Common Bankruptcy Terms
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Common Bankruptcy Terms
The meeting of creditors. You must attend. A trustee (and any creditors who show up) can ask you questions under oath about your petition and property.
Protection provided to a secured creditor when bankruptcy affects the creditor’s interest in collateral. Adequate protection can take different forms depending on the property and circumstances and is intended to protect against a decline in the value of the secured creditor’s interest.
A separate lawsuit filed within a bankruptcy case. Adversary proceedings are used for certain disputes identified by the Bankruptcy Rules, including some dischargeability disputes, property-interest disputes, and other matters requiring a complaint.
Any item of value owned by the debtor – any form of property including intangible things such as stock options or the right to sue anyone.
An agreement to maintain your current obligation under a lease or contract.
The pause that usually starts when you file. It can stop many lawsuits, garnishments, foreclosures, and repossessions. The law lists exceptions, and a creditor may ask the court to lift it.
Authority under the Bankruptcy Code to set aside or recover certain transfers, liens, or obligations when the statutory requirements are met. Depending on the provision involved, an avoidance power may be exercised by a trustee, debtor in possession, or in limited circumstances another authorized party.
A federal legal process under Title 11 of the United States Code for individuals or entities seeking relief under one of the Bankruptcy Code’s chapters. Bankruptcy is not limited to people who are completely unable to pay any creditor.
The name given for Title 11 of the United States Code, the federal bankruptcy laws.
A division of the United States District Court (federal court) where bankruptcy cases are reviewed and litigated under the U.S. Bankruptcy Code.
The legal estate created when a bankruptcy case is filed. It generally includes the debtor’s legal and equitable interests in property as defined by the Bankruptcy Code, subject to exclusions, exemptions, and other applicable rules.
A judicial officer of the United States district court with decision-making power over federal bankruptcy cases, appointed by the majority of judges of the United States court of appeals for a 14 year term.
Legal documents that must be filed with the court for a bankruptcy case to officially begin.
A fiduciary who performs duties assigned by the Bankruptcy Code in a bankruptcy case. Chapter 7 trustees administer estate property when appropriate, and Chapter 13 standing trustees administer Chapter 13 plans. Trustee oversight differs by jurisdiction: Alabama uses the federal Bankruptcy Administrator system, while Georgia is within the U.S. Trustee Program.
The most common consumer chapter. Qualifying unsecured debts can be wiped out without a repayment plan. Unprotected property can be sold by a trustee to pay creditors.
The person appointed to represent the interests of the bankruptcy estate and the unsecured creditors in a Chapter 7 bankruptcy case, whose responsibilities include reviewing the debtor’s bankruptcy petition and schedules, liquidating the non-exempt property of the estate, and distributing the proceeds to creditors in accordance with set priorities.
A repayment plan, usually three to five years, often used to catch up a house or car while treating other debts under court supervision.
The person appointed to represent the interests of the bankruptcy estate and creditors in a Chapter 13 bankruptcy case, whose responsibilities include reviewing the debtor’s bankruptcy petition and schedules, overseeing the debtor’s plan, receiving payments from debtors, and disbursing plan payments to creditors.
A creditor’s assertion of a right to payment from a debtor or debtor’s property whether or not secured, unsecured, contingent, liquidated, disputed, equitable, or matured.
A term that means the original creditor does not expect to collect on the debt. However, this does not mean the debt cannot be legally enforced.
An asset given as security for a loan, to ensure repayment.
The bankruptcy court’s approval of a Chapter 11, Chapter 12, or Chapter 13 plan after the applicable statutory requirements are satisfied.
A dispute among parties involved in the bankruptcy case resulting in filing a motion with the bankruptcy court.
A claim that might be owed by the debtor under certain circumstances, such as, where the debtor is a cosigner on someone else’s loan and that person fails to pay.
Changing from one chapter in bankruptcy to another after the case has already been filed; for example, a Chapter 13 case can be converted to a Chapter 7 case if the debtor is eligible for a Chapter 7. Eligibility, fees, and a new 341 meeting often still apply. See /bankruptcy-attorneys/converting-chapters.
A limited stay in Chapter 13 (11 U.S.C. § 1301) that can pause collection of certain consumer debts from an individual co-signer while the case is pending. It can be lifted, and it does not apply in Chapter 7. See /bankruptcy-attorneys/debts/co-signers.
A bankruptcy term used for certain treatment of secured claims based on collateral value and other statutory requirements. Whether cramdown is available depends on the bankruptcy chapter, type of collateral, loan, timing, and other Bankruptcy Code restrictions.
Someone a debtor owes money to.
A person or entity concerning which a bankruptcy case has been commenced. Outside bankruptcy, someone who owes a debt may also be described generally as a debtor, but the Bankruptcy Code uses the term in connection with the bankruptcy case.
A court order that wipes out your personal liability on qualifying debts. Collectors generally cannot chase you on those debts. It does not by itself remove a valid lien, and some debts cannot be discharged.
Debts where the Bankruptcy Code allows the debtor to no longer be personally liable for the debt.
The termination of a bankruptcy case, without a discharge or denial of discharge. The creditors and debtor have the same rights as they had prior to the bankruptcy filing once the case is dismissed, i.e., the creditors can resume all collection efforts against debtor.
The value of an ownership interest after subtracting valid liens or other claims against the property. For example, if a home is worth $175,000 and is subject to a $125,000 mortgage, the owner has approximately $50,000 in gross equity before considering transaction costs or other liens.
A contract or lease under which important obligations remain unperformed on both sides. Bankruptcy law provides rules governing whether an executory contract or unexpired lease may be assumed, assigned, or rejected.
