Abstention: A federal court’s ultimate decision to not oversee or exercise judgement on a particular case, usually to prevent what could be seen as a frivolous challenge involving a lower or state court.
Accountant: A professional dedicated to keeping, inspecting, and recording financial records for an individual, business, or organization. In bankruptcy, an accountant may be hired to help analyze expense reports.
Administrative Claim: The debt that a debtor is permitted to incur by court approval after the finalization of their bankruptcy filing; sometimes called an administrative expense claim.
Adversary Proceeding: Any lawsuit that arises due to a complaint filed with the bankruptcy court.
Affiliate: An intercompany relationship defined by one company owning less than a majority stock of another company, such as a Company A owning 35% of Company B stock. In some IRS regulations, a company is not affiliated unless 80% or more of its stocks are owned by another company.
Agency: The permission given to someone who has been legally and officially permitted to act on behalf of another, especially when it involves financial situations and decisions.
Amend: The act of changing, altering, adding to, or subtracting from a legal document or statute after it has already been established.
Anti-Modification provision: A line in a loan agreement that states a creditor’s claim cannot be modified or reduced through Chapter 13 bankruptcy filings; sometimes called an anti-modification clause.
Appearance: The act of a person showing up to a court date or other mandated gathering, such as a meeting of creditors.
Arrears: Specifically any money that is owed to another party or institution and should have, reasonably, been paid at an earlier time.
Assets: Any sort of resource with an obvious economic value and should continue to have value or benefits in the future. In bankruptcy, assets like automobiles or real estate can be collected by banks or creditors when debts are not paid.
Assisted Person: Someone with debts that are mostly comprised of consumer debts, and who has nonexempt property valued under $164,250 (circa 2016).
Assume: A written or verbal agreement that states all parties within a contract or lease will continue to perform their duties as expected.
Attorney: A legal professional who provides clients with services including but not limited to law interpretation and litigation representation. In bankruptcy, an attorney may work with a client from an initial bankruptcy filing to the final approval of a bankruptcy plan.
Avoidance: The rights a bankruptcy trustee inherits to be used when recovering particular property transfers, including pre-bankruptcy void liens; sometimes called avoidance powers.
Avoidability: The ability for an act, incident, or outcome to be avoided, or not. In bankruptcy, may be used in terms of an unforeseeable consequence, or an “act of God” with no avoidability.
Bankruptcy Assistance: Any item, service, or advice sold or offered with the purpose of aiding someone filing for or considering bankruptcy. A bankruptcy attorney provides bankruptcy assistance through numerous means.
Bankruptcy Code: The less-formal name of bankruptcy law Title 11 of the United States Code (11 U.S.C. §§ 101-1330); used within bankruptcy documents to spare readers and typists from the entire cryptic code.
BAP: A panel consisting of three bankruptcy judges who have been appointed to hear appeals that have moved up from lower bankruptcy courts. Rules of practice may vary greatly from one BAP to another. In full, Bankruptcy Appellate Panel.
Bond: A written obligation to pay a certain, specified sum of money to a bondholder when a certain circumstance or condition either occurs or does not occur. Bonds may be subject to interest as they commonly represent a debt. In bankruptcy, a bond may be used as a form of asset or nonexempt property, depending on the bankruptcy’s progression.
Bondholders: Any individual or company that owns or holds a bond. If bondholders and stockholders both have invested in a company that has gone bankrupt, bondholders are given priority when it comes to repaying debts.
Business Bankruptcy: A bankruptcy that is filed by a business, or by an individual in control of a business, based on debts that accrued due to regular business expenses, as opposed to an individual’s bankruptcy.
Capital Account: A national account that shows the net change in asset ownership for a nation. Capital accounts reflect the net result of both private and public international investments flowing in and out of a country.
Capital Contribution: An entry on the shareholders’ equity section of a company’s balance sheet summarizing the total value of stock that shareholders have purchased directly from its issuing company. Contributed capital is the sum of the par value of the shares plus the value paid that was greater than par value.
Capital Distribution: Also known as capital gains distribution, a capital distribution is the payment of proceeds prompted by a fund manager’s liquidation of stocks and securities held in a mutual fund. Capital distributions occur when fund managers liquidates underlying positions that have since made profits since they were initially added to the fund.
Cash Collateral: Cash that is collected when liquid assets are sold during the process of Chapter 11 bankruptcy. Cash collateral can be acquired either through the sale of cash equivalent securities or through the sale of personal property against which debt may be secured.
