341 meeting - (see Meeting of Creditors )

Absolute priority rule – This term refers to §1129(2)(b)(ii) of the bankruptcy code and its prohibition against a shareholder retaining any asset by virtue of a prior, pre-bankruptcy interest, over the objection of unpaid creditors in a Chapter 11 proceeding.  Essentially, the rule requires that the debtor, or its shareholders, receive no value from bankruptcy estate assets until all creditors have been repaid in full.

Adequate protection - the right of a secured creditor to assurance that its interest will not be diminished during the bankruptcy proceedings – for example, a mortgage holder requiring property inspections.

Administrative claim (or administrative expense claim) - debt incurred by the debtor, with court approval, after the bankruptcy filing, such as lawyers' fees, trustees' expenses, and costs of preserving property.

Adversary proceeding – a lawsuit within a bankruptcy proceeding instituted by filing a complaint, for example, challenging the validity or amount of a creditor’s claim. 

Automatic stay - the suspension of actions, such as debt collection or foreclosure, against an individual or business in bankruptcy. This occurs automatically when the bankruptcy petition is filed, and may be lifted (see relief from stay). Automatic stay protects the debtor from creditors and also protects some creditors by preventing one creditor from obtaining an excessive share of an asset.

Avoidance power - the power of the bankruptcy trustee to invalidate certain obligations or transactions undertaken by a debtor prior to filing bankruptcy, intended to reverse transfers of property that favor one creditor over another, sheltering funds via gifts to family members, and so forth. 

Bankrupt - the entity that files a bankruptcy; the debtor; the insolvent entity. This is a non-technical term and is not used in the Bankruptcy Code.

Bankruptcy - (see also failure and insolvency) a non-technical term for a legal state of insolvency.

Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 – The most recent revision of the United States Bankruptcy Code. This legislation, enacted to favor creditors, has made the individual consumer bankruptcy process more complicated and forced more people into Chapter 13 reorganization bankruptcies, but,

Bankruptcy Code - The name given to the statutory body of bankruptcy laws after the Bankruptcy Reform Act of 1978. Bankruptcy, with the exception of exemptions, is a matter of Federal law, and is uniform throughout theUnited States . 

Bankruptcy Court - The federal tribunal where cases under the Bankruptcy Code are litigated is referred to as the Bankruptcy Court.  The Bankruptcy Court is a subdivision of the federal court system supervised by the District Court.  Bankruptcy matters are delegated by the District Court to the Bankruptcy Court for adjudication.  The Bankruptcy court for the Eugene-Springfield area is located at 151 W. 7^th in Eugene.

Bankruptcy estate - generally, the property of the debtor that is subject to the jurisdiction of the bankruptcy court. See exemptions for assets that can be excluded under Oregon law.

Bankruptcy petition - the document filed with the court to initiate a bankruptcy proceeding.

Bankruptcy Reform Act of 1978 - the first substantive bankruptcy code revision since the Chandler Act of 1938; took effect on October 1, 1979; some of the major elements of this act were 1) upgrading the jurisdiction of the U.S. bankruptcy courts to deal with cases handled by other courts (subsequently modified); 2) allowing the filing of a single joint petition of bankruptcy by husband and wife; 3) reorganizing the Chapters of bankruptcy; in particular, concerning business reorganization, Chapters X, XI and XII of the old code are replaced by Chapter 11; 4) expanding the number of people eligible and the type of relief available to people in a new Chapter 13 , wage-earner reorganization bankruptcy; 5) altering the appellate procedure allowing direct appeal to the U.S. courts of appeal (subsequently modified); and 6) generally, making federal exemption provisions and options for debtors more extensive. 

BAPCPA – The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 is often referred to by the initials BAPCPA.  Some lawyers working with this piece of legislation refer to it derisively as BAPCRAPA due to the poor draftsmanship and consumer unfriendly provisions it contains.

Bar date - the last date that creditors may file a claim against the debtor.

Brunner Test - a three part test for determining whether a student loan is dischargeable in bankruptcy based on a claim of undue hardship.  It is based on a thirty-year old U.S. Court of Appeals decision Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987) and requires a debtor to prove: (1) That the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and dependents if forced to pay off student loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.  See my blog article on this subject for more information.