Property or equity protected under an applicable bankruptcy exemption. Properly exempt property generally is not available for distribution to unsecured creditors, subject to the Bankruptcy Code and any valid objection.
Legal protections that allow a debtor to protect qualifying property or equity from bankruptcy administration. Which exemption law applies can depend on domicile history and other Bankruptcy Code rules.
An informal phrase describing the financial relief bankruptcy can provide through the automatic stay, discharge, or reorganization. A bankruptcy discharge does not eliminate every debt or every lien.
The legal process through which a lender or other lienholder enforces rights against real property after default. Foreclosure procedure and the point at which ownership changes depend on applicable state law and the circumstances.
A legal collection process that can direct an employer, bank, or other garnishee to withhold or turn over money belonging to a debtor after the legal requirements for garnishment are satisfied.
A fee charged by a homeowners’ or condominium association. Personal liability on amounts due before filing may be dischargeable; amounts that become due after filing while you still have an interest in the unit are generally excepted under 11 U.S.C. § 523(a)(16). A recorded association lien can survive. See /bankruptcy-attorneys/property/hoa-dues.
A legal interest or charge against property that secures a debt or other obligation. Liens can attach to real property or personal property.
The act of converting a debtor’s property to cash with the proceeds used for the benefit of creditors.
A mailing list of a debtor’s creditors.
A statutory income-and-expense analysis used primarily in consumer Chapter 7 cases under 11 U.S.C. § 707(b). The official forms use current Census and expense data. Alabama bankruptcy cases are overseen through the Bankruptcy Administrator system rather than the U.S. Trustee Program. See the Means Test guide.
When a creditor requests permission to take action against the debtor or debtor’s property that otherwise would be prohibited by the automatic stay.
A Chapter 7 bankruptcy case where there are no assets that can be liquidated to satisfy any portion of the creditors’ unsecured claims.
A debt that is not discharged in the bankruptcy case. Some categories are automatically excepted from discharge, while others require a creditor or other party to obtain a court determination.
A proposal for treatment of claims and other obligations under a bankruptcy chapter that uses a plan, such as Chapter 13. A Chapter 13 plan must satisfy the Bankruptcy Code’s confirmation requirements before it becomes binding.
A debt that arises after the bankruptcy petition is filed. Postpetition debts generally are not treated the same way as prepetition debts. During Chapter 13, taking on significant new debt may require compliance with trustee and court procedures.
An unsecured claim that is entitled to be paid before any other unsecured claims that are not entitled to priority status. Priority refers to the order the unsecured claims are to be paid. Certain unsecured debts hold priority over others, such as child support and taxes.
A written statement filed in the bankruptcy case asserting that a creditor is owed a debt and stating information about the claim. The Bankruptcy Rules and Official Forms govern proofs of claim.
A voluntary agreement in a Chapter 7 case under which the debtor agrees to remain personally liable on a debt that otherwise may be dischargeable. Reaffirmation agreements must satisfy the requirements of 11 U.S.C. § 524 and are commonly considered with vehicle loans and other secured debts.
A secured creditor’s taking of collateral after default when permitted by the contract and applicable state law. The debtor’s remaining ownership and redemption rights after repossession can differ by state.
Documents that are filed with the court along with the petition that show the debtor’s assets, liabilities, and income.
A creditor whose claim is supported by a lien or security interest in collateral. A secured creditor’s ability to enforce that interest during bankruptcy is subject to the automatic stay, Bankruptcy Code, court orders, and applicable nonbankruptcy law.
Debt that is backed by collateral, mortgage or lien, such as vehicle loans, home mortgages and tax liens where the creditor has the right to pursue said property upon default.
An official form containing a series of questions that the debtor is required to answer regarding transfers of property, lawsuits by creditors and income.
Tools, equipment, or other qualifying property used in a trade or occupation. Whether those items can be protected depends on the exemption law applicable under the Bankruptcy Code’s domicile rules. Georgia has a specific tools-of-the-trade exemption; Alabama uses a different exemption structure.
A fiduciary assigned or appointed to perform duties under the Bankruptcy Code. A Chapter 7 trustee can administer nonexempt estate assets, while a Chapter 13 trustee receives and distributes plan payments and performs other statutory duties. Trustees operate under the applicable U.S. Trustee or Bankruptcy Administrator system.
An official within the U.S. Department of Justice’s U.S. Trustee Program who performs bankruptcy oversight functions in jurisdictions administered by that program. Alabama bankruptcy cases are not administered by the U.S. Trustee Program; Alabama uses the federal Bankruptcy Administrator program.
A claim for debt where there is no collateral that is security for the debt.
A creditor whose claim is not secured by collateral for that debt. An unsecured claim may still have priority status under the Bankruptcy Code.
Debt that is not backed by any type of collateral or lien.
A transfer of a debtor’s property in which the debtor gives consent.
Bankruptcy resources
Discharge and the automatic stay have statutory exceptions. Exemptions depend on the state whose law applies. See the Knowledge Center for sourced explanations.
- Bankruptcy Knowledge Center — Bankruptcy Knowledge Center
Helpful guides to Chapter 7, Chapter 13, and state law.
- Bankruptcy tools — Bankruptcy tools
Income screening, garnishment estimators, and a process timeline.
- Automatic stay — Automatic stay
What filing generally stops — and the statutory exceptions.
- Bankruptcy discharge — Bankruptcy discharge
Which debts may be wiped out, and which often are not.
- 341 meeting — 341 meeting
The meeting of creditors after a case is filed.
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This page is general educational information about bankruptcy as of the date shown. It is not legal advice, does not create an attorney-client relationship, and does not guarantee results. Outcomes depend on individual facts and current federal and state law. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