Certificate of Service: The section of a pleading or motion that certifies that the party filing the document has sent a copy of the document to the opposing party or their attorney.
Chapter 7: Also known as “liquidation bankruptcy,” Chapter 7 is a bankruptcy proceeding in which a company or individual sells their assets to satisfy creditors. Businesses who file for Chapter 7 bankruptcy cease all operations and completely go out of business.
Chapter 9: A form of bankruptcy that protects financially distressed municipalities from creditors by creating a plan between the two parties to resolve the outstanding debt. Municipalities can include cities, townships, counties, and school districts.
Chapter 10: A form of bankruptcy filing restricted to corporate debtors where a major restructuring or reorganization of the company is necessary. Chapter 10 bankruptcy is not available in situations where a Chapter 11 bankruptcy would apply.
Chapter 11: A form of bankruptcy that involves a reorganization of a debtor’s assets, debts, and business affairs. Chapter 11 gives a debtor a fresh start under the condition that the debtor fulfills its obligations under its reorganization plan.
Chapter 12: A bankruptcy proceeding specifically for family farms or fisheries that allows its owner the opportunity to reorganize their finances and formulate a repayment plan while still keeping the farm or fishery. Chapter 12 bankruptcy is available for both family owned farms and fisheries as well as those owned by a partnership or corporation.
Chapter 13: A bankruptcy proceeding in which the debtor reorganizes their finances and formulates a three- to five-year plan to repay their creditors under the supervision and approval of the courts. Debts are repaid out of the debtor’s income. If the debtor adheres to the terms of their repayment plan, all remaining unsecured debts are discharged.
Claim: Rights to repayment made by creditors against a debtor. Claims can be liquidated, unliquidated, fixed, contingent, matured, unmatured, secured, unsecured, subordinated, legal, or equitable.
Claim Preclusion: The legal principle that once a cause of action may not be litigated twice. For example, a losing plaintiff may not re-sue a winning defendant on the same cause of action.
Class of Unsecured: A loan or equity interest that is given without any guarantee of payment, performance, satisfaction, or opportunity of return from the recipient is known as an unsecured debt. Unsecured debts are not backed by any sort of collateral.
Codebtor: One of two or more debtors who are primarily responsible for the same debt.
Collateral: Security pledged for the payment of a loan that is surrendered in the event of the borrower’s default. Collateral can be property, stocks, bonds, or security deposits.
Choate Lien: Any lien that has been completed to perfection, meaning there is no other action necessary to take for it to be actionable, is considered a Choate lien.
Claim Compliance: The process of assuring that all aspects related to a claim to an asset during bankruptcy are fulfilled accordingly, or to compliance standards.
Collateral Judgement: A judge’s final decision regarding which debtor, if any, should have primary rights over a piece of property that has been set up as collateral during a bankruptcy process.
Collateralized Lien: A creditor that has the ability to sell collateral property if a debt obligations are not met holds a collateralized lien.
Collection: The actual action of a creditor recovering owed debts and property from a debtor or customer.
Commercial Fishing Operation: A business, privately owned or publically traded, that catches wild fish or, in some cases, breeds fish in enclosures, for sale and profit.
Commercial Fishing Vessel: A watercraft owned by a Commercial Fishing Operation for use in commercial fishing or transport of cargo; in business bankruptcy, Commercial Fishing Operations will often use excess Commercial Fishing Vessels as collateral before anything else.
Commodity Broker: A professional who charges commissions to help clients purchase or sell commodity contracts; a commodity broker will not deal with their own accounts.
Community Claim: Any claim to property or assets during bankruptcy that was made before a debtor made a specific claim to the same or similar piece.
Compulsion: Legal term for the act of forcing someone to comply with a legal order or standard; a party that must surrender property in bankruptcy may be influenced by the court’s compulsion.
Confirmation Denial With Leave to Amend: After a legal motion is not approved by the court, it can be granted the ability for amendment, possibly to make it valid for confirmation.
Confirmation Denial Without Leave to Amend: Not permitting a motion or merit that was denied any additional means for alterations in hopes of meeting validation requirements.
Confirmation Denial: When a legal motion or merit is not approved by the court, or is rendered invalid through review of preexisting legal definitions.
Confirmation: When a legal motion or merit is approved by the court or by legal definitions, it is confirmed, or undergoes confirmation and ratification.