Chapter - the Bankruptcy Code is organized into Chapters.  Except for Chapter 12, the Chapters of the present code are all odd-numbered and are enumerated with Arabic numerals. Chapters 1, 3, and 5 of the bankruptcy code cover matters of general application. Chapters 7, 9, 11, 12, 13 and 15 concern, respectively:  liquidation (business or non-business); municipality bankruptcy; business reorganization; family farm debt adjustment; wage-earner or personal (i.e. non-business) reorganization, and foreign bankruptcy proceedings.

Chapter 7 – The commonest and most familiar form of personal bankruptcy. Liquidation proceedings; generally assets (minus exemptions) are sold by a trustee and the proceeds used to pay expenses and creditors. To qualify for Chapter 7, individuals must pass a means test.

Chapter 11 - reorganization proceedings, generally for business entities; the debtor maintains control of the business in Chapter 11 (unless the Court appoints a trustee). Sometimes used for individuals whose incomes or assets exceed the amount allowable for Chapter 13.    

Chapter 12 - family farmer bankruptcies; created by Congress in 1986 (Chapter 12 became effective on November 26, 1986 and is now a permanent Chapter of the Bankruptcy Code); only a family owned farm business can qualify for Chapter 12 and it must have debt less than $1.5 million and have 50% of its income from farming operations. Family fishing operations were added in 2005.

Chapter 13 - bankruptcy proceedings for an individual with the intention of rescheduling the individual's debt, paying all or a portion of it over three to five years under the direction of the bankruptcy court. Chapter 13 is referred to as wage-earner bankruptcy, personal bankruptcy or consumer bankruptcy; Chapter 13 cannot be used by a partnership or a corporation but may be used by a sole proprietorship.

Chapter 15 - Chapter 15 is a new chapter added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It is the U.S. domestic adoption of the Model Law on Cross-Border Insolvency promulgated by the United Nations Commission on International Trade Law ("UNCITRAL") in 1997, and it replaces section 304 of the Bankruptcy Code.  The purpose of Chapter 15, and the Model Law on which it is based, is to provide effective mechanisms for dealing with insolvency cases involving debtors, assets, claimants and other parties in interest involving more than one country.

Claims - rights to repayment made by creditors against a debtor; they may be liquidated, unliquidated, fixed, contingent, matured, unmatured, secured, unsecured, subordinated, legal or equitable. See specific entries and seepriority claims .

Confirmation - the final approval by the bankruptcy court of a debtor's plan of reorganization under Chapter 13.  Confirmation takes place after the plan has been approved by creditors.

Conversion - changing chapters in bankruptcy (e.g., converting from Chapter 7 to Chapter 13).  Conversion is generally allowed, absent bad faith, at the request of the debtor.

CRA - is an abreviation for Consumer Reporting Agency as defined by federal law.  Most CRAs are credit bureaus that gather and sell information about you -- such as if you pay your bills on time or have filed bankruptcy -- to creditors, employers, landlords, and other businesses.  Three of the most well known are Experian, Equifax and Transunion.

Cramdown – The confirmation of a plan of reorganization over the objections of one or more classes of creditors, i.e. “cramming it down their throats.”  In individual consumer bankruptcies, refers to reducing the amount of a secured lien to the present value of the property, most commonly with vehicles.

Debtor - the entity seeking protection from creditors under the bankruptcy laws.

Debtor-in-possession - The debtor who remains in control of assets and business operations during a bankruptcy proceeding; as opposed to having a trustee operate the company or take control of non-exempt assets.  The debtor in possession assumes a fiduciary responsibility to the creditors of the estate to manage it in their interests.

Default - the failure by an entity to abide by the covenants in a debt obligation or other agreement to which it is a party. The most common default is non-payment of interest or principal.

Discharge (of indebtedness) - The satisfaction or elimination of the debts of the debtor by order of the bankruptcy court.  A debt which has been discharged is no longer legally enforceable, but any lien which secures it may survive.

