Bankruptcy Terms Explained
Posted on June 26, 2008
Filed Under Debt Consolidation, Avoid Bankruptcy, Business Bankruptcy, Chapert 11, Chapter 13, Blog Carnivals |
Property of the Estate
“Property of the estate” describes the assets that, in any particular bankruptcy proceeding, are to be used to satisfy pre-filing or pre-confirmation debts and the costs of the bankruptcy proceeding. But for the bankruptcy filing, these assets would have belonged to the debtor.
In chapter 7, property of the estate is defined by Code 541 as “all legal and equitable interests of the debtor in property as of the commencement of the case.” Some assets, although initially characterized as property of the estate, later exit this category when they are exempted by the debtor, abandoned by the trustee as burdensome or inconvenient, redeemed by the debtor or sold by the debtor-in-possession or trustee. In chapter 7, 541 excludes from property of the estate all of an individual debtor’s earnings from post-petition services. This is consistent with the idea that the filing of the petition begins the chapter 7 fresh start.
The 541 definition of property of the estate applies to reorganizations under chapter 11, 12 and 13 as well. However, both individual and entity debtors in these chapters are expected to fund their plans with post-petition income. Consequently, those chapters contain broader definitions of property of the estate, which include post-petition income in addition to 541 types of assets.
Property of the Debtor
“Property of the debtor” includes all of the property owned by the debtor before the bankruptcy filing or acquired by the debtor after the filing that is statutorily excluded from property of the estate. In addition, property of the debtor includes all property exempted or redeemed by the debtor as well as property abandoned to the debtor by the trustee.
Claim
A claim is a right to payment, whether or not the right is reduced to judgment, unsecured, unliquidated, unmatured, contingent or disputed. Even a right to equitable relief for breach of a “performance” may be a claim, if a right to payment is an alternative remedy for the breach of performance giving rise to the right to equitable relief.
Many bankruptcy courts hold that a party may have a claim for bankruptcy purposes even if its cause of action has not yet accrued under applicable non-bankruptcy law. This very broad definition of “claim” allows a debtor to discharge debts that many people would not even consider debts yet.
For more information about bankruptcy, visit the popular blog at http://newinfopost.com/bankruptcy/bankruptcy-terms.
Useful Links:
Fed up with scraping the pennies together at the end of the month? Get a cheap credit card with low interest rates.
Comments
