Chapter Six.Useful Definitions—Section 101 After reading this chapter, you will be able to:

List what is included in Section 101 of the Bankruptcy Code

Define of a number of important terms as they are used throughout the Bankruptcy Code

Identify the different usages of the term lien as it is used in the Bankruptcy Code

What is Section 101?

Section 101 of the Bankruptcy Code is critical because it contains definitions of many terms that are used frequently throughout the Code.

Reference to a Section 101 definition will sometimes save substantial research time and will help to explicitly resolve questions only answered implicitly by other Code provisions.

Terms Defined by Section 101

Affiliates Claim Community Claim Corporation Creditor Current Monthly Income Custodian Debt Debt Relief Agency Domestic Support Obligations Equity Security Holder Individual with Regular

Income

Insiders Insolvency Judicial Lien Lien Median Family Income Person Security Security Agreement Single Asset Real Estate Statutory Lien Transfer

Affiliates

Affiliates are (1) nondebtor entities that own or control a 20

percent or more interest in a debtor; (2) nondebtor entities in which a debtor owns

or controls 20 percent or more of the ownership interest; and

(3) nondebtor entities that control or operate substantially all of a debtor’s assets.

Claim

A claim is a right to payment of any kind, whether or not the amount has been previously determined or liquidated.

Second, a claim may also be a right to performance if the debtor breach can be compensated by monetary damages, whether or not the amount has been previously determined.

A claim is considered liquidated when it has been reduced to a fixed sum.

Community Claim

A community claim is a claim against the debtor that would be enforceable against community property under nonbankruptcy law.

Corporation

A corporation is a business organized and registered according to nonbankruptcy or state law.

Creditor

A creditor is normally an entity with a claim that arises before the petition is filed.

Current Monthly Income

Includes the debtor’s average monthly income, from all sources received, in the six months preceding the filing of a bankruptcy petition as set forth in 11 U.S.C. §101(10A)

Custodian

A third party appointed to administer assets of a debtor outside of the bankruptcy system

Debt

A liability on a claim. For example, a claim is what a creditor says

is owed; a debt is what a debtor says it owes.

Debt Relief Agency

An individual consumer debtor’s bankruptcy attorney or bankruptcy petition preparer.

Required to provide individual consumer debtors with written retainer agreements and the various prepetition notices.

Domestic Support Obligations

An obligation owed for the payment of spousal support, child support, or maintenance, whether or not the unpaid amount accrued before or after the filing of the bankruptcy petition.

Equity Security Holder

An entity owning an interest in a debtor.

Individual with Regular Income

Includes individual who have “regular” income that is “sufficiently stable” to make monthly payments to the trustee under a Chapter 13 plan.

Insiders

An insider is an entity in control of a debtor or a debtor’s relatives.

The definition of an insider will vary depending upon the debtor’s identity as an individual, partnership, or corporation.

Insolvency

An entity is normally insolvent when the entity’s liabilities (debts) exceed the value of assets (property).

Judicial Lien

A lien obtained by virtue of a court order or judgment.

Lien

A lien is a right to property to secure repayment of a debt or the performance of an obligation.

A lien may be Judicial Consensual or Statutory

Median Family Income

The median income most recently calculated and reported by the Bureau of the Census, or if not currently calculated and reported, the most recently calculated and reported amount, adjusted upward by the Consumer Price Index.

Person

Any kind of entity, individual, partnership, or corporation, except a governmental unit.

Security

Securities are commercial documents used to evidence an ownership interest in an entity, among other things.

Security Agreement

An agreement that creates or provides for a security interest.

A security interest is an agreement that creates a lien.

Single Asset Real Estate

Single asset real estate is real property that generates substantially all the gross income of a debtor who is not a family farmer and on which no substantial business is conducted other than the operation of the property and activities incidental thereto.

Residential real property with three or fewer units is excluded from the definition.

Statutory Lien

A lien created by operation of law and not by court order or agreement.

Transfer

Any type of means that human beings might devise to dispose of property or interests in property.