Dischargeable – Debts that can be eliminated in bankruptcy. Certain debts are not dischargeable. Family support, criminal restitution, and student loans are examples of debts which cannot be discharged.

Dismissal - the termination of a bankruptcy proceeding without entry of a discharge or denial of a discharge.  The bankruptcy court can dismiss a case if it deems that the debtor has acted in bad faith or for other reasons. Under BAPCPA, cases can be dismissed for failure to follow proper procedures.

Docket - the schedule on which the clerk of the court records all motions, pleadings, memoranda, orders and all other court filings.

Domestic support obligation – Debts for alimony, maintenance, or support owed a spouse, child, or government entity.  This is often referred to by the initials DSO.

Earned Income Credit - The earned income credit is a federal program by which low wage earners can receive more in income tax refunds than they paid into the system.  It operates as a wage subsidy for low income workers and is considered by many to be one of the most successful anti-poverty tools in theUnited States.

ECMC -  Education Credit Management Corporation ("ECMC") is a non-profit company and fiduciary of the Department of Education that is charged with collecting federally guaranteed student loans.

Equitable subordination - the lowering of priority of a claim when strict adherence to priority would be manifestly unfair to other creditors. [the glossary I got this from had ‘because of improper conduct on the part of the priority claimholder’ but the case where I ran into this concept involved including a student loan under the automatic stay provision, because collecting on this nondischargeable debt left nothing to pay other creditors].

Exempt/exemptions – Property removed from the bankruptcy estate under state or federal law, and hence unavailable to pay creditors is often referred to as exempt.  Important exemptions in Oregon are the homestead exemption ($30,000 for an individual, $39,600 for joint debtors), an automobile to the value of $2,150, child and spousal support, criminal restitution, personal injury settlements to the amount of $10,000, social security benefits, tools of the debtor’s trade to the value of $3,000, and qualified retirement plans.  Dollar amounts for personal property exemptions (clothes, furniture) refer to resale value.

FCRA - The federal Fair Credit Reporting Act (FCRA) is a federal law designed to promote accuracy, fairness, and privacy of information in the files of every "consumer reporting agency" (CRA).  You can find the complete text of the FCRA, 15 U.S.C. 1681-1681u, at the Federal Trade Commission's web site (http://www.ftc.gov).

FDCPA - The Fair Debt Collection Practices Act (or FDCPA), 15 U.S.C. §1692 et seq., is a federal law added in 1978 as Title VIII of the Consumer Credit Protection Act. Its purposes are to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy. The Act creates guidelines under which debt collectors may conduct business, defines rights of consumers involved with debt collectors, and prescribes penalties and remedies for violations of the Act. It is sometimes used in conjunction with the Fair Credit Reporting Act or FCRA.

Fiduciary- One who is entrusted with duties on behalf of another, for example a debtor in possession who is managing a business on behalf of creditors. The fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where his fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from his fiduciary position without express knowledge and consent of those he represents. 

Filing fees - (as of January 1, 2007) for Chapter 7 the fee is $299 and for Chapter 13 it is $274.

Fraudulent conveyance - the transfer of valuable assets immediately prior to and in anticipation of a declaration of bankruptcy, made for less than adequate consideration, for example sale of real estate to a relative for a nominal amount. 

General, unsecured claim – Creditor’s claim that has no priority for payment, and for which the creditor holds no security. When determining general unsecured claims, the court apportions the funds available according to the relative size of each claim within the class. 

HOEPA - The Home Ownership and Equity Protection Act, often referred to by the initials HOEPA, is a federal law enacted by congress in 1994 and made a part of the Truth in Lending Act as 15 USC 1639 et seq.  The law specifically regulates loans against a consumer's home at high rates of interest or that contain high costs and fees.  A HOEPA loan is subject to specific disclosure requirements and certain types of terms are prohibited under specified circumstances.

As with other parts of the Truth In Lending Act, the specific details of the law are contained in Regulation Z.  In December 2001, the Federal Reserve Board amended the HOEPA regulations to include more types of loans under its disclosure requirements and reorganized Regulation Z to include a section listing certain prohibited acts or practices in covered consumer home loans.

