Bankruptcy Terms and Definitions

Skeleton filing
Term used at bankruptcy courts to describe a bankruptcy filing in which not all the necessary forms have been filed. Certain courts allow a case to commence if only certain important forms are filed so long as the balance of required forms are forthcoming within a certain period of time.

Liquidation value
The aggregate value of a business if its assets are sold piecemeal.

Adversary proceeding
Litigation within a bankruptcy proceeding instituted by the filing of a complaint.

Forbearance and Repayment
The most common way of resolving a loan default is to work out a plan which will let you repay part of the delinquency each month, along with you regular monthly installment.

Set-off
The ability to discharge or reduce a debt by applying a counter claim between the same parties.

Absolute priority
The order of payment to the different classes of creditors mandated by the Bankruptcy Code. In theory, claims with higher priority are paid in full before other claims receive anything

Chapter Thirty Three
An unofficial term describing a company that has filed for Chapter 11 three times.

Garnishment Laws
Unsecured creditors in relation to garnishment laws do not hold any collateral that they can take from you if you fall behind on your payments.

Debtor
The entity seeking protection from creditors under the bankruptcy laws.

Chapter Thirteen
Bankruptcy proceedings for an individual with the intention of rescheduling the individual's debt (rather than liquidating the individual's assets and debt; an individual files under Chapter 7 to liquidate);