Because recent changes in U.S. law made declaring bankruptcy a much more complicated matter, Storobin & Spodek published a Guide to Bankruptcy. Chapter 7 is the most common form of bankruptcy requested by debtors and does not require repayment. For this reason, our bankruptcy guide focuses particularly on Chapter 7.
To speak to a qualified New York bankruptcy lawyer, call us at (212) 748-9243.
The Chapter 7 Bankruptcy Guide is not intended to serve as legal advice, and should not be relied upon. No attorney-client relationship exists or can exist based on the offering of the information in this guide. While all effort was made to avoid errors and inaccuracies, such may occur for several reasons, including but not limited to changes in bankruptcy law.
A required meeting between the person declaring bankruptcy and the creditors to whom the debt is owed. In addition to the creditors, other parties may question the debtor: the trustee, examiner, and/or the United States Trustee about his/her financial affairs. The questioning is under oath.
The order of payment to the different claimants as mandated by the Bankruptcy Code. Taxes, creditors, and lien holders have a higher priority and are paid first. Shareholders are paid after all other claimants have been paid.
The right of a party with interests in the debtor's property to assurance that its interests will not be reduced or dismissed during bankruptcy proceedings.
Court approved debt acquired by the debtor after the bankruptcy filing. This debt can include costs of preserving the estate, wages, court costs, legal fees, accounting fees, administrative expenses, etc.
A lawsuit filed in bankruptcy court associated with a bankruptcy case such as in the case of complaints of discharge ability of debt or complaints to determine the degree and legitimacy of liens.
A creditors claim or an equity interest approved by the bankruptcy court under a reorganization plan.
A variety of agreements relating to the conditions that allow a bankrupt company to operate such as an extension of time allowed for the repayment of debt.
Everything that the debtor owns including property, business interest, investments, funds, and tangible and intangible effects that a debtor must disclose in the bankruptcy schedules.
An agreement to honor or continue performing duties under a contract or lease.
An automatic injunction that suspends any actions against the individual or company in bankruptcy when a bankruptcy petition is filed. This prevents creditors from seize assets or from taking legal actions against the debtor for unpaid debt.
The power of the bankruptcy court or bankruptcy trustee to invalidate certain liens, obligations, or transactions created prior to filing for bankruptcy. It is intended to reverse transfers of property that favor one creditor over another.
The legal procedure used to deal with the financial collapse or debt problems of an individual or a business.
The legislation designed to make it more difficult for a person, estate, or business to file for Chapter 7 bankruptcy.
An expansion of the statutory rules of bankruptcy applicable to companies applying for reorganization.
Additional expansion of the statutory rules of bankruptcy applicable to companies applying for reorganization.
An officer of the bankruptcy judiciary for the judicial districts of Alabama and North Carolina responsible for supervising the administration of bankruptcy cases, estates in bankruptcy, and trustees assigned to manage bankruptcy cases.
Amendments to the Bankruptcy Reform Act of 1978 that contain various provisions including limiting the jurisdiction of the bankruptcy court and the right of companies to invalidate labor contracts while in bankruptcy.
The collection of statutory rules and regulations of the bankruptcy laws enacted after the Bankruptcy Reform Act of 1978.
The federal bankruptcy tribunal of judges assigned to hear and rule over bankruptcy cases in district bankruptcy courts.
The appointment date and time designated by the bankruptcy court for confirmation or rejection of a plan of reorganization set forth by the debtor.
The legal or equitable interests of the debtor at the time of the bankruptcy filing including all assets, property, and interests held by the debtor.
The judicial officer and representative of the United States Bankruptcy District Court that presides over bankruptcy proceedings
A business that is not authorized to practice law but provides bankruptcy counseling and files bankruptcy petitions on behalf of debtors.
The document filed with the Bankruptcy Court to initiate a bankruptcy proceeding. This petition can be voluntary if filed by the debtor or involuntary if filed by the creditors.
The first substantive revision to the Bankruptcy Code that upgraded the jurisdiction of the U.S. Bankruptcy Courts to rule over cases handled by other courts. The revisions allow for the filing of a joint petition by a husband and wife concerning business reorganization.
Bankruptcy legislation that included provisions to expedite bankruptcy proceedings, standardize fees, encourage individual debtors to use Chapter 13 to reschedule their debts rather than use Chapter 7 to liquidate their debt, and provisions to aid creditors in recovering claims against bankrupt estates. The Act also created the National Bankruptcy Commission.