Impairment - when a plan of reorganization alters the contractual rights of a class of holders of claims, that class is deemed to be impaired. A class that is unimpaired is deemed to automatically accept a plan of reorganization.

Indemnify – To guarantee against loss another might suffer. In bankruptcy, it is used to describe one spouse in a divorce case agreeing to assume certain debts from a marriage and to see that the other spouse is not forced to pay.

Insolvency - (see also bankruptcy and failure) another term used to describe a firm that is failing; generally it means that a firm's liabilities exceed its assets or that it is unable to satisfy its obligations as they come due.  

Involuntary bankruptcy - a bankruptcy initiated by at least three creditors holding unsecured claims aggregating at least $5,000 against the debtor. Data from the U.S. Administrative Office of the Courts subdivides bankruptcies into voluntary and involuntary.

Lien – An interest in real or personal property which secures a debt. A lien may be voluntary, such as a mortgage on real estate, or involuntary, such as a judgment or property tax lien. 

Liquidation value - the aggregate value of a business if its assets are sold piecemeal.

Means test – a set of rules, introduced in 2005, used to determine whether an individual is eligible to file for Chapter 7 or has sufficient income to pay some of his debts and must file under Chapter 13. 

Meeting of creditors (341 meeting) - a mandatory meeting between the trustee and the debtor, at which the debtor is examined under oath about assets and liabilities. Creditors in personal bankruptcies may attend, but rarely do. It is usually held within a month of the filing of bankruptcy but often occurs later when the debtor has filed its schedules of financial information.

PACER (Public Access to Court Electronic Records) - a service provided by the court system that gives case filing information. PACER requires an IBM-compatible computer equipped with a modem.

Pell Grant - named after U.S. Senator Claiborne Pell the Pell Grant program is a type of post-secondary, educational federal grant program sponsored by the U.S. Department of Education. Grants are awarded based on a "financial need" formula determined by the U.S. Congress.  The Pell Grant is covered by legislation titled the Higher Education Act of 1965, Title IV, Part A, Subpart 1; 20 U.S.C. 1070a. For the award year of 2007-2008 the maximum Pell Grant Award is $4,310. The 2008 maximum grant is $4,600. The maximum grant is to increase to $5,400 by 2012.

Personal bankruptcy - filed by an individual; also called a household bankruptcy, consumer bankruptcy or wage-earner bankruptcy. (see Chapter 13 and also Chapter 12).

Perfection – When a secured creditor has taken the required steps to perfect his lien, as when a mortgage is recorded with the county recorder. A lien which has not been perfected is still valid, but the seniority of liens, or priority over other competing liens is normally determined by the date on which they were perfected.

Petition - (or bankruptcy petition or petition for relief) - the document, filed with the court, that commences a bankruptcy proceeding.  Events are frequently described as “prepetition” and “post petition.”

Plan of reorganization - the document setting forth how a bankrupt company plans to satisfy its creditors. The plan of reorganization is the cornerstone of a successful Chapter 11 bankruptcy.

Post-petition - occurring after the filing of a petition.

Preference payments - a payment by a debtor made during a specified period (90 days or one year) prior to the filing that favors one creditor over others. Preference payments can usually be recovered and returned to the debtor's estate.

Pre-petition - occurring before the filing of a bankruptcy petition. Generally only pre-petition debts may be discharged in bankruptcy.

Priority claims – Claims which are paid in full before claims with a lower priority receive anything.  Priority claims, in descending order, include administrative expenses and salaries of the estate, wages, employee benefits, rental deposits, spouse and child support, and taxes which occurred pre-petition.

Pro rata – The term pro-rata refers to allocation between multiple entities based on a proportional measure.

Proof of claim - form filed by a creditor setting out its claims against a bankruptcy debtor.

Relief from stay – A creditor can petition the judge to lift the automatic stay and permit some action against the debtor or the property of the estate. Mortgage lienholders routinely ask for a relief of stay in order to commence or resume foreclosure proceedings.

