GLOSSARY OF LEGAL TERMS FOR BANKRUPTCY AND FAMILY LAW
BANKRUPTCY TERMS FAMILY LAW TERMSBankruptcy
Adversary proceeding - A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the court.
Assume - An agreement to continue performing duties under a contract or lease.
Automatic stay - An injunction that automatically stops lawsuits, foreclosure, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.
Bankruptcy - A legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title 11 of the United States Code (the Bankruptcy Code).
Bankruptcy Code - The informal name for title 11 of the United States Code (11 U.S.C. § 101 - 1330), the federal bankruptcy law.
Bankruptcy estate - All legal or equitable interests of the debtor in property at the time of the bankruptcy filing. (The estate includes all property in which the debtor has an interest, even if it is owned or held by another person.)
Bankruptcy judge - A judicial officer of the United States district court who is the court official with decision-making power over federal bankruptcy cases.
Bankruptcy petition - The document filed by the debtor (in a voluntary case) or by creditors (in an involuntary case) by which starts the bankruptcy case.
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 11 - The chapter of the Bankruptcy Code providing (generally) for reorganization, 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 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 the debtor or the debtor's property.
Confirmation - Bankruptcy judge's approval of a plan of reorganization or liquidation in chapter 11, or payment plan in chapter 12 or 13.
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.
Contested matter - Those matters, other than objections to claims, that are disputed but are not within the definition of adversary proceeding contained in Rule 7001.
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 - One to whom the debtor owes money or who claims to be owed money by the debtor.
Credit counseling - Generally refers to two events in individual bankruptcy cases: (1) the "individual or group briefing" from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing under any chapter of the Bankruptcy Code; and (2) the "instructional course in personal financial management" in chapters 7 and 13 that an individual debtor must complete before a discharge is entered.
Creditors' meeting - A meeting of creditors required by section 341 of the Bankruptcy Code at which the debtor is questioned under oath by creditors, a trustee, examiner, or the United States trustee about his/her financial affairs. Also called creditors' meeting.
Current monthly income - The average monthly income received by the debtor over the six calendar months before commencement of the bankruptcy case, including regular contributions to household expenses from nondebtors and income from the debtor's spouse if the petition is a joint petition, but not including social security income and certain other payments made because the debtor is the victim of certain crimes. 11 U.S.C. § 101(10A).
Debtor - A person who has filed a petition for relief under the Bankruptcy Code.
Defendant - An individual (or business) against whom a lawsuit is filed.
Discharge - A release of a debtor from personal liability for certain dischargeable debts set forth in the Bankruptcy Code. (A discharge releases a debtor from personal liability for certain debts known as dischargeable debts (defined below) and prevents the creditors owed those debts from taking any action against the debtor to collect the debts.)
Dischargeable debt - A debt for which the Bankruptcy Code allows the debtor's personal liability to be eliminated.
Disclosure statement - A written document prepared by the chapter 11 debtor or other plan proponent designed to provide "adequate information" to creditors to enable them to evaluate the chapter 11 plan of reorganization.
Equity - The value of a debtor's interest in property that remains after liens and other creditors' interests are considered. (Example: If a house valued at $100,000 is subject to a $80,000 mortgage, there is $20,000 of equity.)
Exempt - A description of any property that a debtor may prevent creditors from recovering.
Exemption, exempt property - Certain property owned by an individual debtor that the Bankruptcy Code or applicable state law permits the debtor to keep from unsecured creditors. For example, in some states the debtor may be able to exempt all or a portion of the equity in the debtor's primary residence (homestead exemption), or some or all "tools of the trade" used by the debtor to make a living (i.e., auto tools for an auto mechanic or dental tools for a dentist). The availability and amount of property the debtor may exempt depends on the state the debtor lives in.
Fraudulent transfer - A transfer of a debtor's property made with intent to defraud or for which the debtor receives less than the transferred property's value.
Fresh start - The characterization of a debtor's status after bankruptcy, i.e., free of most debts. (Giving debtors a fresh start is one purpose of the Bankruptcy Code.)
Insider (of individual debtor) - Any relative of the debtor or of a general partner of the debtor; partnership in which the debtor is a general partner; general partner of the debtor; or corporation of which the debtor is a director, officer, or person in control.
Insider (of corporate debtor) - A director, officer, or person in control of the debtor; a partnership in which the debtor is a general partner; a general partner of the debtor; or a relative of a general partner, director, officer, or person in control of the debtor.