Consumer Debt: The debt held by an individual consumer, not a business or government entity.
Contingent Claim: Any sort of potential pay out that may be confirmed or denied based on the completion, or lack thereof, of other events in the future.
Corporation: An entire group of people or companies that has been permitted to act as a single group; corporations are technically to be considered people and inherent such legal rights.
Court: Any court of law in which litigation dispute are settled or laws are revisited; bankruptcy court is the primary court affiliated with bankruptcy.
Cramdown: In bankruptcy, the reorganization of existing debts that will ultimately be passed along to creditors through compulsion.
Credit Counseling: A process or official procedure offered to people in bankruptcy to help them settle debts and avoid bankruptcy in the future; may be a necessary requirement in the completion of Chapter 7 and Chapter 13 bankruptcies.
Creditor Committee: The seven largest unsecured creditors in a Chapter 11 bankruptcy filing, who will gather to act as overseers for the bankruptcy case.
Creditor: Any party to whom the debtor owes money or assets; in some cases, a creditor may make an appearance without the debtor recognizing them in bankruptcy.
Cross-collateralization: The act of using a single piece of property as collateral in more than one loan; may trigger serious debtor disputes if two creditors attempt to collect on the same item.
Current Monthly Income (CMI): How much a single person or household makes within a month due to total incomes, after compiling the last 6 months before bankruptcy was filed; Chapter 7 filings may be denied if the bankruptcy filer has a CMI higher than the average within their state.
Custodian: Someone who has received the legal ability to control a piece of property in lieu of a debtor.
Debt: An amount of money borrowed by one party from another. Debt is often used as a way of helping parties afford large purchases that they otherwise would not be able to afford under normal circumstances. In many cases, deb arrangements allow a borrowing party to borrow money under the condition that the money will be paid back at a later date with interest.
Debt Relief Agency: Under the Bankruptcy Reform Act, a debt relief agency is any person, individual, partnership, or corporation who provides bankruptcy assistance to a person in return for payment of money or some other valuable consideration.
Debtor: Any company or individual who owes money to another party. If the debt is in the form of a loan, debtors are referred to as borrowers. If the debt is in the form of securities or bonds, debtors are referred to as issuers.
Debtor Assistance Project: The Debtor Assistance Project (DAP) is a legal clinic that is a partnership between the U.S. Bankruptcy Court for the District of Maryland and members of the legal community. The program offers an opportunity for debtors to meet with volunteer bankruptcy lawyers for free during a half-hour consultation.
Debtor in Possession: An individual or corporation that has filed for Chapter 11 bankruptcy and still remains in control of property that a creditor has a lien against, or retains the power to continue to operating a business. Debtors in possession continue to run their business and have the powers and obligations of a bankruptcy trustee to operate in the best interests of creditors.
Debtor’s Principal Residence: The primary structure in which a debtor resides, such as a home, condominium, manufactured home, cooperative unit, or trailer. For legal purposes, it does not matter if the structure is attached to real property.
Dependent: An individual whom a taxpayer may claim on their annual tax returns for credits and/or exemptions. Taxpayers are permitted one exemption for each person claimed as a dependent.
Depreciation: A method of distributing the cost of a tangible asset over the duration of its useful life. For accounting purposes, depreciation shows how much of an asset’s value has been used up. In regards to taxes, businesses may deduct the cost of tangible assets purchased as business expenses, however they must depreciate these assets according to IRS rules. Depreciation can also be defined as a decrease in an asset’s value due to unfavorable market changes.
Discharge: An order that releases a debtor from liability for certain specified debts, thereby eliminating their financial responsibility to pay back the debt. Debts that are discharged through bankruptcy are gone forever and may not be attempted to be collected by creditors.
Disinterested Person: A person who is not a creditor, an equity security holder, or an insider who does not have any interest materially adverse to the interest of the estate or of any class of creditors or equity security holders.
Disclosure of Compensation: A required document during bankruptcy which informs the courts of the amount of money a debtor will pay his or her attorney in connection with their bankruptcy case. The Disclosure of Compensation is designed to prevent a debtor from depriving creditors of potential assets by transferring property to the attorney before filing, while also preventing a financially stressed debtor from overpaying for legal services.
Dismiss: An order terminating a bankruptcy case prior to its normal end A judge may dismiss or throw out all or a portion of a debtor’s bankruptcy filing due to a change in circumstances, clerical error, failure to submit the correct forms, or allegations of fraud.
