Glossary

Absolute priority – The order of payments made to different creditor classes. Higher priority classes are paid in full before creditors in other classes receive any payment. The order goes: administrative claims; statutory priority claims (such as tax claims) and rent claims; secured creditors claims; unsecured creditors claims; and equity claims.

Administrative claims – Debts incurred after the bankruptcy filing. These claims may include court costs, fees for your bankruptcy representation in Minneapolis, trustees expenses, and more.

Automatic stay – The suspension of debt collections and foreclosures against the debtor that occurs immediately when the petition for bankruptcy is filed.

Ballot date – The date set by the court by which all votes for a reorganization plan must be received.

Bankruptcy estate – The debtor’s property subject to bankruptcy proceedings.

Bankruptcy petition – The document filed to initiate the bankruptcy process.

Bar date – The last date creditors can file a claim against a debtor.

Chapter – The type of bankruptcy a person is filing. Your Minneapolis bankruptcy attorney can help you select the right type of bankruptcy for your specific situation.

Chapter 7 – A bankruptcy involving liquidation proceedings.

Chapter 13 – A type of bankruptcy involving the rescheduling of debt.

Claims – Creditor’s rights to repayment made for debts incurred.

Class – The different types of claims made against a debtor.

Collateral – Property subject to a lien. The creditors who hold rights to this property are known as “secured creditors.” They have more protections than unsecured creditors.

Confirmation – The court’s final approval of a reorganization plan. This is made after the plan was approved by the creditors.

Credit Report – A compilation of your debts, credit history and overall credit worthiness. This report is used by companies to evaluate whether or not to provide you a loan or credit card.

Creditor – A person or organization owed money by a debtor.

Debtor – A person or organization who owes money.

Default – The failure to maintain a debt repayment obligation. When you find many of your accounts are defaulted, it is a good indication that you should get in touch with a Minneapolis bankruptcy lawyer.

Delinquency – Failure to make payments by their due date.

Discharge – The elimination of debts by a bankruptcy court.

Dischargeable debts – Debts that can be removed through the bankruptcy process. Not all debts are dischargeable, such as alimony, child support or fines for criminal acts. Your Minneapolis bankruptcy lawyer can help you find a workable plan to fulfill these debt obligations after your other debts are discharged.

Effective date – The date a reorganization plan is initiated.

Equity – The financial interest in a property by a homeowner. This figure is created by subtracting the amount of money owed on mortgages and other liens from the total value of the property.

Exempt – Property not subject to creditor’s claims and removed from the bankruptcy estate. The debtor is allowed to select this property and may keep it after the bankruptcy process.

Fair Market Value – The highest price that a buyer would pay and the lowest price a seller would accept in a standard, non-compelled item transaction.

Filing Fees – The cost of filing a bankruptcy.

Garnishment – A court-ordered debt collection that can be removed from a person’s pay check without their consent.

Involuntary bankruptcy – A bankruptcy started without the debtor and initiated by at least three creditors who hold unsecured claims over $5000 against the debtor.

Lien – A property interest used to help secure a debt. Liens may be involuntary (like tax liens) or voluntary (like mortgages).

Liquidation – The selling of a person or company’s assets by auction in order to help pay of creditors.

No Asset Case – Debts that cannot be eliminated via bankruptcy. These debts are still legally enforceable. These are also referred to as non-dischargeable.

Personal bankruptcy – A bankruptcy filed by an individual.

Personal property – Not real property that is not affixed to real property. Cars, furniture, collectables and investments are all examples.

Petition – The papers that, once filed, commence a bankruptcy.

Property of the estate – Non-exempt property that is part of the bankruptcy estate. This property is usually sold in auction and used to repay creditors.

Prepackaged bankruptcy – A bankruptcy agreement created and agreed to before a bankruptcy petition has even been filed.

Proof of claim – A form filed by a creditor detailing claims against a debtor.

Relief from stay – A creditor’s request for a bankruptcy judge to lift an automatic stay and permit action to be taken against the debtor. If this is granted, the party that filed the request may take whatever action is permitted by the court.

Repossession – The ability of a creditor to repossess collateral and re-sell the item in order to dispose of a debt.

Restructuring – An out-of-court attempt to reorganize and pay off debts.

Secured creditors – Creditors with a lien on property.

Secured debt – Debt secured by a lien on a debtor’s property, whether involuntary or voluntary by the debtor.

Small claims – In many bankruptcies, a group of smaller claims (generally those under $10,000) are lumped together into one class and settled for cash.

Substantial abuse – the abusing of bankruptcy courts, usually involving personal bankruptcy fraud.

Super priority claim – an administrative claim that is paid ahead of all other claims.

Unsecured creditor – Creditors who have no liens on property. Credit card companies are generally unsecured creditors.

Unsecured claim – A creditor claim that has no payment priority and no collateral.

Voluntary bankruptcy – Bankruptcy filed by a debtor, usually with the help of a skilled Minneapolis bankruptcy attorney.

Workout – A non-bankruptcy payment plan to help the debtor fulfill obligations to creditors.