Common Bankruptcy Terms

Relief created to protect the value of a secured creditor’s lien so it does not depreciate during the debtor’s bankruptcy filing.

A lawsuit filed in the bankruptcy court in relation to the debtor’s bankruptcy case. This is a complaint which can be filed by the bankruptcy trustee, by the debtor if a creditor violates the bankruptcy automatic stay, or by other parties..

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 injunction (provision) issued automatically when you file a bankruptcy case which stops all collection actions against the debtor, the debtor’s property, or the property of the estate. This includes all lawsuits, garnishments, foreclosure, and repossessions.

The bankruptcy court has the authority to invalidate certain transactions and obligations made prior to the debtor filing for bankruptcy.

A legal procedure declared by an individual saying they no longer have the ability to pay creditors; specifically, a case filed under one of the chapters of Title 11 of the United States Code, (the Bankruptcy Code).

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.

All property the debtor has an interest in; said property is subject to authority of the bankruptcy court.

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.

An individual appointed by the U. S. Department of Justice in a bankruptcy case to represent the interests of the bankruptcy estate and the debtor’s creditors.

The most common type of personal bankruptcy that sets forth provisions relating to liquidation of a debtor’s non-exempt assets to help pay off debts..

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 type of personal bankruptcy often referred to as “reorganization of debts” where the debtors work with the bankruptcy court to establish a repayment plan of some or all of the debts over a three to five year period to eliminate their obligations to creditors.

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 final approval for a plan of reorganization or sale of assets by a bankruptcy judge.

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. The case would remain the same as originally filed, even though the chapter of the Code which governs it changes.

Cramdown allows the bankruptcy courts to modify loan terms based on certain conditions in an attempt to have all parties come out better than they would without such changes being made.

Someone a debtor owes money to.

Someone who has filed a petition for relief under the bankruptcy laws; someone who owes money to a creditor.

The legal elimination of debt through a bankruptcy case, meaning it relieves the debtor from personal liability and prevents the creditors who are owed for those debts from taking any action against the debtor or debtor’s property to collect the debts. Creditors are prohibited from communicating with the debtor regarding the discharged debt, letters, phone calls and any personal contact.

Debts where the Bankruptcy Code allows the debtor to no longer be personally liable for the debt.