Joint petition - One bankruptcy petition filed by a husband and wife together.
Lien - The right to take and hold or sell the property of a debtor as security or payment for a debt or duty.
Liquidation - A sale of a debtor's property with the proceeds to be used for the benefit of creditors.
Liquidated claim - A creditor's claim for a fixed amount of money.
Means test - Section 707(b)(2) of the Bankruptcy Code applies a "means test" to determine whether an individual debtor's chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to chapter 13).
No-asset case - A chapter 7 case where there are no assets available to satisfy any portion of the creditors' unsecured claims.
Nondischargeable debt - A debt that cannot be eliminated in bankruptcy. Examples include most home mortgages, debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime. Some debts, such as debts for money or property obtained by false pretenses and debts for fraud or defalcation while acting in a fiduciary capacity may be declared nondischargeable only if a creditor timely files and prevails in a nondischargeability action.
Objection to dischargability - A trustee's or creditor's objection to the debtor's being released from personal liability for certain dischargeable debts. Common reasons include allegations that the debt to be discharged was incurred by false pretenses or that debt arose because of the debtor's fraud while acting as a fiduciary.
Objection to exemptions - A trustee's or creditor's objection to a debtor's attempt to claim certain property as exempt from liquidation by the trustee to creditors.
Party in interest - A party who has standing to be heard by the court in a matter to be decided in the bankruptcy case. The debtor, the U.S. trustee or bankruptcy administrator, the case trustee and creditors are parties in interest for most matters.
Petition preparer - A business not authorized to practice law that prepares bankruptcy petitions.
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. (Prebankruptcy 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. For example, under the Bankruptcy Code's priority scheme, money owed to the case trustee or for prepetition alimony and/or child support must be paid in full before any general unsecured debt (i.e. trade debt or credit card debt) is paid.
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 and verifying document filed by a creditor that describes the reason the debtor owes the 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.
Reaffirmation agreement - An agreement by a chapter 7 debtor to continue paying a dischargeable debt (such as an auto loan) after the bankruptcy, usually for the purpose of keeping collateral (i.e. the car) that would otherwise be subject to repossession.
Secured creditor - An creditor holding a claim against the debtor who has the right to take and hold or sell certain property of the debtor in satisfaction of some or all of the claim.
Secured debt - Debt backed by a mortgage, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default. Examples include home mortgages, auto loans and tax liens.
Schedules - Detailed lists filed by the debtor along with (or shortly after filing) the petition showing the debtor's assets, liabilities, and other financial information.
Small business case - A special type of chapter 11 case in which there is no creditors' committee (or the creditors' committee is deemed inactive by the court) and in which the debtor is subject to more oversight by the U.S. trustee than other chapter 11 debtors. The Bankruptcy Code contains certain provisions designed to reduce the time a small business debtor is in bankruptcy.
Statement of financial affairs - A series of questions the debtor must answer in writing concerning sources of income, transfers of property, lawsuits by creditors, etc.
Statement of intention - A declaration made by a chapter 7 debtor concerning plans for dealing with consumer debts that are secured by property of the estate.
Transfer - Any mode or means by which a debtor disposes of or parts with his/her property.
Trustee - The representative of the bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the United States trustee or Bankruptcy Administrator
Undersecured claim - A debt secured by property that is worth less than the amount of the debt.
Unliquidated claim - A claim for which a specific value has not been determined.
Unscheduled debt - A debt that should have been listed by a debtor in the schedules filed with the court but was not. (Depending on the circumstances, an unscheduled debt may or may not be discharged.)
Unsecured claim - A claim or debt for which a creditor holds no special assurance of payment, such as a mortgage or lien; a debt for which credit was extended based solely upon the creditor's assessment of the debtor's future ability to pay.
Voluntary transfer - A transfer of a debtor's property with the debtor's consent.
Family Law
Acceptance of Service - A form signed by a non-filing spouse indicating that the spouse agrees to receive the initial papers in the case without the papers being formally delivered by a Sheriff or process server.
Affidavit - A written statement made under oath to show that certain facts are true or that certain events have happened.
Affidavit of Service - A paper filed with the court to show that legal papers in a court case have been delivered to one of the persons involved in the case.
Application for Default - A form filed with the Clerk of Superior Court indicating that the Respondent has been served with the initial court papers and has not replied in the time allowed by law.