The last date permitted by the bankruptcy court for creditors to file a claim against the debtor.
A business or an individual with business related debt that files for bankruptcy. The U.S. Administrative Office of the Courts divides bankruptcies into business and non-business cases.
Cash or the equivalent owned by the debtor subject to liens by creditors.
Legislation that provides substantial modifications to the Bankruptcy Act of 1898.
The Bankruptcy Code is structured into Chapters. Each Chapter represents deferent applications of the bankruptcy code and is applicable to different bankruptcy conditions. Lesserknown Chapters include Chapters 1, 3, and 5 and cover matters of general application.
This Chapter provides for liquidation of nonexempt assets by a trustee and creditors distribute the proceeds to settle claims. If it is company, they must cease operations after filing Chapter 7 bankruptcy.
The person appointed by the bankruptcy court to represent the interests of the estate in bankruptcy and the unsecured creditors.
This Chapter provides for bankruptcy and reorganization of municipalities (cities, towns, villages, counties, taxing districts, municipal utilities, and school districts).
This Chapter provides for relief of debt to family farmers and family fishing enterprise.
This Chapter provides for the adjustment of debt of an individual with regular income that wishes to reschedule the debt and paying the debt off over time. A sole proprietorship can file for Chapter 13 but a partnership or a corporation cannot.
This Chapter provides for cross-border insolvency.
This Chapter provides for combination filing, the filing of a Chapter 7 eliminating unsecured debts followed by a Chapter 13 to deal with continuing liens.
This Chapter provides for double filing, a company that files for Chapter 11 twice.
This Chapter provides for triple filing, a company that files for Chapter 11 three times.
This refers to debt that creditors do not expect to collect and it relates to the creditor's taxes but it does not mean that the debt is no longer legally collectable.
A creditor's affirmation of a right of payment from the debtor or the debtor's liquidated or un-liquidated property.
The different categories of claims against a debtor.
The debtor.s property that is subject to a lien for payment by a secured creditor. If more than one creditor holds a lien for the same collateral, the creditor that holds the first lien by date is paid first.
A petition in a lawsuit that notifies the court and the debtor of a claim by a creditor for an award of relief against the debtor.
Creditors have approved Authorization of a debtor's plan of reorganization, liquidation, or repayment plan by the bankruptcy court after the plan.
A binding plan of reorganization approved by the Bankruptcy Court in Chapter 11, 12 or 13.
A debtor that primarily owes consumer debts.
Debts acquired for personal reasons, as opposed to corporate or business debt.
A dispute to a claim, initiated by the filing of a motion of the court but not adversary proceeding.
A claim that may be owed by the debtor under certain situations such as when the debtor is a cosigner on a defaulted loan
Used to describe debts that are not fixed at the time of filing, but are dependent on the occurrence of some other event to fix the liability.
See Small Claims
Changing Chapters in a bankruptcy filing after filing if the debtor is eligible.
The fundamental proceedings subject to the particular jurisdiction of the bankruptcy court inherent to the administration of a bankruptcy case.
Confirmation of a plan of reorganization over one or more creditor.s objections.
Seminar from a nonprofit budget and credit counseling agency or an instructional course in personal financial management. An individual must attend credit counseling before filing for Chapter 7 or Chapter 13 bankruptcy.
A business or person that the debtor owes money to for services or goods provided to the debtor on credit.
A committee of representatives of the creditors appointed by the U.S. Trustee to act on behalf of the creditor.s interests in negotiating a plan of reorganization.
The average monthly household income of the six-month period prior to filing for bankruptcy, excluding certain benefit payments and social security payments.
The person, couple, or entity filing for bankruptcy and seeking debt relief from creditors under the Bankruptcy Code.
A debtor that retains control of company operations rather than relinquishing control to a trustee of the court.
The failure to abide by contracts of debt obligations, nonpayment of debt.
The person, couple, or entity against which a lawsuit for nonpayment is filed.
The satisfaction or elimination of debt, or the release of a debtor from certain debt obligations under the Bankruptcy Code.
The debt allowed to be eliminated by the Bankruptcy Code releasing the debtor from personal liability.
A written comprehensive disclosure document prepared by the debtor and sent to creditors for consideration of a debtor.s plan of reorganization under Chapter 11 bankruptcy.
