Chapter Six.
Useful Definitions—Section 101
 After reading this chapter, you will be able to:
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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
 Insiders
 Claim
 Insolvency
 Community Claim
 Judicial Lien
 Corporation
 Lien
 Creditor
 Median Family Income
 Current Monthly Income
 Person
 Custodian
 Security
 Debt
 Security Agreement
 Debt Relief Agency
 Single Asset Real Estate
 Domestic Support
 Statutory Lien
Obligations
 Equity Security Holder
 Individual with Regular
Income
 Transfer
Affiliates
 Affiliates are
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(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
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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.