Conciliation Court - A branch of the Superior Court to which a spouse may apply in an effort to preserve a marriage or to receive other services such as mediation.
Conciliation Services - Services of trained professionals offered by the court to persons in divorce or custody cases that help resolve disputes or reconcile marital difficulties.
Community Property - A term generally meaning that a wife and husband share equally anything acquired, purchased or paid for during the marriage, no matter who uses the property or who paid the money or in whose name title is taken.
Commissioner - A person authorized to hear and determine some kinds of court cases. A judge is elected or appointed by the Governor. A Commissioner is appointed by the Presiding Superior Court Judge in a particular county to perform some of the tasks that a judge otherwise would do.
Consent Decree - An order of the court legally ending a marriage that is based on an agreement of the spouses regarding any issues that originally were disputed. Covenant Marriage - An optional type of marriage created by the state legislature that requires partners to complete marital counseling prior to marrying and to sign a special declaration to obtain a marriage license. In a covenant marriage, a legal separation or divorce may be granted only for certain reasons listed in state law.
Decree - The court order legally ending a marriage, often containing other orders regarding division of property, debts, spousal support and, when children are involved, custody, parenting time and child support.
Default - When a person named in a lawsuit chooses not to or neglects to participate by filing necessary court papers or making an appearance in court, the court may enter orders against that person without the person being involved.
Deferral - When speaking of court fees, a term meaning that payment of fees may be postponed.
Dismiss - An action taken by the court that has the effect of ending a case or a request in a case.
Dissolution of Marriage - The terms used in Arizona law for “divorce.” Enter (also Entry) - A term used to indicate that a document is accepted by the Clerk of Superior Court and made a part of the official court record in a case.
Hearing - The opportunity for persons involved in a legal case to tell the court their side of the dispute to the court. Hearings are scheduled by the court for a particular date and time.
Injunction - An order of the court directing the spouses not to do certain things like sell property or annoy one another.
Irretrievably Broken - The standard used by the court to decide if a dissolution of marriage should be granted. It means that there is no reasonable chance that the spouses will agree to stay married.
Judicial Officer - A term referring to either a judge or commissioner of the court who has the authority to decide legal issues and issue court orders.
Mediation - A process by which persons attempt to reach mutually acceptable agreements, usually with the assistance of a trained professional who guides the discussion process.
Motion - A written request filed with the court asking a judge to issue an order or rule on a particular matter.
Petition - The paper filed with the Clerk of Superior Court to state a case for dissolution of marriage.
Petitioner - The term used to refer to the spouse that files a request (Petition) with the court for a dissolution of marriage. This can be either the husband or wife.
Process Server - A person authorized to deliver or serve court papers on one of the parties to the court case. Proof of Service - A paper filed with the court to show that legal papers in a court case have been delivered by a sheriff or other authorized law enforcement officer to one of the persons involved in the case.
Respondent - The spouse that did not file the request for a dissolution of marriage.
Response - The written legal paper filed in court by the person against whom a case to dissolve a marriage has been brought and by which the person tells the court whether he agrees or disagrees with the claims made by the person who started the case.
Separate Property - A term referring to any property owned by a married person before the marriage date that remains the personal property of that spouse during marriage and does not become community property. In addition, gifts and inheritance received during the marriage are the receiving spouse’s separate property, as are any increases in those items such as interest, profits of sale or capital gain.
Service - The process by which court papers given to the Clerk of Superior Court by one spouse are made available to the other spouse. Particular rules state how service must be made in different circumstances.
Service of Process - A phrase referring to the procedure by which a Summons and the Petition and other papers originally filed with the Clerk of Superior Court are delivered to the non-filing party to advise that a case has been started and a response must be made to avoid further legal action.
Spousal Maintenane - Also called Spousal Support; formerly known as "Alimony." Money that the court may order either a husband or wife to pay to the other during or after a divorce case. The court must decide whether financial support is necessary; if so, in what amount and for how long the support should be paid.
Summons - A legal paper that is stamped by the Clerk of Superior Court and which must be delivered in the way required by court rules on the party who did not file the request for a dissolution of marriage. The Summons notifies the non-filing spouse that a request for a dissolution of marriage has been filed and advises that spouse what action must be taken.
Waiver - When speaking about court fees, a term meaning that payment of fees is excused. Waiver of Service - A form signed by a non-filing spouse indicating that the spouse does not wish to formally receive the initial papers in the case by delivery from a Sheriff or process server.