or chapter 11.

Assets - Assets are generally anything of value. For example: property, real estate, cash, notes, stocks, bonds, accounts receivables, securities, and any other item of value that could be used to pay off debt.

Chapter 7 Bankruptcy - Straight bankruptcy- may be voluntary or involuntary. Liquidation of all non-exempt assets. Taxes in order of precedence - Federal Income Tax, Withholding tax, Employment tax, Excise tax, Customs and duty tax, Any pecuniary loss penalty on any of the foregoing.

Chapter 13  Bankruptcy- Simply put, is the reorganization of consumer debt with a new payment schedule. 

Chapter 11 Bankruptcy- An individual may file under this chapter but it is used primarily for business debt. Like a chapter 13, this chapter halts collection activities an allows the business debtor to restructure their payments. This applies to business debt that exceeds $250,000 in unsecured debt and $750,000 in secured debt. Total debt may not exceed $2,000,000.00

Conversion- If the court believes the petitioner can pay all or a part of his bills it can deny a chapter 7 and convert to a chapter 13.

Cramdown - The courts authority to force acceptance by creditors, stock holders, IRS etc of a reorganization or liquidation plan as empowered by the bankruptcy code.

Creditor - A person or entity to whom money is due, or one who has extended credit and has a vested interest in getting paid.

Discharge - To release from debt after fulfilling ones obligations

Exemption - Assets that cannot be touched by creditors during bankruptcy proceedings. 

Insolvent - Unable to pay ones debts.

Involuntary Bankruptcy - This is when creditor take legal action against a debtor and files petition in court.

Secured Debt - debt that is backed by collateral. For example: mortgage or car loan.

Substantial Abuse- dismissal of a chapter 7 filing because income of petitioner is sufficient to service debt.

Tax Abatement- After a bankruptcy court has discharged any tax liability as outlined in the bankruptcy codes, a form (3870) will be filed with the IRS as official notice. 

Trustee - Person appointed to oversee the completion of a bankruptcy filing.

Unsecured Debt - debt that is not backed by collateral. For example: credit cards, medical bills, utility bills. 

Voluntary Bankruptcy - This is when the debtor takes the initiative to file bankruptcy on their own rather than being forced by creditors.

 

This information is presented to you by the Bank Fraud Victim Center.

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