Business Credit GlossaryChapter 7 Bankruptcy: Chapter of the Bankruptcy Code that provides for court administered liquidation of the assets of a financially troubled individual or business.
Chapter 11 Bankruptcy: Chapter of the Bankruptcy Code that is usually used for the reorganization of a financially troubled business. Used as an alternative to liquidation under Chapter 7. The U.S. Supreme Court has held that an individual may also use Chapter 11.
Chapter 12 Bankruptcy: Chapter of the Bankruptcy Code adopted to address the financial crisis of the nation’s farming community. Cases under this chapter are administered like Chapter 11 cases, but with special protections to meet the special conditions of family farm operations.
Chapter 13 Bankruptcy: Chapter of the Bankruptcy Code in which debtors repay debts according to a plan accepted by the debtor, the creditors and the court. Plan payments usually come from the debtor’s future income and are paid to creditors through the court system and the bankruptcy trustee.
Charge-Off: Action of transferring accounts deemed uncollectible to a category such as bad debt or loss. Collectors will usually continue to solicit payments, but the accounts are no longer considered part of a company’s receivable or profit picture.
DBA: Doing Business As (the registered trade name of the business)
Federal Tax ID: A 9 digit number that merchants obtain when registering their business (for tax purposes). If it is a sole proprietor and they do not have a tax id, the social security number of the owner can be used as a tax id.
Legal Name: corporate name, in the case of a sole proprietor, the legal name will be the owner’s name.
Delinquent: Accounts classified into categories according to the time past due. Common classifications are 30, 60, 90 and 120 days past due. Special classifications also include charge-off, repossession, transferred, etc.
Discharge: Granted by the court to release a debtor from most of his debts that were included in a bankruptcy. Any debts not included in the bankruptcy – alimony, child support, liability for willful and malicious conduct and certain student loans – cannot be discharged.
Involuntary Bankruptcy: A petition filed by certain credit grantors to have a debtor judged bankrupt. If the bankruptcy is granted, it is known as an involuntary bankruptcy.
Lien: Legal document used to create a security interest in another’s property. A lien is often given as a security for the payment of a debt. A lien can be placed against a consumer for failure to pay the city, county, state or federal government money that is owed. It means that the consumer’s property is being used as collateral during repayment of the money that is owed.
Voluntary Bankruptcy: If a consumer files the bankruptcy on his own, it is known as voluntary bankruptcy.