The termination of a bankruptcy proceeding by the bankruptcy court if it believes that the debtor or three creditors do not have an adequate case for bankruptcy.
Entity under fear of failure to meet debt obligations near bankruptcy or insolvency.
The journal used by the clerk of the Bankruptcy Court to record all petitions, pleadings, orders, and all other court motions.
Debts in the form of alimony, maintenance, or support owed to a child, spouse, or government entity for the financial support of a child or spouse.
A comprehensive case management system that allows debtors access to file information over the internet and permits courts to maintain electronic case files.
The date on which any decision handed down by the bankruptcy court becomes final or legal.
The lowering of a claim.s priority by the court if the debtor is found to be engaging in inappropriate behavior.
The remaining value of a debtor.s interest in property after creditor.s interests and liens are deducted.
An officer appointed by the court to investigate and supervise certain aspects of a bankruptcy cases including the debtor and/or the procedures.
An offer to exchange new securities for outstanding debt securities.
The limited period (first 120 days after bankruptcy approval), a debtor in Chapter 11 has to file a plan of reorganization.
Contracts or leases in which both parties still have part or all of the obligations remaining to be fulfilled.
Certain assets or properties owned by the debtor that the Bankruptcy Code that cannot be recovered by creditors.
See Bankruptcy or Insolvency
An individual, couple, or entity that engages in the farming or fishing industry, these industries can file a petition under Chapter 12 if they cannot meet their financial obligations if they meet certain debt limits and other statutory criteria.
An officer appointed by the bankruptcy court to monitor fees paid to the professionals involved in bankruptcy cases.
A person entrusted with financial duties on behalf of another person.
The financial charge imposed by the government for the processing of a bankruptcy filing, different chapters have different filing fees.
A mandatory meeting required by section 341 of the Bankruptcy Code between the creditors and the debtor. The creditors, the trustee, examiner, and/or the United States Trustee question the debtor under oath about his/her financial affairs.
A transfer of a company's property made with intent to defraud. The transfer takes place when the company is officially insolvent, causes the company to become insolvent, or is made for less than the property's value.
The classification of a debtor's status after bankruptcy and is one of the reasons for the Bankruptcy Code. Bankrupt companies have their assets valued at current market value after a bankruptcy.
The period between the filing of an involuntary petition, order for relief, or voluntary petition, and the dismissal of the petition or a ruling on the petition.
A creditor's claim without security or collateral and without a priority for payment. Unsecured claims are only paid in proportion to the size of the claim relative to the total of claims in the class of unsecured claims if there are funds left over after the secured claims are paid.
A company.s worth if sold as an ongoing business rather than liquidating the assets.
The primary place of residence of a debtor, it may include a house, apartment, condominium, or any other dwelling.
A plan of reorganization that alters the contractual rights of a class of claim holders. An unimpaired class is one in which the plan of reorganization is automatically accept.
The guarantee that one party will not be held liable for another.s debt as in the case of a divorced spouse being held liable for the debt of the ex-spouse.
Refers to a director, officer, or person in control of the debtor, a debtor that is a general partner in a partnership, a general partner of the debtor, or a relative of a general partner, director, officer, or person in control of the debtor.
Refers to any relative or general partner of a debtor, a debtor that is a general partner in a partnership, the general partner of a debtor, or a debtor that is a director, officer, or person in control of a corporation.
The legal procedure used to deal with financial collapse or debt problems by an individual or a business.
The equity interests of stockholders as referred to in bankruptcy documents.
A bankruptcy initiated against the debtor by at least three creditors holding unsecured claims that collectively equal at least $5,000.
The court-approved combination of multiple bankruptcy proceedings of affiliated entities for administrative convenience
A bankruptcy petition filed together by a husband and wife.
A right of charge upon a debtor.s specific property intended to secure payment of a debt of duty.
A creditor's right or demand for payment of a fixed amount of money.
When the company is liquidated through one or more asset sales in Chapter 11 proceeding.
A sale of a debtor.s property (company or individual) for cash to satisfy debt obligations to creditors.
A debtor.s list of creditors required as part of a Chapter 11 bankruptcy filing.
A test used to determine whether a Chapter 7 filing is dismissed or converted to another chapter (usually to Chapter 13). The test is used to screen Chapter 7 filings to search for debtors that are able to repay part of their debts.
An automatic stay would prohibit a request by a creditor for permission to take action against the debtor or his /her property that.
