An injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.
A legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of the Bankruptcy Code.
The chapter of the Bankruptcy Code providing for "liquidation,"(i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors.)
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.
A creditor's assertion of a right to payment from the debtor or the debtor's property.
Bankruptcy judge's approval of a payment plan in chapter 13.
A debtor whose debts are primarily consumer debts.
Debts incurred for personal, as opposed to business, needs.
One to whom the debtor owes money or who claims to be owed money by the debtor.
Generally refers to two events in individual bankruptcy cases: (1) the "individual or group briefing" from a nonprofit budget and credit counseling agency that individual debtors generally must attend prior to filing bankruptcy; and (2) the "instructional course in personal financial management" in chapters 7 and 13 that an individual debtor generally must complete before a discharge is entered.
The meeting of creditors required by section 341 of the Bankruptcy Code at which the debtor is questioned under oath by creditors, a trustee, examiner, or the U.S. trustee about his/her financial affairs. Also called a 341 meeting.
Current monthly income
Generally, the average monthly income received by the debtor over the six calendar months before commencement of the bankruptcy case, including regular contributions to household expenses from nondebtors and income from the debtor's spouse if the petition is a joint petition.
A person who has filed a petition for relief under the Bankruptcy Code.
A release of a debtor from personal liability for certain debts set forth in the Bankruptcy Code. The discharge prevents the creditors owed those debts from taking any action against the debtor to collect the debts. The discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and personal contact.
The value of a debtor's interest in property that remains after liens and other creditors' interests are considered. (Example: If a house valued at $100,000 is subject to a $80,000 mortgage, there is $20,000 of equity.)
Exemptions, exempt property
Certain property owned by an individual debtor that the Bankruptcy Code or applicable state law permits the debtor to keep from unsecured creditors. For example, in some states the debtor may be able to exempt all or a portion of the equity in the debtor's primary residence (homestead exemption), or some or all "tools of the trade" used by the debtor to make a living (i.e., auto tools for an auto mechanic or dental tools for a dentist).Generally, the availability and amount of property the debtor may exempt depends on the state the debtor lives in.
One bankruptcy petition filed by a husband and wife together.
The right to take the property of a debtor as security or payment for a debt.
A sale of a debtor's property with the proceeds to be used for the benefit of creditors.
A creditor's claim for a fixed amount of money.
The means test determines whether an individual debtor's chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to chapter 13). Abuse is presumed if the debtor's aggregate current monthly income (see definition above) over 5 years, net of certain statutorily allowed expenses is more than (i) $10,950, or (ii) 25% of the debtor's nonpriority unsecured debt, as long as that amount is at least $6,575. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income.
Motion to lift 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.
A chapter 7 case where there are no assets available to satisfy any portion of the creditors' unsecured claims.
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 or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime. Some debts, such as debts for money or property obtained by false pretenses and debts for fraud or defalcation while acting in a fiduciary capacity may be declared nondischargeable only if a creditor timely files and prevails in a
Objection to dischargeability
A trustee's or creditor's objection to the debtor being released from personal liability for certain dischargeable debts. A common reason includes allegations that the debt to be discharged was incurred by false pretenses.
Objection to exemptions
A trustee's or creditor's objection to the debtor's attempt to claim certain property as exempt from liquidation by the trustee to creditors
A debtor's detailed description of how the debtor proposes to pay creditors' claims over a fixed period of time.
The arrangement (or rearrangement) of a debtor's property to allow the debtor to take maximum advantage of exemptions. Prebankruptcy planning typically includes converting nonexempt assets into exempt assets.
Preference or preferential debt payment
Generally, a debt payment made to a creditor in the 90-day period before a debtor files bankruptcy that gives the creditor more than the creditor would receive in the debtor's chapter 7 case.
The Bankruptcy Code's statutory ranking of unsecured claims that determines the order in which unsecured claims will be paid if there is not enough money to pay all unsecured claims in full. For example, under the Bankruptcy Code's priority scheme, money owed to the case trustee or for prepetition alimony and/or child support must be paid in full before any general unsecured debt, such as for a credit card, is paid.
Proof of claim
A written statement and verifying documentation filed by a creditor that describes the reason the debtor owes the creditor money.
Property of the estate
All legal or equitable interests of the debtor in property at the time the debtor files for bankruptcy.
An agreement by a chapter 7 debtor to continue paying a dischargeable debt (such as an auto loan) after the bankruptcy, usually for the purpose of keeping collateral (i.e. the car) that would otherwise be subject to repossession.
Detailed lists filed by the debtor along with (or shortly after filing) the petition showing the debtor's assets, liabilities, and other financial information.
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 the entire claim.
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.
Statement of intention
A declaration made by a chapter 7 debtor concerning plans for dealing with consumer debts that are secured by property of the estate.
Any mode or means by which a debtor disposes of or parts with his or her property.
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. The trustee is a private individual or corporation appointed in all chapter 7 and chapter 13 cases. The trustee's responsibilities include reviewing the debtor's petition and schedules and bringing actions against creditors or the debtor to recover property of the bankruptcy estate. In chapter 7, the trustee liquidates property of the estate, and makes distributions to creditors. Trustees in chapter 13 have similar duties to a chapter 7 trustee as well as the additional responsibilities of overseeing the debtor's plan, receiving payments from debtors, and disbursing plan payments to creditors.
An officer of the Justice Department responsible for supervising the administration of bankruptcy cases, estates, and trustees; monitoring plans and disclosure statements; monitoring fee applications; and performing other statutory duties.
A debt secured by property that is worth less than the full amount of the debt.
A claim for which a specific value has not been determined.
A debt that should have been listed by the debtor in the schedules filed with the court but was not. Depending on the circumstances, an unscheduled debt may or may not be discharged.
A claim or debt for which a creditor holds no special assurance of payment, such as a mortgage or lien; a debt for which credit was extended based solely upon the creditor's assessment of the debtor's future ability to pay.