RESPA - The Real Estate Settlement Procedures Act, often referred to as RESPA, is a federal law about closing costs and settlement procedures in consumer home loan transactions.  It is found at 12 U.S.C. § 2601–2617.  The Act prohibits kickbacks between lenders and third-party settlement service agents in the real estate settlement process (Section 8 of RESPA), requires lenders to provide a good faith estimate for all the approximate costs of a particular loan and finally a HUD-1 (for purchase real estate loans) or a HUD-1A (for refinances of real estate loans) at the closing of the real estate loan. The final HUD-1 or HUD-1A allows the borrower to know specifically the costs of the loan and to whom the fees are being allotted.

The statute also has provisions restricting how title insurance is sold, limiting use of an escrow account by the lender, requiring notice to the borrower when the loan is transferred to another servicer, and providing a means for borrowers to address loan servicing complaints.

Restructuring - a general term applied to an out-of-court attempt to reorganize and satisfy debts.  Similar to workout (see below).

Schedules – The lists of assets and liabilities a debtor is required to file when commencing a bankruptcy case.

Secured creditors - one of two general types of creditors of a company or individual.  Secured creditors have a lien on property.

Set-off - the ability to discharge or reduce a debt by applying a counter claim between the same parties. For example, a bank which has lent money to a debtor may attempt to satisfy some or the entire loan by seizing the debtor's deposits at the bank.

Straight bankruptcy - an informal term for a Chapter 7 bankruptcy or liquidation; used more commonly to describe liquidation before the Bankruptcy Reform Act of 1978.

Substantial abuse - a term that refers to the abusing of the privilege to file a petition.  It usually describes fraud in cases of personal bankruptcy.    

TILA - The Truth in Lending Act of 1968, often referred to as TILA, is a federal law contained in title I of the Consumer Credit Protection Act, as amended (15 USC 1601 et seq.)  The law is designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs. The regulations implementing the statute, which contain most of the specific requirements are known as "Regulation Z", and are found at 12 CFR Part 226.

TILA is all about disclosure.  There is little or no prohibition in the law or regulations that can not be overcome by proper disclosure.  Only the provisions contained in HOEPA, an amendment to TILA in 1994 governing certain high-cost home mortgage loans, actually prohibit some provisions in loan transactions. TILA requires that consumers be given information in a very specific way. Uniform disclosure allows a consumer to make an informed decision and properly compare alternative offers. 

TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's home, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes.  The regulations prohibit certain acts or practices in connection with credit secured against a consumer's home.

Trustee - an agent of the court who manages the property of the debtor for the benefit of the creditors. The court appoints a trustee in most Chapter 7 cases and in Chapter 13 cases. This type of trustee should be distinguished from the U.S. Trustee, who plays an administrative role in all bankruptcy cases. 

United States Trustee - an agent of the U.S. Department of Justice appointed to assist in bankruptcy cases. The U.S. Trustee administers many of the duties of the court including appointing committees, appointing trustees and examiners, scrutinizing bankruptcy documents, etc. The United States Trustee Program began in 1979. Presently, it covers all federal judicial districts except for North Carolina and Alabama , which were originally scheduled to be included in October of 2002, but whose inclusion Congress has extended indefinitely.

Unliquidated debt – a debt whose exact dollar amount is unknown, for example a tort claim.

Unsecured creditor - one of two general types of creditors. The unsecured creditors have no liens on the property of the debtor.

Voluntary bankruptcy - bankruptcy filed by the debtor itself; data from the U.S. Administrative Office of the Courts subdivides bankruptcies into voluntary and involuntary.

Vulture funds - (also referred to as vulture capitalists or vulture investors) - investment groups that are prominent in the restructuring of financially distressed and bankrupt companies usually by the buying or selling of large pieces of the distressed company's debt and/or equity.

Wage-earner bankruptcy - (see Chapter 13 and personal bankruptcy)

Workout - an arrangement, outside of bankruptcy, by a debtor and its creditors for payment or re-scheduling of payment of the debtor's obligations.  Usually applies to an informal agreement between a business and its creditors, although it can be a formal agreement and it can apply to consumer debtors also.