Bankruptcy Glossary

341 Meeting – This is a meeting between the creditors, the trustee, and your bankruptcy attorney.

Adversary Proceeding – This is a separate lawsuit involving opposing parties related to the bankruptcy case.

Automatic Stay –When you file for bankruptcy, an automatic injunction goes into effect, suspending the collection of any debts listed in bankruptcy.

Bankruptcy estate –The bankruptcy estate consists of all assets belonging to the bankrupt debtor at the time the petition is filed.

Chapter 7 –Named after the chapter of the Bankruptcy Code detailing the liquidation of a debtor's assets, Chapter 7 filings feature an appointed trustee that collects and liquidates non-exempt assets and then distributes the proceeds to creditors.

Chapter 9 –Chapter 9 bankruptcies are only available to public agencies and municipalities. It is a reorganization of debts.

Chapter 11 – Most often used by businesses, Chapter 11 bankruptcies are a reorganization and rehabilitation of the debtor's financial structure.

Chapter 12 –Offered only to family farmers, this is a reorganization and rehabilitation of the debtor's financial structure.

Chapter 13 –Often called the "wage earner's plan," Chapter 13 debtors with disposable income to propose a full or partial repayment plan.

Confirmation –When the court officially approves a Chapter 13 repayment plan, it is called a confirmation.

Co-debtor - An individual that has signed a contract for credit with another debtor.

Debtor - The person or entity who owes the debt. For example, a person that takes out a loan to purchase a car is a debtor.

Discharge –The goal of bankruptcy is a discharge of debts. When a debt is discharged, it becomes not-collectable by its creditor.

Exemptions –Bankruptcy Code allows certain property to be excluded from the bankruptcy, allowing the debtor to keep the property.

Involuntary Chapter 7 –An involuntary Chapter 7 bankruptcy is a forced liquidation forced by creditors.

Joint bankruptcy - A bankruptcy filed by two spouses.

Liability –Another word for debt; the opposite of asset.

Liquidation - A process where assets are converted into cash, typically through sales or auctions, to pay creditors all or a portion of the debt owed.

Matrix –A list of creditors, their names and addresses.

 

Necessities –Items required to sustain life that are not excessive such as food, clothing, and shelter.

Non-dischargeable Debt –Some debts are not dischargeable in bankruptcy such as taxes and alimony.

Petition - A document that is filed to start a bankruptcy case.

Post-petition indebtedness - Debts incurred after the initial petition for bankruptcy. These debts are separate from the bankruptcy and can be collected without violating the automatic stay.

Priority debts - Debts are paid following a specified priority. For example, administrative costs are usually paid first followed by secured debts and then unsecured debts.

Pro Per or Pro Se – A do-it-yourself debtor who files for bankruptcy without a bankruptcy attorney's representation.

Secured creditor - A creditor that holds a lien on property or issued credit secured with collateral.

Trustee (Chapter 7) – An appointed person who collects the debtor's non-exempt assets and liquidates them to pay creditors.

Trustee (Chapter 13) – An appointed person who collects funds from the debtor and uses them to repay creditors over a 3- or 5- year period based on a court approved repayment plan.

Unsecured creditor - A creditor that issued credit that was not secured by property or collateral. For example, credit card debts are unsecured.