Bankruptcy BASICS

Bankruptcy Terminology   E - L

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 $60,000 is subject to a $30,000 mortgage, there is $30,000 of equity.)

EXECUTORY CONTRACT OR LEASE
Generally includes contracts or leases under which both parties to the agreement have duties remaining to be performed. (If a contract or lease is executory, a debtor may assume it or reject it.)

EXEMPT
A description of any property that a debtor may prevent creditors from recovering.

EXEMPTION
Property that the Bankruptcy Code or applicable state law permits a debtor to keep from creditors.

EXEMPT PROPERTY
Property or value in property that a debtor is allowed to retain, free from the claims of creditors who do not have liens.

FACE SHEET FILING
A bankruptcy case filed either without schedules or with incomplete schedules listing few creditors and debts. (Face sheet filings are often made for the purpose of delaying an eviction or foreclosure.)

FAMILY FARMER
An individual, individual and spouse, corporation, or partnership engaged in a farming operation who meet certain debt limits and other statutory criteria for filing a petition under chapter 12.

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 per- son in control of the debtor.

JOINT ADMINISTRATION
A court-approved mechanism under which two or more cases can be administered together. (Assuming no conflicts of interest, these separate firms or individuals can pool their resources, hire the same professionals, etc.)

JOINT PETITION
One bankruptcy petition filed by a husband and wife together.

LIEN
A charge upon specific property design- ed to secure payment of a debt or performance of an obligation.

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.