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Bankruptcy Terms and Glossary

 C

Capitalized Interest
The accrued interest added to the principal balance of a loan while you are not making payments; or your payments are insufficient to cover both the principal and interest due.

Chapter 7
The chapter of the Bankruptcy Code providing for "liquidation." Chapter 7 Bankruptcy was enacted to allow persons who are hopelessly burdened by debt to have an opportunity for a new beginning by wiping out unsecured debts (debts that aren't tied to any specific item of property, most commonly credit cards).

Chapter 11
The chapter of the Bankruptcy Code providing for reorganization — usually involving a corporation or business partnership.

Chapter 12
The chapter of the Bankruptcy Code providing for adjustment of debts of a "family farmer" or a "family fisherman."

Chapter 13
The chapter of the Bankruptcy Code designed to enable individual debtors the option of applying a percentage of their future earnings to a portion of their current debts over an extended period of time. Chapter 13 authorizes the wage earner to keep the property (like your home and car) while consolidating and reorganizing debt, allowing the debtor a reasonable opportunity to arrange installment-payments of what is owed out of future income.

Claim
A creditor's assertion of a right to payment by the debtor.

Class
The different levels of claims against a debtor.

Collateral
Property used to guarantee payment of a secured debt.

Collection Agency
A company hired by a creditor to collect a debt that it is owed.

Confirmation
Approval of a plan of reorganization or liquidation by a bankruptcy judge.

Consumer Debtor
A debtor who owes primarily consumer debts.

Consumer Debts
Debts incurred for personal needs.

Contested Matter
Those legal issues that are disputed, but are not within the definition of adversary proceedings.

Consumer Leasing Act
A federal law that requires lease agreements to include certain defined terms.

Contingent Claim
A claim that may be owed by the debtor's cosigner on another person's loan and the cosigner also fails to pay.

Consumer Credit Counseling Service (CCCS)
A national non-profit agency that helps debtors plan budgets and repay their debts.

Contract
A legally binding agreement involving two or more people or businesses that sets forth what the parties will or will not do.

Conversion
Changing bankruptcy chapters such as a debtor mobbing from a Chapter 7 to a Chapter 13.

Cooling Off Rule
The act that allows you to cancel a contract within a specified time period after signing it.

Cosigner
A person who signs their name to a credit application, lease or loan agreement to help someone qualify and secure a loan or product. If the primary debtor does not pay, the cosigner is fully responsible for the loan or debt.

Creditor
The person or business the debtor owes (or claims to owe) money to.

Credit Counseling
In Bankruptcy, CC usually refers to two things: The "individual or group briefing" from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing. And the “instructional course in personal financial management” in Chapter 7 and Chapter 13 an individual debtor must complete before the discharge of debt.

Credit Bureau
A company that collects and sells information about an individual’s credit history.

Credit Insurance
Insurance a lender requires a borrower to purchase to cover the loan.

Credit Report
An account of an individual's credit history and pertinent personal information.

Creditor
A person or entity that a debt is owed.

Current Monthly Income
The average monthly income received by the debtor over the six calendar months before commencement of the bankruptcy case.