Docket: The list of documents and actions within a bankruptcy case or adversary proceeding that is kept by the Bankruptcy Court’s clerk. The docket often lists the time by which responses to pleadings are required by the Court, as well as when and where hearings are to be held
Domestic Support Obligation: Debts that accrue prior to, on, or after the date of the order for relief in a bankruptcy case that are owed to a spouse, former spouse, child of the debtor, or governmental unit for alimony, maintenance, or support.
En Banc Review: Any form of judicial review, although usually related to appeals and the appellate court, which will include all judges who currently sit on the concerned court.
Entity: A legal term for any party interested in a certain case, law, or legal standing; can be interchanged with party.
Equal Monthly Payments: Sometimes called equated monthly installment (EMI), equal monthly payments are a fixed payment plan from a borrower to a lender or creditor each calendar month; equal monthly payments are created to consider principal debts and interest so the debt as a whole is eventually paid off entirely.
Equity Security: When a stock share of a company is offered as collateral or payment towards a piece of property, it can be considered as equity security.
Equity Security Holder: Any entity (see above) that possesses equity security, usually from a property owner that has fallen into debt or must use nontraditional methods to make payments.
Executory Contracts: Any sort of contract that sets terms to be fulfilled in the future, or to be executed beyond a point in time that is not when the contract is signed.
Exemption: The process of protecting certain pieces of property from entering a bankruptcy estate, where it could be sold off to creditors and the bank; exemption rules vary from state-to-state, with some states having their own and others relying on a federal list of exemption rules.
Exhibit: A piece of evidence submitted to a trial to support one side’s claims; exhibits are traditionally frequent in criminal defense cases but can be used in bankruptcy cases that require the court’s attention and ruling to conclude.
Expenses: Purchases made by an individual or business; expenses is often interchangeable with “necessary” expenses, or purchases that must be made by an individual or business in order to continue regular functions or maintain the overall wellbeing of the entity; expenses will be calculated in bankruptcy to ensure the filer can continue to afford them.
Extend: Pushing back the date of bankruptcy, foreclosure, or other legal procedures after it has become apparent that the current legal timeline will no longer be suitable for the filer; filing to extend, or requesting an extension, often requires an attorney’s help, as the court may deny the request.
Family Farmer: Often interchanged with family farming, a family farmer is any agricultural production that is owned, managed, and operated by one family or several closely related families; family farmers may gain certain exemptions that other entities of similar income would not be able to receive.
Family Farmer with Regular Annual Income: Some family farmers (see above) earn annual paychecks from government programs or stipends, or parent corporations, regardless of the product they are able to cultivate or manufacture that given year.
Family Fisherman: Similar to a family farmer, only the family or group of closely related families works primarily in aquaculture, in a fishery, or on the open sea or lake.
Family Fisherman with Regular Annual Income: Similar to a family farmer with regular annual income (see above), only it involves receiving a set paycheck for work conducted in aquaculture, in a fishery, or on the open sea or a lake.
Farmer: An agricultural professional that works with the cultivation and harvesting of produce and livestock; farmers that are not family farmers can often work at numerous locations across several states and gain tax exemptions that could be to their benefit in bankruptcy.
Farming Operation: The collective operations of a farming, aquafarm, fishery, pasture, and other related industries to bring numerous products to a parent corporation or to the market; in bankruptcy, a farming operation may also be in reference to an oil, gas, or mineral corporation that pays investment interests to interested parties upfront to gain favors or services, such as being able to drill on a particular set of land.
Farmout Agreement: The contract that defines a farming operation in bankruptcy; it will outline upfront interest payouts, profit distribution from income generated by the farming operation activities, duties expected of all interested parties, and more.
Federal Depository Institutions Regulatory Agency: Any regulatory agency overseen or controlled by the Federal Deposit Insurance Corporation (FDIC), which in turn provides deposit insurance to United States banks and their depositors.
Fee Simple: The permanent and unwavering tenure of a particular estate that also grants the controller of the fee simple the ability to relinquish it, if desires; in bankruptcy, fee simples are often concerned with land and real property upon it.
Filing Fee: Any sort of fee collected by the court that someone must pay to file a complaint, lawsuit, or document; courts will often not even view complaints, lawsuits, or documents if they are filed without full payment of filing fees, no matter how small the fee or important the case.
