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B Law 2 Unit 1 Ch 21
Creditors' Rights and Bankruptcy
Term | Definition |
---|---|
mechanic’s lien | A statutory lien on the real property of another to ensure payment to a person who has performed work and furnished materials for the repair or improvement of that property. |
artisan’s lien | A possessory lien on the personal property of another person to ensure payment to a person who has made improvements on and added value to that property. |
attachment | The legal process of seizing another’s property under a court order to secure satisfaction of a judgment yet to be rendered. |
writ of attachment | A writ used to enforce obedience to an order or judgment of the court. |
writ of execution | A writ that puts in force a court’s decree or judgment. |
garnishment | A legal process whereby a creditor appropriates a debtor’s property or wages that are in the hands of a third party. |
creditors’ composition agreement | An agreement formed between a debtor and his creditors in which the creditors agree to accept a lesser sum than that owed by the debtor in full satisfaction of the debt. |
suretyship | An express contract in which a third party (the surety) promises to be primarily responsible for a debtor’s obligation to a creditor. |
surety | A third party who agrees to be primarily responsible for the debt of another. |
guarantor | A person who agrees to satisfy the debt of another (the debtor) only after the principal debtor defaults; thus, liability is secondary. |
right of subrogation | The right of a surety or guarantor to stand in the place of (be substituted for) the creditors, giving the surety or guarantor the same legal rights against the debtor that the creditor had. |
right of reimbursement | The legal right of a person to be repaid or indemnified for costs, expenses, or losses incurred or expended on behalf of another. |
co-surety | A person who assumes liability jointly with another surety for the payment of an obligation. |
right of contribution | The right of a co-surety who pays more than his proportionate share on a debtor’s default to recover the excess paid from other co-sureties. |
homestead exemption | A law permitting a debtor to retain the family home, either in its entirety or up to a specified dollar amount, free from the claims of unsecured creditors or trustees in bankruptcy. |
consumer-debtor | One whose debts result primarily from the purchases of goods for personal, family, or household use. |
liquidation | The sale of the nonexempt assets of a debtor and the distribution of the funds received to creditors. |
discharge | The termination of a bankruptcy debtor’s obligation to pay debts. |
petition in bankruptcy | The document that is filed with a bankruptcy court to initiate bankruptcy proceedings. |
U.S. trustee | A government official who performs certain administrative tasks that a bankruptcy judge would otherwise have to perform. |
order for relief | A court’s grant of assistance to a complainant. In bankruptcy proceedings, relieves the debtor of the immediate obligation to pay the debts listed in the bankruptcy petition. |
automatic stay | In bankruptcy proceedings, the suspension of almost all litigation and other action by creditors against the debtor or the debtor’s property; effective the moment the debtor files a petition in bankruptcy. |
estate in property | All of the property owned by a person, including real estate and personal property. |
preference | In bankruptcy proceedings, a property transfer or payment made by the debtor that favors one creditor over others. |
preferred creditor | In the context of bankruptcy, a creditor who has received a preferential transfer from a debtor. |
reaffirmation agreement | An agreement between a debtor and a creditor in which the debtor voluntarily agrees to pay a debt dischargeable in bankruptcy. |
workout | An out-of-court agreement between a debtor and creditors that establishes a payment plan for discharging the debtor’s debts. |
debtor in possession (DIP) | In Chapter 11 bankruptcy proceedings, a debtor who is allowed to continue in possession of the estate in property (the business) and to continue business operations. |
cram-down provision | A provision of the Bankruptcy Code that allows a court to confirm a debtor’s Chapter 11 reorganization plan even though only one class of creditors has accepted it. |