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Legal Environment
Chapter 14
| Term | Definition |
|---|---|
| Affidavit | A statement of facts confirmed by the oath or affirmation of the party making it and made before a person having the authority to administer the oath or affirmation. |
| Artisan’s Lien | A possessory lien on 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. |
| Automatic Stay | A suspension of all judicial proceedings on the occurrence of an independent event. |
| Co-Surety | One who assumes liability jointly with another surety for the payment of an obligation. |
| Consumer-Debtor | One whose debts result primarily from the purchases of goods for personal, family, or household use. |
| 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. |
| Creditors’ Composition Agreement | An agreement formed between a debtor and his or her creditors in which the creditors agree to accept a lesser sum than that owed by the debtor in full satisfaction of the debt. |
| 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. |
| Discharge | he termination of a debtor’s obligation. |
| Estate in Property | All of the property owned by a person, including real estate and personal property. |
| Garnishment | A legal process whereby a creditor appropriates a debtor’s property or wages that are in the hands of a third party. |
| Guarantor | A person who agrees to satisfy the debt of another (the debtor) only if and when the debtor fails to pay the debt. |
| Homestead Exemption | A law allowing an owner to designate his or her house (and adjoining land) as a homestead and thus exempt it from liability for his or her debt. |
| Lien | A claim against specific property to satisfy a debt. |
| Liquidation | The sale of the assets of a business or an individual for cash and the distribution of the cash received to creditors, with the balance going to the owner(s). |
| Mechanic’s Lien | A statutory lien on the real property of another created to ensure priority of payment for work performed. |
| Order for Relief | A court’s grant of assistance to a complainant. In bankruptcy proceedings, the order relieves the debtor of the immediate obligation to pay the debts listed in the bankruptcy petition. |
| Petition in Bankruptcy | The document that is filed with a bankruptcy court to initiate bankruptcy proceedings. |
| Preference | In bankruptcy proceedings, a property transfer or payment made by the debtor that favors one creditor over others. |
| Preferred Creditor | 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. |
| Reorganization | A plan for the readjustment of a corporation and its debts, the submission of the plan to a bankruptcy court, and the court’s approval or rejection of the plan. |
| Right of Contribution | The right of a co-surety who pays more than her or his proportionate share on a debtor’s default to recover the excess paid from other co-sureties. |
| 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. |
| Right of Subrogation | The right of a person to stand in the place of (be substituted for) another, giving the substituted party the same legal rights against the debtor that the creditor had. |
| Secured Creditor | A lender or seller who has a security interest in collateral that secures a debt. |
| Surety | A third party who agrees to be primarily responsible for the debt of another. |
| Suretyship | An express contract in which a third party (the surety) promises to be primarily responsible for a debtor’s obligation to a creditor. |
| U.S. Trustee | A government official who performs certain administrative tasks that a bankruptcy judge would otherwise have to perform. |
| Unsecured Creditor | A creditor whose debt is not backed by any collateral. |
| Workout | An out-of-court agreement between a debtor and creditors that establishes a payment plan for discharging the debtor’s debts. |
| 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. |
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