Financial Affairs (statement of): A bankruptcy filing requires that the filer fill out a Statement of Financial Affairs for Individuals Filing for Bankruptcy; the form will include all pertinent information regarding the filer’s financial situation for the last 10 years.
Financial Institution: Any company that is actively engaged with or in the business that manages monetary dealings, such as transactions, depositions, trades, investments, loans, and exchanging domestic currency for foreign bills; i.e. a bank.
Financial Management: Any sort of active plan or passively controlled system that involves the proper management of finances, money, funds, loans, and assets with the purpose of completing a specific objective, usually for a business; strategic financial management refers to financial management with a long term view and goal.
Financial Participant: A party, company, or entity that has direct investment in the debt, loans, or finances of another entity; financial participants are usually only concerned with financial dealings or transactions that total no less than $1 million.
Foreclosure: Sometimes abbreviated in official tax or bank forms or documents as FCL, foreclosure is the act of seizing and securing a piece of property that had been mortgaged after the mortgagor stopped completing scheduled mortgage payments as defined in a mortgage or loan contract.
Foreign Proceeding: When assets of a foreign debtor must be reorganized, distributed, or liquidated by a foreign court under the control of a foreign country, a full judicial and administrative proceeding, called a foreign proceeding, will take place.
Foreign Representative: An individual, or, rarely, a party that has received authority by a foreign court to oversee or otherwise manage the reorganization or liquidation of the assets belonging to a foreign debtor, as planned in a foreign proceeding.
Form: Any sort of document, official or unofficial, that is required to complete a bankruptcy filing; for a complete list of forms, bankruptcy filers should console with a bankruptcy attorney from their state.
Forward Contract: In terms of finances and related bankruptcy dealings, a forward contract is the unofficial yet accepted agreement – generally managed by a broker-dealer institution – to purchase or sell listed assets and currency owned by a debtor but after a certain date has passed.
Forward Contract Merchant: Any entity that is authorized to create, oversee, and manage forward contract; also, an entity that has agreed to a forward contract trade or deal.
Garnishment: An official court order that allows an entity, such as a bank, creditor, or financial institution, to remove portions of a debtor’s income or held assets in order to gradually pay off a debt.
Governmental Unit: A body of the government that is in any way concerned with bankruptcy; may include the United States, the Commonwealth, a Territory, a municipality, a department, an agency, etc.
Health Care Business: A company, business, entity, corporation, or conglomerate that provides medical care, including diagnostics, hospitalization, clinical work, and son; may include private or public sector industries.
Hearing: When a matter must be decided in court or before an administrative panel, a hearing will take place; a single bankruptcy case may require multiple hearings, depending on the size of the estate of the bankruptcy filer.
Household Members: An individual person who has claimed to be dependent in regards to tax filings is considers a household member, or a member of the household, as it is worded on certain forms.
Household Size: The number of people for which an individual is financially responsible; household size is not limited to one actual household or establishment, as dependents (see household members) can live in different residences but still maintain financial dependency.
Incidental Property: In regards to the primary residence of a particular debtor, incidental property is any part of the property that is understood to be where the real estate property is located; incidental property may also include abstract rights and proceeds in relation to the actual real property, including mineral rights, oil rights, and more.
Income: Any finances, specifically money, that is routinely received in exchange for work or labor, or as part of a return on an investment (ROI); income can be measured weekly, monthly, yearly, and so on, and must be quantified during a bankruptcy filing.
Indenture Trustee: A third party that is invested in the functionality, benefits, or appropriateness of a bondholder’s agreement with a bond issuer.
Indenture: Another term for a legal binding agreement between two or more parties, companies, or individuals; may be comprised of any number of documents, contracts, and other official forms; name is derivative of historically accurate contract agreements that featured indented sides, each pertaining to one of the parties.
Individual with Regular Income: A person with income that is regular, efficient, and reliable, enough so to the point that it can be depended on for necessary payments, expenses, and other living adjustments (as defined by the Federal Bankruptcy Code).
In Personam Liability: In so many words, an obligation or liability imposed against a specific person or individual in consequence of a legal action, judgement, or jury verdict.
In Rem Liability: The ability of a court to rule over or influence a piece of property or a specific status as consequence of liability; used when the court does not have the ability to use an “in personam liability” ruling.
Inchoate Lien: Any lien that is considered “imperfect” by interested or imposing parties; may arise as a temporary lien upon a piece of property under work or review.
