Here is a list of commonly used bankruptcy terms used by law firms and bankruptcy courts in plain English. If you want to learn more about any of these terms, simply click on the term to pull up a more detailed definition.
Automatic Stay – A court order which automatically stops lawsuits, foreclosures, garnishments and all other collection actions against a debtor once a bankruptcy petition is filed
Bankruptcy – A legal procedure under federal law that provides a legal way to deal with debt problems of individuals and businesses
Bankruptcy Claim – A creditor’s claim to a right of payment from you
Bankruptcy Petition – An official form filed by the debtor which opens a bankruptcy case
BK – Abbreviation for bankruptcy commonly used by lawyers and the court
Chapter 7 – A type of personal bankruptcy, also called “Liquidation,” that you can file that can cancel many types of debts. At the same time, the bankruptcy trustee could sell (liquidate) your property to pay your creditors.
Chapter 13 – A type of personal bankruptcy, also called “Reorganization,” that you can file that proposes a plan to reorganize debt and pays creditors over time via the bankruptcy trustee.
Creditor – A person or business to which a debtor owes money or who claims to be owed money by the debtor
Creditors Meeting (341 Hearing) – A meeting of creditors required by federal law at which a debtor is questioned, under oath, by creditors or the U.S. trustee about the debtor’s financial situation
Credit Counseling – A two part mandatory instructional course in personal financial management that people filing for Chapter 7 or Chapter 13 bankruptcy must complete before they start filing for bankruptcy and before they can be done with the bankruptcy process.
Debtor – A person or business to which owes money to a creditor or creditors
Discharge – The legal and official elimination of the your debts by the bankruptcy court
Exemption – Certain property owned by an individual that federal or state law permits the debtor to protect from unsecured creditors
Means Test – A test to determine whether your income is low enough for you to file Chapter 7 bankruptcy
Schedules – Lists submitted by you along with your bankruptcy filing showing your assets, liabilities, and other financial information
Secured Debt – Debt backed by a mortgage, collateral, or other lien
Trustee – An agent of the court that manages a person’s property for the benefit of the creditors
Unsecured Debt – A type of debt that is not backed by a mortgage, collateral, or other lien