The most common type of bankruptcy case in which individuals try to get a financial fresh start by giving all non-exempt property to creditors in exchange for a discharge from some (but not all) types of debt. Businesses may also use Chapter 7 to liquidate and go out of business, but they do not receive a discharge. For a more complete description of Chapter 7 and examples of debts not discharged in Chapter 7, see the Summary of Chapter 7.
Chapter 7 Trustee
One of about 50 people, usually an attorney or accountant, assigned by the United States Trustee to represent the interests of creditors in a Chapter 7 case. A Chapter 7 Trustee takes control over the Chapter 7 Estate. The Chapter 7 Trustee is responsible for many things including collecting property and money which is not exempt property, recovering property which has been improperly transferred by the debtor, making sure the debtor complies with all duties in Chapter 7 case, investigating the debtor's financial affairs, making sure that claims are legitimate, opposing the debtor's right to receive a discharge when appropriate, and closing the case as quickly and efficiently as possible. See Bankruptcy Code §704
A type of bankruptcy case in which individuals and businesses try to reorganize and pay back some or all of their debts under a Plan of Reorganization. Generally during this process the debtor remains in control of the situation acting as a Debtor-in-Possession. Sometimes the Bankruptcy Court will appoint a Chapter 11 Trustee. The process sometimes leads to liquidation (going out of business). Other times the debtor is trying to stay in business. Most Plans do provide for some type of discharge. For a more complete description of Chapter 11, see the Summary of Chapter 11.
Chapter 11 Trustee
A private panel trustee, usually an attorney or accountant, assigned by the United States Trustee to represent the interests of creditors in a Chapter 11 case. A Chapter 11 Trustee takes control over the Bankruptcy Estate. The Chapter 11 Trustee is responsible for many (but not all) of the same things as a Chapter 7 Trustee and more. See Bankruptcy Code §1106
A type of bankruptcy case in which a family farmer or family fisherman with regular annual income can try to reorganize and pay back some or all of their debts under a plan. During this process, the debtor remains in control of the Bankruptcy Estate and makes payments to the Chapter 12 Trustee while trying to stay in business. Chapter 12 plans do provide for a discharge of some (but not all) types of debts. For a more complete description of Chapter 12 and examples of debts not discharged in Chapter 12, see the Summary of Chapter 12. Only certain types of people can be a debtor under Chapter 12 See Bankruptcy Code §109(f)
Chapter 12 Trustee
One of about 5 people assigned by the United States Trustee to handle Chapter 12 cases. By comparison with a Chapter 7 Trustee or a Chapter 11 Trustee, a Chapter 12 Trustee has very limited duties. Their primary duties have to do with making sure that the Chapter 12 repayment plan meets the requirements of the Bankruptcy Code and that the debtor follows through by making the payments required under that plan. Payments under the plan are paid to the Chapter 12 Trustee who distributes them to creditors. See Bankruptcy Code §1202(b)
A type of bankruptcy case in which individuals with regular income can try to reorganize and pay back some or all of their debts under a plan. During this process, the debtor remains in control of the Bankruptcy Estate and makes payments to the Chapter 13 Trustee while trying to stay in business. Chapter 13 plans do provide for a discharge of some (but not all) types of debts. For a more complete description of Chapter 13 and examples of debts not discharged in Chapter 13, see the Summary of Chapter 13. Only certain types of people can be a debtor under Chapter 13 See Bankruptcy Code §109(e)
Chapter 13 Trustee
One of about 5 people assigned by the United States Trustee to handle Chapter 13 cases. By comparison with a Chapter 7 Trustee or a Chapter 11 Trustee, a Chapter 13 Trustee has very limited duties. Their primary duties have to do with making sure that the Chapter 13 repayment plan meets the requirements of the Bankruptcy Code and that the debtor follows through by making the payments required under that plan. Payments under the plan are paid to the Chapter 13 Trustee who distributes them to creditors. See Bankruptcy Code §1202(b)
This is an accounting term. It means that the creditor does not expect to collect on the debt. It relates to the creditor's taxes. It starts time periods under the Fair Credit Reporting Act. The debt can still be enforced.
A right to demand money (even if the right is not for a precise amount, or is disputed) or to demand some other remedy under the law if that other remedy can be reduced to a demand for money. See Bankruptcy Code §101(5). A claim against the debtor includes a claim against property belonging to the debtor. See Bankruptcy Code §102(2)
Refers to Current Monthly Income.
Property related to a specific debt or obligation which is held hostage and may be forfeited if that debt is not paid or the obligation is not performed. The creditor who has a debt with collateral is a secured creditor and the creditor is said to have a lien on the collateral. It is possible to have more than one debt related to collateral such as when a single house has a first mortgage and a second mortgage. For more information, see Is This Debt Secured?
