Bankruptcy Terminology Defined

Bankruptcy Terminology Defined "Real Estate of the EstateIn a bankruptcy proceeding, ""property of the estate"" refers to the assets that are to be used to satisfy pre-filing or pre-confirmation debts and the costs of the bankruptcy proceeding. If not for the bankruptcy filing, the debtor would have owned these assets.Section 541 of the Bankruptcy Code defines the property of the estate in chapter 7 as ""all legal and equitable interests of the debtor in property as of the commencement of the case."" Initially categorized as estate property, some assets later leave this category when they are exempted by the debtor, abandoned as burdensome or inconvenient by the trustee, redeemed by the debtor, or sold by the debtor-in-possession or trustee. In chapter 7, section 541 excludes from the estate all post-petition earnings earned by an individual debtor. This is consistent with the notion that the chapter 7 new start begins with the filing of the petition.The 541 definition of estate property is applicable to reorganizations under chapters 11, 12, and 13. In these chapters, however, both individual and entity debtors are expected to fund their plans with post-petition income. Consequently, these chapters contain more inclusive definitions of estate property, which include post-petition income in addition to 541 categories of assets.Real Estate of the DebtorThe term ""property of the debtor"" refers to all of the debtor's pre-petition or post-petition acquisitions that are statutorily excluded from the estate's property. In addition, the debtor's property includes any exempted or redeemed property, as well as any property abandoned to the debtor by the trustee.ClaimA claim is a right to payment, regardless of whether it has been reduced to judgment, is unsecured, unliquidated, immature, contingent, or is contested. Even a right to equitable relief for violation of a ""performance"" may be a claim if payment is an alternative remedy for the breach of performance that gave rise to the right to equitable relief.Numerous bankruptcy courts hold that a party may have a bankruptcy claim even if its non-bankruptcy cause of action has not yet accrued. This extremely broad definition of ""claim"" permits a debtor to discharge debts that many individuals would not consider to be debts yet.
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