A – D | E – L | M – P | R – V

M – P

M

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).  Abuse is presumed if the debtor’s aggregate current monthly income (see definition above) over 5 years, net of certain statutorily allowed expenses is more than (i) $10,000, or (ii) 25% of the debtor’s nonpriority unsecured debt, as long as that amount is at least $6,000. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income.

motion to lift (for relief from) the automatic stay:  A request by a creditor to allow the creditor to take action against the debtor or the debtor’s property that would otherwise be prohibited by the automatic stay.

N

net income:  this is basically “take-home” pay.  The amount you receive after necessary tax withholding deductions have been taken, union dues, insurance, etc.  If you are self-employed, this is the amount left after paying your ordinary business expenses.

new bankruptcy laws:  See Bankruptcy Abuse Prevention and Consumer Protection Act

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 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.

non-contingent debt:  debt which is owed now without any contingent acts needing to occur first.

O
objection to dischargeability:  A trustee’s or creditor’s objection to the debtor 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 the debtor’s attempt to claim certain property as exempt from liquidation by the trustee to creditors.

P
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.

personal bankruptcy:  A bankruptcy where the majority of debts are non-business.  Usually this is a Chapter 7, but can also be Chapter 11 or Chapter 13 depending on the circumstances.

personal property:  Any property or interests held by someone that is not real estate.  For example, cars, jewelry, clothes, stocks, rights to sue someone, etc.

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.  Plans are required in Chapter 13 and Chapter 11 cases (also in Chapter 9 and 12).

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

postpetition transfer:  A transfer of the 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.)

preference or 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.

pre-petition:  Occurring prior to the commencement of a bankruptcy case.

post petition:  Occurring after the commencement of a bankruptcy case.

presumption of abuse: see means test

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 pre-petition 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 documentation 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.