See Tax Loss Carry-Forward
A Chapter 7 bankruptcy case where the debtor has no assets to satisfy any part of the creditors' unsecured claims.
The bankruptcy of an individual or a family farm categorized by the U.S. courts as a non-business bankruptcy.
A debt that cannot be eliminated in bankruptcy such as most taxes, a primary home mortgage, alimony, child support, most government funded or guaranteed educational loans, reimbursement of benefit overpayments, DUI wrongful death debt, restitution debts, criminal fines, and debts acquired because fraudulent activities.
An objection by a trustee or creditor to a debtor.s release from personal liability for certain dischargeable debts.
An objection by a trustee or creditor to a debtor.s attempt to claim certain property or assets as exempt from liquidation to settle outstanding debt.
A proceeding before the Bankruptcy Court where the Court may hear different arguments pertaining to one bankruptcy case.
An electronic service provided by the court system that grants the public access to information about bankruptcy filing.
Refers to any party that has standing interests in a bankruptcy case and has the right to be heard by the court in a matter of bankruptcy. This includes the debtor, U.S. trustee, bankruptcy administrator, case trustee, and all creditors.
See exclusivity
An individual, household bankruptcy, consumer bankruptcy, or wageearner bankruptcy.
Any personal assets except real property.
The document filed with the Bankruptcy Court that initiates a bankruptcy proceeding.
Plaintiff
The person or business that initiates a formal complaint with the court.
Plan
A detailed report by the debtor of how the debt is to be repaid to creditors over a fixed period.
A document that details how a bankrupt company plans to restructure itself, stay in operation, and satisfy its creditors in Chapter 11 bankruptcy.
Anything that occurs after filing a bankruptcy petition.
A transfer of the debtor's property or assets that is made after the commencement of a bankruptcy case.
A debt payment by a debtor made during a specified period before a debtor files for bankruptcy (90 days or within one year) and may be recovered by the trustee for the benefit of all creditors.
When a company agrees to a plan of reorganization that is approved by creditors before the company files a bankruptcy petition.
Anything that occurs before filing a bankruptcy petition.
A prepetition unsecured debt that is entitled to be paid before other unsecured claims such as taxes, administrative expenses, unpaid wages, employee benefits, and customer deposits.
The statutory ranking used by the Bankruptcy Code to establish the order of payment of unsecured claims if there is not enough money to pay all unsecured claims.
A statement and documentation filed by a creditor establishing the creditor's claim against a debtor.
When a judge lifts an order of automatic stay to allow action against a debtor or against the property of an estate.
The process by which a company can emerge from bankruptcy and become viable again in Chapter 11 bankruptcy. The company settles on a plan of repayment of debt with creditors and the plan is confirmed by the court.
When a former leverage buyout company restructures its debt by issuing new equity in exchange for part or all of its outstanding debt from the original leveraged buyout.
Comprehensive lists submitted by the debtor with the petition for bankruptcy or shortly after filing that details the debtor.s assets
A creditor holding a claim against the debtor that is secured by collateral or a lien.
A series of questions that a debtor must answer in writing and present with the petition relating to sources of income, transfers of property, lawsuits by creditors, etc.
A declaration by a Chapter 7 debtor relating to plans for dealing with consumer debts secured by property of an estate.
This refers to the abuse of the privilege or fraud in cases of personal bankruptcy.
The combination of the assets and liabilities of two or more related debtors to satisfy their combined liabilities.
An administrative claim that takes precedence for payment over other administrative claims or priority claims.
Financial losses that can be carried forward and applied to future taxable income.
Any method or manner used by a debtor to distribute part or all of his/her property.
Debt secured by property that is valued less than the amount of the debt.
A debt left out of the required schedules filed with the petition that should have been included.
A claim or debt secured by property that is worth less than the amount of debt and for which a creditor holds no special assurance of payment.
A claim or debt without collateral as security for the debt, such as consumer debts.
A telephone service provided by the court system that supply automated information on bankruptcy case filings.
A petition for bankruptcy filed by the debtor.
When a debtors consents to a transfer of his/her property.
Companies that aggressively seek financially troubled or bankrupt companies to restructure the ailing company by buying, selling, or brokering the purchase or sale of the company or portions of its debt or equity.
See Chapter 13 or Personal Bankruptcy
An agreement between a debtor and the creditors for payment or rescheduling of the debt.
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Storobin & Spodek LLP |