Bankruptcy Terminology

PARTY IN INTEREST

A party who is actually and substantially interested in the subject matter, as distinguished from one who has only a nominal on technical interest in it.

PLAN

A debtor’s detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time.

PLAINTIFF

A person or business that files a formal complaint with the court.

POSTPETITION TRANSFER

A transfer of a debtor’s property made after the commencement of the case.

PREBANKRUPTCY PLANNING

The arrangement (or rearrangement) of a debtor’s property to allow the debtor to take maximum advantage of exemptions.  (Pre-bankruptcy planning typically includes converting nonexempt assets into exempt assets.)

PREFERENTIAL DEBT PAYMENT

A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy (or within one year if the creditor was an insider) that gives the creditor more than the creditor would receive in the debtor’s chapter 7 case.

PRIORITY

The Bankruptcy Code’s statutory ranking of unsecured claims that determines the order in which unsecured claims will be paid if there is not enough money to pay all unsecured claims in full.

PRIORITY CLAIM

An unsecured claim that is entitled to be paid ahead of other unsecured claims that are not entitled to priority status.  Priority refers to the order in which these unsecured claims are to be paid.

PROOF OF CLAIM

A written statement describing the reason a debtor owes a creditor money. (There is an official form for this purpose.)

PROPERTY OF THE ESTATE

All legal or equitable interests of the debtor in property as of the commencement of the case.