Adversary Proceeding: A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the court.
Assume: An agreement to continue performing duties under a contract or lease.
Automatic Stay: An injunction that automatically stops lawsuits, foreclosures, garnishments and all collection activity against the debtor the moment a bankruptcy petition is filed.
Bankruptcy Code: The informal name for title 11 of the United States Code (11 U.S.C. §§ 101-1330), the federal bankruptcy law.
Bankruptcy Estate: All legal or equitable interests of the debtor in property at the time of the bankruptcy filing. (The estate includes all property in which the debtor has an interest, even if it is owned or held by another person.)
Bankruptcy Petition: The document filed by the debtor which opens the bankruptcy case. (There are official forms for bankruptcy petitions.)
Chapter 13: The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.
Claim: A creditor’s assertion of a right to payment from the debtor or the debtor’s property.
Confirmation: The Bankruptcy judge’s approval of a payment plan in chapter 13.
Consumer Debts: Debts incurred for personal needs rather than business needs.
Contested Matter: Those bankruptcy matters that are disputed between the parties but are not adversary proceedings.
Co-signer: An individual or entity that is obligated to the pay the debt of a debtor in certain situations.
Creditor: One to whom the debtor owes money or who claims to be owed money by the debtor.
Credit Counseling/Financial Management: Generally refers to two events in individual bankruptcy cases: (1) the class debtors have to attend prior to filing under any chapter of the Bankruptcy Code and (2) the course that individual debtors must complete before a discharge is entered.
Debtor: A person who has filed a petition for relief under the Bankruptcy Code.
Discharge: A release of a debtor from personal liability for certain dischargeable debts which prevents the creditors owed those debts from taking any action against the debtor to collect the debts.
Dismissal: When a case is ended prior to completion without a discharge order being entered.
Dividend to Creditors: The “dividend” of a Chapter 13 plan is the amount that will be paid to non-priority unsecured creditors over the life of the plan. For some people, there is a certain statutory minimum which must be paid.
Equity: The value of a debtor’s interest in property that remains after liens and other creditors’ interests are considered.
Executory Contract or Lease: Contracts or leases under which both parties to the agreement have duties remaining to be performed.
Exemptions, Exempt Property: The Bankruptcy Code or applicable state law permits the debtor to keep certain property from unsecured creditors. That property is identified by the debtor through claiming an exemption, and the property is referred to as exempt property.
Feasibility: Whether the plan is financially viable. Most often, the term refers to whether the debtor has sufficient income to make the proposed payments. Sometimes, the term is used in reference to whether the plan payment is large enough to pay out the claims provided for in the plan
Insider: Any relative of the debtor or of a general partner of the debtor; partnership in which the debtor is a general partner; general partner of the debtor; or a corporation of which the debtor is a director, officer or person in control.
Joint Petition: One bankruptcy petition filed by spouses together.
Lien: The right to take and hold or sell the property of a debtor as security or payment for a debt.
Liquidation: A sale of a debtor’s property with the proceeds distributed to creditors.
Liquidated Claim: A creditor’s claim for a fixed amount of money.
Means Test: The Bankruptcy Code requires that a debtor’s income and expenses be reviewed a certain way at the beginning of the case. Bankruptcy practitioners refer to this review and its associated forms as the “means test.”
Meeting of Creditors: The meeting that every debtor is required to attend and answer questions from the Chapter 13 Trustee and the debtor’s creditors.
Motion to Lift the Automatic Stay (or Motion for Relief from the Automatic Stay): A request by a creditor to allow the creditor to take action against the debtor or the debtor’s property that would otherwise be prohibited by the automatic stay.
Motion to Dismiss: A request by the Court, the Trustee or a creditor to dismiss your case. The more common reasons are: failure to file a complete list of creditors (mailing matrix), failure to submit social security number, failure to pay filing fees, failure to attend the meeting of creditors, failure to obtain credit counseling prior to filing for bankruptcy, failure to file all required documents, failure to propose a feasible plan, unreasonable delay and failure to make regular plan payments.
Non-dischargeable Debt: A debt that cannot be eliminated in bankruptcy. Examples include a home mortgage, debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans.
Objection to Confirmation: A written statement from the Chapter 13 Trustee or a creditor of the debtor that there is something wrong with the case that needs to be fixed before the confirmation hearing.
Plan: A debtor’s detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time.
Post-petition Transfer: A transfer of the debtor’s property made after the commencement of the bankruptcy case.
Preference or Preferential Payment: A debt payment made to a creditor before a debtor files bankruptcy that gives the creditor more than the creditor would receive in the debtor’s case.
Priority Claim: An unsecured claim that is entitled to be paid ahead of other unsecured claims. Priority refers to the order in which these unsecured claims are to be paid.
Proof of Claim: A written statement and verifying documentation filed by a creditor that describes the reason the debtor owes the creditor money and how much.
Property of the Estate: All legal or equitable interests of the debtor in property as of the filing of the bankruptcy petition.
Pro Se: The legal term used to refer to an individual who chooses to represent themselves, rather than using an attorney.
Schedules: Detailed lists filed by the debtor along with (or shortly after filing) the petition showing the debtor’s assets, liabilities and other financial information.
Secured Creditor: A creditor holding a claim against the debtor who has the right to take and hold or sell certain property of the debtor in satisfaction of some or all of the claim.
Secured Debt: Debt backed by a mortgage, pledge of collateral or other lien; debt for which the creditor has the right to pursue specific pledged property upon default. Examples include home mortgages, auto loans and tax liens.
Statement of Financial Affairs: A series of questions the debtor must answer in writing concerning sources of income, transfers of property, lawsuits by creditors, etc.
Transfer: Any mode or means by which a debtor disposes of or parts with his or her property.
Trustee: The representative of the bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the U.S. Trustee.
Unreasonable Delay: If the chapter 13 case is just dragging on and on with little to no progress, then a party-in-interest, creditor or trustee may file a motion with the court to request a hearing and dismissal for unreasonable delay
U.S. Trustee: An officer of the Justice Department responsible for supervising the administration of bankruptcy cases, estates and trustees.
Unliquidated Claim: A claim for which a specific value has not been determined.
Unscheduled Debt: A debt that should have been listed by the debtor in the schedules filed with the court but was not.
Unsecured Claim: A claim or debt that is not backed by an asset; a debt for which credit was extended based solely upon the creditor’s assessment of the debtor’s future ability to pay, like a credit card.