Secured Transaction
Any transaction in which the payment of a debt is guaranteed, or secured, by personal property owned by the debtor or in which the debtor has a legal interest
Secured Party
A lender, seller, or any other person in whose favor there is a security interest, including a person to whom accounts or chattel paper have been sold.
Debtor
Under Article 9 of the UCC, any party who owes payment or performance of a secured obligation, whether or not the party actually owns or has rights in the collateral.
Security Interest
Any interest in personal property or fixtures that secures payment or performance of an obligation.
Security Agreement
An agreement that creates or provides for a security interest between the debtor and a secured party.
Collateral
Under Article 9 of the UCC, the property subject to a security interest, including accounts and chattel paper that have been sold.
Financing Statement
A document prepared by a secured creditor, and filed with the appropriate state or local official, to give notice to the public that the creditor has a security interest in collateral belonging to the debtor named in the statement.
Default
Failure to observe a promise or discharge an obligation; commonly used to refer to failure to pay a debt when it is due.
Attachment
In a secured transaction, the process by which a secured creditor's interest "attached" to the property of another (collateral) and the creditor's security interest becomes enforceable.
Perfection
The legal process by which secured parties protect themselves against the claims of third parties who may wish to have their debts satisfied out of the same collateral; usually accomplished by filing a financing statement with the appropriate government official.
Pledge
A common law security device (retained in Article 9 of the UCC) in which personal property is transferred into the possession of the creditor as security for the payment of a debt and retained by the creditor until the debt is paid.
Purchase-Money Security Interest (PMSI)
A security interest that arises when a seller or lender extends credit for part or all of the purchase price of goods purchased by a buyer.
Proceeds
Under Article 9 of the UCC, whatever is received when collateral is sold or otherwise disposed of, such as by exchange.
After-Acquired Property
Property that is acquired by the debtor after the execution of a security agreement.
Cross-Collateralization
The use of an asset that is not the subject of a loan to collateralize that loan.
Floating Lien
A security interest in proceeds, after-acquired property, or collateral subject to future advances by the secured party; a security interest in collateral that is retained even when the collateral changes in character, classification, or location.
Execution
An action to carry into effect the directions in a court decree or judgment.
Levy
The obtaining of funds by legal process through the seizure and sale of nonexempt property, usually done after a writ of execution has been issued.
Deficiency Judgment
A judgment against a debtor for the amount of a debt remaining unpaid after the collateral has been repossessed and sold.
Mechanic's Lien
A statutory lien on the real property of another to ensure payment for work performed and materials furnished in the repair or improvement of real property, such as a building.
Artisan's Lien
A possessor y lien given to a person who has made improvements and added value to another person's personal property as security for payment for services performed.
Writ of Attachment
A court's order, issued prior to a trial to collect a debt, directing the sheriff or other public officer to seize nonexempt property of the debtor. If the creditor prevails at trial, the seized property can be sold to satisfy the judgment.
Writ of Execution
A court's order, issued after a judgment has been entered against a debtor, directing the sheriff to seize and sell any of the debtor's nonexempt real or personal property.
Garnishment
A legal process used by a creditor to collect a debt by seizing property of the debtor (such as wages) that is being held by a third party (such as the debtor's employer.
Mortgage
A written instrument giving a creditor an interest in (lien on) the debtor's real property as security for payment of a debt.
Surety-ship
An express contract in which a third party to a debtor-creditor relationship (the surety) promises to be primarily responsible for the debtor's obligation.
Surety
A person, such as a cosigner on a note, who agrees to be primarily responsible for the debt of another.
Guarantor
A person who agrees to satisfy the debt of another (the debtor) only after the principal debtor defaults. Thus, a guarantor's liability is secondary.
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 that the original party had.
Right of Reimbursement
The legal right of a person to be restored, repaid, or indemnified for costs, expenses, or losses incurred or expended on behalf of another.
Co-Surety
A joint surety; a person who assumes liability jointly with another surety for the payment of an obligation.
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.
Homestead Exemption
A law permitting a debtor to retain the family home, either in its entirely or up to a specified dollar amount, free from the claims of unsecured creditors or trustees in bankruptcy.
Liquidation
The sale of all of the nonexempt assets of a debtor and the distribution of the proceeds to the debtor's creditors. Chapter 7 of the Bankruptcy Code provides for liquidation bankruptcy proceedings.
Consumer-Debtor
An individual whose debts are primarily consumer debts (debts for purchases made primarily for personal, family, or household use).
Discharge
In bankruptcy proceedings, the extinction of the debtor's dis-chargeable debts, thereby relieving the debtor of the obligation to pay the debts.
Petition in Bankruptcy
The document that is filed with a bankruptcy court to initiate bankruptcy proceedings. The official forms required for a petition in bankruptcy must be completed accurately, sworn to under oath, and signed by the debtor.
U.S. Trustee
A government official who performs certain administrative tasks that a bankruptcy judge would otherwise have to perform.
Order of 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.
Automatic Stay
In bankruptcy proceedings, the suspension of almost all litigation and other action by creditors against the debtor or the debtor's property. The stay is effective the moment the debtor files a petition in bankruptcy.
Estate in Property
In bankruptcy proceedings, all of the debtor's interests in property currently held, wherever located, together with certain jointly owned property, property transferred in transactions voidable by the trustee, proceeds and profits from the property of the estate, and certain property interests to which the debtor becomes entitled within 180 days after filing for bankruptcy.
Preference
In bankruptcy proceedings, property transfers or payments made by the debtor that favor (give preference to) one creditor over others. The bankruptcy trustee is allowed to recover payments made both voluntarily and involuntarily to one creditor in preference over another.
Preferred Creditor
In the context of bankruptcy, 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, or reaffirm, a debt dis-chargeable in bankruptcy. To be enforceable, the agreement must be made before the debtor is granted a discharge.
Workout
An out-of-court agreement between a debtor and creditors in which the parties work out a payment plan or schedule under which the debtor's debts can be discharged.
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.