Bankruptcy Terminology

CHAPTER 7

The chapter of the Bankruptcy Code providing for “liquidation,” i.e., the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.

CHAPTER 7 TRUSTEE

A person appointed in a chapter 7 case to represent the interests of the bankruptcy estate and the unsecured creditors.  (The trustee’s responsibilities include reviewing the debtor’s petition and schedules, liquidating the property of the estate, and making distributions to creditors. The trustee may also bring actions against creditors or the debtor to recover property of the bankruptcy estate.)

CHAPTER 11

A reorganization bankruptcy, usually involving a corporation or partnership.  (A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.)

CHAPTER 12

The chapter of the Bankruptcy Code providing for adjustment of debts of a “family farmer,” as that term is defined in the Bankruptcy Code.

CHAPTER 13

The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income.  (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)

CHAPTER 13 TRUSTEE

A person appointed to administer a chapter 13 case. (A chapter 13 trustee’s responsibilities are similar to those of a chapter 7 trustee; however, a chapter 13 trustee has the additional responsibilities of overseeing the debtor’s plan, receiving payments from debtors, and disbursing plan payments to creditors.)

CLAIM

A creditor’s assertion of a right to payment from a debtor or the debtor’s property.

COMPLAINT

The first or initiatory document in a lawsuit that notifies the court and the defendant of the grounds claimed by the plaintiff for an award of money or other relief against the defendant.

CONFIRMATION

Approval of a plan of reorganization by a bankruptcy judge.

CONSUMER BANKRUPTCY

A bankruptcy case filed to reduce or eliminate debts that are primarily consumer debts.

CONSUMER DEBTS

Debts incurred for personal, as opposed to business, needs.

CONTINGENT CLAIM

A claim that may be owed by the debtor under certain circumstances, for example, where the debtor is a cosigner on another person’s loan and that person fails to pay.

CREDITOR

A person to whom or business to which the debtor owes money or that claims to be owed money by the debtor.