Insider: An individual or party that has unique, nonpublic, or undisclosed information about a business or a financial situation, especially if it has to do with trading stocks; insider action can be both legal and illegal, depending on the circumstances.
Insolvent: The situation that occurs once a debtor is officially unable to pay off debts or loans; also known as insolvency.
Institution-Affiliated Party: A party that is invested in, associated with, or connected to one particular institution; in bankruptcy, an institution-affiliated party usually refers to a party that works directly with or for a bank, trust company, or any other banking institution.
Insured Depository Institution: In the United States, any sort of financial institution, such as a bank or savings association, that has the ability to collect monetary deposits directly from consumers, and then insure them against unexpected loss, up to a certain amount.
Intellectual Property: A piece of property that is not tangible but still has inherent value, use, and uniqueness; intellectual property is generally subject to copyright or trademark, such as ideas, formulas, recipes, slogans, brand names, etc.
Intellectual Property Rights: A person’s or professional entity’s rights to use, control, own, and protect a piece of intangible intellectual property; the violation of intellectual property rights can be grounds for a lawsuit that seeks monetary damages despite no real property being stolen or misused.
Intent: The legal term for acting with a specific purpose in mind; in bankruptcy law, intent generally refers to a person’s or entity’s plan for bankruptcy, rather than being forced into it through uncontrolled or third-party means.
Interest: Having the desire to see a process through to completion; or, the additive portion of a loan or credit that will accrue if a minimum monthly amount is not paid to the creditor, bank, or lender, as generally associated with credit cards and credit card debt.
Interested Party: Any party or entity that stands to make a profit or gain benefit from a certain outcome of a specific event; in business, an interested party will generally invest in a company in order to gain larger profits later, assuming the business does not fail and fall to bankruptcy.
Interested Person: An individual person who wished to make profit or gain benefit from the right outcome of certain events or investments; see Interested Party (above).
Involuntary Petition in Bankruptcy: The process in which a person or entity is brought into bankruptcy, or is influenced to file for bankruptcy, at behest of creditors and investors, rather than deciding to file for their own purposes or due to their own decisions.
Joint Debtor: A second party in a single bankruptcy filing, such as a person’s spouse; joint debtors will gain the same automatic stay protection afforded to the original or primary bankruptcy petitioner.
Judge: The appointed official to a certain bankruptcy court who oversees individual bankruptcy cases that are brought to that court; the judge in a bankruptcy case is tasked with determining if bankruptcy for the particular individual or party should be accepted, and, if so, what the details of the bankruptcy’s terms should be.
Judgment Avoidability: Any sort of legal strategy or option that deters using judgement to settle it; in bankruptcy, this may be specific to avoiding a money judgement that forces the petitioner to repay debts to creditors, either completely or partially.
Judgment Creditor: A party that benefits from a money judgement issued by a bankruptcy court; in bankruptcy, the petitioner will attempt to avoid repaying creditors for debts owed but must pay back a certain amount to certain judgement creditors.
Judgment De Novo: Another way to say a summary judgement; in law, a judgement de novo is oftentimes issues without the completion of a full trial regarding the matter; a judge that has been granted de novo abilities can conclude a case based on their own discretion.
Judgment Preclusion: The document, decision, or official judgement that closes a legal dispute between two parties and stops the ability from either party from suing the other for the same reason; once a judgement preclusion is established in a bankruptcy case, creditors can no longer pursue previous debts from a debtor but can pursue any future debts.
Judicial Lien: A specific type of lien placed their at a judge’s discretion, usually as a result of a bankruptcy case; if the debtor cannot repay debts to judgement creditors (see above), any piece of real property with a judicial lien will be surrendered to that creditor.
Judicial Lien Avoidance: A debtor’s ability to remove judicial liens, or prevent them from being placed there initially, by meeting certain criteria or enforcing their rights in specific circumstances; judicial lien avoidance is most often used in Chapter 7 bankruptcies.
Lease: Any contract that outlines the general terms under which an individual or business agrees to pay rent, usually monthly, to a property owner for fair use of that property; some leases may not be specific to real property, such as a leased vehicle, which involves an individual renting an automobile for regular use, typically with the ability to buy it in the future.
Leasehold: Whenever an asset or piece of property is bound by a lease contract, it will be classified as a leasehold on any relevant accounting paperwork and spreadsheets.
Lessee: The party who agrees to pay monthly rent amounts for control, borrow, rent, or temporarily own a piece of property, usually real estate; lessee is sometimes substituted for tenant when speaking of lease contracts involving homes and apartments.
