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Do you know what an automatic stay is? How about a cramdown? They're important bankruptcy terms you might need to know if you ever end up a party-either as a debtor or a creditor-in a bankruptcy case.
"Bankruptcy has become an integral part of everybody's business, but most small companies don't have lawyers on retainer who handle bankruptcy matters for them," says John Wanderer, a creditors' rights and bankruptcy attorney with Wanderer & Wanderer in Las Vegas. You'll have an easier time dealing with the situation if you understand the language, which is why the Commercial Law League of America (CLLA), an organization of collections, creditors' rights and bankruptcy professionals headquartered in Chicago, has published "Bankruptcy Terminology for the Non-Lawyer." The free pamphlet, which Wanderer wrote, includes more than 80 detailed definitions, such as:
Automatic stay: an injunction automatically imposed on creditors on the filing of bankruptcy cases that prohibits them from taking virtually any action against debtors or property of debtors' bankruptcy estates
Bankruptcy estate: refers to the separate legal entity that arises when a bankruptcy case is filed
Priority claim: describes claims which will be paid prior to those of general, unsecured creditors; priority claims are typically claims for wages, rents, deposits and taxes
Secured claim: a claim based on a valid lien which can be satisfied by resorting to real or personal property
Cramdown: a slang term for what happens when the court approves a payment plan over the creditor's objection
Creditors meeting/341 meeting: the time when the debtor appears to respond to questions by the trustee and creditors concerning the current bankruptcy filing
Trustee: a person regularly appointed by the office of the U.S. Trustee to administer a bankruptcy estate.
Jacquelyn Lynn left the corporate world more than 13 years ago and has been writing about business and management from her home office in Winter Park, Florida, ever since.