A pre-bankruptcy claim which State law says can be paid with community property even if there is no community property when the bankruptcy case is filed. See Bankruptcy Code §101(7)
Property defined by the law of each State. Not all States have community property. In California, it includes any property acquired by a person after marriage (and before separation or divorce) unless that property was acquired by inheritance, by gift, or from other non-community property (like rental income from a house acquired before marriage). See Calif.Family Code §760 and §770. This also includes property acquired by the spouses before they moved to California. See Calif.Family Code §125. Under California law, domestic partners (same gender couples and couples where at least one partner is entitled to receive social security old age benefits) can also have community property. See Calif.Family Code §297.5. Federal bankruptcy law does NOT recognize domestic partnerships. See Title 1, United States Code §7
Commercial Fishing Operation
Raising, catching or harvesting aquatic species or products of such species for market. See Bankruptcy Code §101(7A)
Commercial Fishing Vessel
A vessel used by a family fisherman to carry out a commercial fishing operation. See Bankruptcy Code §101(7B)
Most settlements which resolve disputes before the Bankruptcy Court must be approved by the Bankruptcy Court. This usually takes about 30 days. Federal Rule of Bankruptcy Procedure 9019
The legal process of approving a debt repayment plan in Chapter 11, Chapter 12 or Chapter 13. After the plan is approved it is "confirmed".
The complete merging of two separate bankruptcy cases. Creditors from both cases are combined and claims which might have existed between the two debtors are eliminated. Federal Rule of Bankruptcy Procedure 1015(a). When this can be done is often the subject of significant litigation.
Consumer Bankruptcy Case
A bankruptcy case which involves individuals and their personal financial affairs rather than a business and the financial affairs of the business.
A debt incurred by an individual primarily for a personal, family, or household purpose so business loans are not consumer debt. Taxes are not considered consumer debts. The Means Test only applies to debtors with primarily consumer debt. See Bankruptcy Code §101(8)
One of several types of legal proceedings in which the Bankruptcy Court resolves disputes. The others are Motion, Adversary Action and Application. This is a hybrid form of legal proceeding between a Motion and an Adversary Action. Contested Matters are started when someone files a Motion and someone else files a formal opposition. In these situations, the Court may require the participants to use the formal rules which apply to an Adversary Action, or may fashion some less formal rules to try to help resolve the dispute quickly and efficiently. See Federal Rule of Bankruptcy Procedure 9014
Refers to debt which becomes due only if some other event occurs. In other words, contingent debt may never become due if the contingency does not occur. The classic law school example of this is a promise of a reward upon graduation. If there is no graduation, then the debt never becomes due. Just because a debt is due in the future does not make it contingent.
Cases filed under one Chapter can be converted to a case under a different Chapter. This is the process of changing a case from one Chapter to another. If converting from Chapter 7, see Bankruptcy Code §706. If converting from Chapter 11, see Bankruptcy Code §1112. If converting from Chapter 12, see Bankruptcy Code §1208. If converting from Chapter 13, see Bankruptcy Code §1307. Regardless of how many times a case is converted from one Chapter to another, the Filing Date remains the same.
Since the bankruptcy laws were changed in October 2005, all people who file bankruptcy must take two classes. The first is called a "Briefing". See Bankruptcy Code §109(h). The briefing can be received in person, over the phone or over the internet. It usually lasts about 60 minutes. The Briefing MUST BE COMPLETED before a bankruptcy case can be filed. The second is called a Financial Management Course which must be completed before a debtor receives a discharge. The Financial Management Course takes several hours. See Bankruptcy Code §727(a)(11)
A record of financial transactions maintained by a private company. These records are sold to potential creditors to help them make credit decisions. The major credit reporting companies are TransUnion, Experian and Equifax
Someone with a claim against the debtor, or a mortgage or lien against property owned by the debtor that arose before the order for relief in a bankruptcy case is filed. This includes a community claim. See Bankruptcy Code §101(10)
A representative body of creditors appointed by the United States Trustee to represent the interests of creditors in a bankruptcy case. Sometimes more than one creditor committee will be appointed if there are distinct groups of creditors which have conflicting interests. Creditor committees can hire attorneys, accountants and other professionals to help them and the fees for these professionals are paid, if possible, as administrative claims from the bankruptcy estate. Creditor committees are almost never appointed in Chapter 7 cases and are rarely appointed in Chapter 11 cases. Larger cases are more likely to have a Creditor Committee.
Current Monthly Income
Sometimes referred to as CMI. The average monthly "income" (taxable or non-taxable) from all sources that the debtor (and the debtor's spouse in a joint case) received during the 6-month period ending the month before a bankruptcy case is filed. CMI includes any amount paid by someone else on a "regular basis" for household expenses, but excludes Social Security Act benefits, war crimes victim payments, crimes against humanity victim payments and international or domestic terrorism victim payments. The legal definitions of "income" and "regular basis" remains undecided. See Bankruptcy Code §101(10A)
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