Lessor: The party that had original ownership or control over a piece of property and has agreed to let another party (see lessee) use it for their own purposes so long as the terms and payments of a monthly lease contract are upheld; lessor may be substituted for landlord in situations involving real property.
Liabilities: In terms of businesses, a liability is any sort of financial obligation or monetary debt accrued to regular operations; liabilities can be paid off through services, goods, or finances; when liabilities are not balanced, debt begins to accrue.
Lien: The legal right for a creditor, service specialist, bank, or another professional institution to seize property if the property owner does not pay for services rendered or defaults on a loan from that creditor; for example, if a person gets a loan from the bank to purchase an automobile, that bank will put a lien on that car, and will sell the car for its own profit if the loan defaults.
Lien Avoidance: A financial tool specific to Chapter 7 bankruptcy filings that allows the bankruptcy petitioner to remove liens from their property; lien avoidance is powerful and only used in specific situations and for specific types of debt.
Lien Strip: A financial tool specific to Chapter 13 bankruptcy that is similar to lien avoidance (see above) in that it eliminates junior liens – such as a second or third mortgage on a piece of real property – and makes any remaining debt unsecured and capable of being reduced or discharges; lien stripping is powerful and may not be permitted in most Chapter 13 bankruptcy filings.
Line: Sometimes called a ‘line of credit’ (LOC), a line is the connection between a lending financial institution, such as a bank, and a customer, which could be an individual or business, that permits that customer to access finances up to a certain amount; credit cards are simple and common lines of credit.
Loan Modification: The alteration of a mortgage agreement in order to make the terms more manageable for the borrower or debtor; loan modifications are permanent and serve to help both the borrower and the creditor, as the borrower is more likely to keep their property and the creditor is more likely to receive some payments, rather than receiving none at all from a defaulted mortgage.
Mailing Matrix: A list of all known and relevant creditors that is completed by the person creating a bankruptcy petition to be given to the bankruptcy court; the mailing matrix will be used to ensure all creditors are given notice of your bankruptcy filing.
Mask Work: A particular set or arrangement of images that create a three-dimensional final piece, pattern, or object, which is then used to create a patent or copyright; a company may sell off mask works in bankruptcy to competitors to cover debts.
Master Netting Agreement: When two conflicting parties are competing with one another for a final sum or cash payment that stems from multiple derivative contracts, a master netting agreement can be used to pull all contracts into one that provides one single final payment or settlement.
Master Netting Agreement Participant: Any interested or named party in a master netting agreement that will either profit from the final payment, pay another party as part of the final payment, or acts as a third-party to interact or oversee.
Median Family Income: How much the average family or household in the United States of America makes through regular income each month or year, depending on the records used; median family income is often split into “per state” categories and referenced when determining a bankruptcy filers exemptions or protections; a bankruptcy filer belonging to a family above the median family income will likely have less protections, and vice versa.
Modify: The act of changing a bankruptcy payment plan, Chapter 7 or 13, after it has been established to better serve the bankruptcy petitioner.
Motion: Legal term for an action or request while within a courtroom; in a bankruptcy court, motions are requested of the presiding bankruptcy judge or administrator, who then has the ability to approve or deny the motion.
Municipality: A particular region, city, town, county, or other tax districts that is considered one entity in a Chapter 9 bankruptcy filing; municipality bankruptcies are often considered concerned and treated with high scrutiny, as a municipality without finances cannot serve and support its residents.
Net Income: When speaking of a company, net income is that company’s total profits or earnings in any given period, usually a fiscal year; when speaking of an individual or family, net income is how much that particular household earns through recordable income in a given period of time (see Median Family Income).
Non-Priority Claim: Unsecured debts in a bankruptcy procedure that do not take precedent over other forms of unsecured debts are known as non-priority debts; to make a non-priority claim is to state that a certain debt should be considered as a non-priority debt and therefore addressed last during a bankruptcy, if it is addressed at all.
Non contingent claim
Null and void
Operation of Business
Penalty of Perjury
Perfected Security Interest
Personally Identifiable Information
Proof of Claim
Profit and Loss
Securities Self Regulatory Organization
Single Real Estate Asset Case
Small Business Case
Small Business Debtor
Tenants by the Entirety
Term Overriding Royalty
Uninsured State Member Bank
Unsecured Creditor Committee
Void ab initio
Voluntary Petition in Bankruptcy