Common Bankruptcy Terms That You Need To Know

Posted by changandcarlin on October 15th, 2013

The experienced Chapter 13 and Chapter 7 Bankruptcy Attorneys Chicago at the law offices of Chang and Carlin help many people every day resolve their financial difficulties. However, a large number of people who come to their law offices are not aware of the general terms associated with bankruptcy. If people had idea of the terms associated with bankruptcy, it would become easier for them to make an informed decision. Therefore, below is a Glossary of common bankruptcy terms brought to you exclusively by Chang and Carlin, LLP!

Glossary of Common Bankruptcy Terms

A

Absolute priority – the order of payment to the different classes of creditors mandated by the Bankruptcy Code.

Adequate protection – the right of a party with an interest in the debtor's property (such as a secured creditor) to assurance that its interest will not be diminished during the bankruptcy proceedings.

Adversary proceeding – a lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the bankruptcy court.

Automatic stay – the suspension of actions, such as debt collection or foreclosure, against the company in bankruptcy

B

Bankruptcy Code – the name given to the statutory body of bankruptcy laws after the Bankruptcy Reform Act of 1978

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.

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

C

Cash collateral – cash and cash equivalents held by the debtor in Chapter 11 subject to liens of other parties.

Chapter – the Bankruptcy Code is organized into Chapters, e.g.:-Chapter 13 Bankruptcy Chicago. Except for Chapter 12, the Chapters of the present code are all odd-numbered and are enumerated with Arabic numerals.

Contested matter – It is a dispute among the parties to a bankruptcy proceeding, instituted by the filing of a motion of the court.

Contingent claim – a claim that may be owed by the debtor under certain circumstances

Core proceedings – those proceedings that are inherent in and fundamental to the administration of a bankruptcy case.

D

  Debtor in possession – the debtor which remains in control of operations, as opposed to having a trustee operate the company.

Dischargeable debt – a debt for which the bankruptcy code allows the debtor’s personal liability to be eliminated.

Disclosure statement – a comprehensive disclosure document sent to creditors when they are asked to vote on a plan of reorganization in Chapter 11.

E

Equity – the value of the debtor’s interest in property that remains after the liens and other creditor’s interests are considered.

Examiner – a professional appointed by the bankruptcy court to investigate and oversee certain aspects of the debtor or the proceedings.

G

Gap period – the period between the filing of an involuntary petition and the dismissal of the petition, the entry of an order for relief or the filing of a voluntary petition (whatever the outcome).

Going concern value – what a company is worth if sold as a continuing business, as opposed to its liquidation value.

I

  Interim order – a temporary order of the court pending a hearing, trial, a final order or while awaiting an act by one of the parties.

L

Lien – a charge upon a specific property designed to secure payment of a debt or performance of an obligation.

Liquidated claim – a creditor’s claim for a fixed amount of money

These were some common terms associated with bankruptcy. For detailed information on these terms or to schedule a free initial legal consultation, contact Chang and Carlin, LLP’s experienced Bankruptcy attorneys in Chicago.

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Disclaimer: The content provided by Chang and Carlin, LLP is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Foreclosure services, or Real Estate legal services, call our law firm at 1-866-790-8601 for a Free Legal Evaluation. Chang and Carlin, LLP serves clients in Chicago, Schaumburg, Joliet, and Warrenville.