P.

Plan . A debtor's detailed description of how the debtor proposes to pay creditor's claims over a fixed period of time.

Pre-bankruptcy Planning . The arrangement (or rearrangement) of a debtor's property to allow the debtor to take maximum advantage of exemptions. (Pre-bankruptcy planning typically includes converting nonexempt assets into exempt assets.)

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. Preference payments can usually be recovered and returned to the debtor's estate.

Priority Debt. Pre-petition debt that is accorded a special status by the Bankruptcy Code. Chapter 13 Plans must provide for the payment in full (without interest) of Priority Debt. Priority Debt in Chapter 7 cases is nondischargeable. Personal income tax debt is often Priority Debt.

Proof of Claim. A written statement, filed by a creditor, whereby the creditor makes a claim against the bankruptcy estate.

R.

Reaffirmation Agreement . An agreement by a Chapter 7 debtor to continue paying a dischargeable debt after the bankruptcy, usually for the purpose of keeping collateral that would otherwise be subject to repossession.

S.

Secured Creditor. A creditor with a lien on debtor's property. Houses, land, cars, large appliances and furniture are all examples of secured debts. Purchases of appliances, furniture, televisions, VCR's, DVD players, stereos, computers, jewelry, etc. purchased on department store credit cards could be secured debts.

Setoff (also called "Offset") . The ability to discharge or reduce a debt by applying a counter claim between the same parties. For example, a bank may claim a right to setoff funds debtor has on deposit with the bank if debtor does not repay bank's loan to debtor.

Statement of Financial Affairs . A series of questions the debtor must answer in writing concerning sources of income, transfers of property, lawsuits by creditors, etc.

Straight Bankruptcy . An informal term used to refer to a Chapter 7 bankruptcy.

Substantial Abuse . A term that refers to the abusing of the privilege to file a bankruptcy petition.

T.

Trustee. An agent of the court appointed in all chapter 7 and chapter 13 cases to represent the interests of the bankruptcy estate and the debtor's creditors.

U.

Unexpired Lease. Leases include apartment leases, house leases, car leases, etc.

Unsecured Debt. Unsecured creditors do not have any collateral to secure payment of your debt. Examples of unsecured debt include most credit cards, medical bills and signature loans, as well as deficiencies that remain after a secured creditor repossesses and sells its collateral and the proceeds from the sale do not pay off the debt.

V.

Voluntary Transfer . Transfer of a debtor's property with the debtor's consent.

Sources: Public Information Series of the Bankruptcy Judges Division, May 2002; Doran, Personal Bankruptcy and Debt Adjustment (1991); Griffin , Personal Bankruptcy: What You Should Know ; United States Trustee's Manual, Volume 5.

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