Bankruptcy Terminology
Adams Stirling PLC
Menu

BANKRUPTCY TERMS

Automatic Stay: Arises on bankruptcy filing, bars all collection actions, contempt and fines for those violating it.

BK: Abbreviation for "bankruptcy."

Chapter 7 - Liquidation: Debtor wants to get a fresh start and avoid paying existing debts.

Chapter 11: For companies and heavily indebted individuals seeking a plan to pay off a portion of its/his/her debts.

Chapter 13 - Personal Reorganization: Individuals seeking time to pay a portion of their debts in a 3 to 5-year plan.

Creditor: The party to whom money is owed.

Debtor: The party who owes the money and files the bankruptcy petition.

Discharge: The final step in a successful (for debtor) bankruptcy. Remaining pre-petition unsecured debts are wiped away.

Dismissal: Not a Discharge! Resume all collection activity for all amounts.

In Rem Order: Very useful when multiple bankruptcies are filed to thwart payment.

Motion for Relief from the Automatic Stay: Request for permission to proceed with collection despite the bankruptcy.

Motion to Avoid the Lien: Attempt to invalidate an association's lien.

Petition: Document filed by debtor to initiate bankruptcy.

Plan: Debtor's Chapter 11 or 13 proposal to make payments over time on way to hoped-for discharge.

Post-Petition: Liabilities of the debtor arising after filing of bankruptcy. Generally, not subject to discharge.

Pre-Petition: Liabilities of the debtor arising before the filing of the bankruptcy. Subject to discharge.

Proof of Claim: Formal statement of nature of debt and amount due to creditor.  Rights may be lost if not timely filed.

Secured Claim: A debt for which property is security. Creditor can pursue security even after discharge.

Unsecured Claim: No security for the debt. If discharged, debt is uncollectible.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC