Bankruptcy Glossary of Terms | Lizarraga Law Firm, PLLC

Practice Areas / Bankruptcy / Glossary of Terms

Preference- Certain payments or transfers of a debtor's property to a creditor within ninety (90) days before the filing of a bankruptcy case (or within one year before the filing of the petition if the creditor was an "insider") which enables the creditor to receive more than it otherwise would have received in a hypothetical Chapter 7 case. The trustee may move to avoid the preference and require the creditor to return the money or property. 11 U.S.C. Section 547.

Priority Claims- Those unsecured claims that must be paid first in their order of priority before other unsecured claims can be paid. Priority claims must be paid in full in a Chapter 13 Plan. See 11 U.S.C. §l322(a)(2).

Proofs of Claim- The creditor, guarantor, trustee, or debtor may file a proof of the creditor's claim against the debtor. A proof of claim can be filed any time before the case is closed, but must be filed within 90 days of the scheduled First Meeting of Creditors to be timely. A timely filed proof of claim is given higher priority in the distribution of estate assets to creditors. Where a proof of claim has been filed, a claim not objected to by the debtor or a party in interest is automatically allowed. See 11 U.S.C. §501-502, 727; Fed. R. Bankr. Pro. 3001-3005.

Property of the Estate- The filing of the bankruptcy petition creates an estate comprised of all of the debtor's legal and equitable interests in property at the commencement of the proceeding wherever located and by whomever held. Property acquired by the debtor through inheritance, devise, bequest, property settlement with the debtor's spouse, or as a beneficiary to a life insurance policy within 6 months of the filing of the petition is also property of the estate. In Chapter 13, property acquired by the debtor after filing the petition but before the case is closed, dismissed, or converted to a Chapter 7 proceeding is property of the estate. Property of the estate is subject to distribution to the debtor's creditors unless it is abandoned by the Trustee or is exempt. See 11 U.S.C. §§541, 1306.