Essentials of Business Law Chapter 21

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Essentials of Business Law Chapter 21
2014-06-04 23:43:12
Business Law

Chapter 21
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  1. Debtor
    An individual or business that owes money.
  2. Creditor
    An individual or business to which money is owed.
  3. Insolvency
    The state that occurs when a individual's or business's liabilities exceed assets.
  4. Default
    The state in which a debtor fails to meet one or more financial obligations to his or her creditors.
  5. Bankruptcy
    The legal state that occurs when a debtor is insolvent, is in default, and is unable to fulfill his or her obligations to pay back his or her creditors.
  6. Voluntary filing
    A form of bankruptcy that occurs when the debtor himself or herself files a bankruptcy petition.
  7. Involuntary filing
    A form of bankruptcy that occurs when creditors pressure a debtor to file.
  8. Liquidation
    A process in which assets are sold to obtain cash.
  9. Straight or liquidation bankruptcy
    The name given to a Chapter 7 bankruptcy, in which a trustee collects the debtor's nonexempt property, sells it, and dispenses the proceeds.
  10. Secured debt
    A loan for which a specific asset is used as collateral.
  11. Preferential payment
    A transfer of funds in which the debtor gives favorable treatment to one creditor over another.
  12. Fraudulent transfer
    A transaction in which the debtor sells property for an amount far below its market value.
  13. Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
    A federal law that instituted strict rules and eligibility requirements for debtors filing for bankruptcy.
  14. Means test
    A complex formula that measures an individual's income relative to the median income of the people in the state where he or she resides.
  15. Reorganization bankruptcy
    The name given to a Chapter 13 bankruptcy, in which the debtor agrees to pay back all or a portion of his or her debts over a period of 3-5 years.
  16. Priority debts
    Debts deemed sufficiently important under Chapter 13 of the bankruptcy law that they must be paid in full.