341 Meeting
A meeting required by law in all cases during which the debtor is questioned under oath by a trustee and creditors about his or her financial affairs. The debtor’s attendance is mandatory. See also First Meeting of Creditors.


Adversary Proceeding
A lawsuit arising in or related to a bankruptcy case. An adversary proceeding is started by filing a complaint in the Bankruptcy Court.
A written statement of facts, confirmed by the oath taken before an officer having authority to administer such oath (a notary public) or affirmation of the party making it. For example, an affidavit of service is a sworn statement of facts by the person who served the papers on the person named in the summons. See also Verification.
A defendant’s response setting out the facts, denying or affirming (admitting) allegations of plaintiff’s complaint. An involuntary petition against an alleged debtor filed by petitioning creditors also requires the alleged debtor to file an answer. This answer could be the filing of a voluntary petition by the debtor or a motion by the debtor contesting the involuntary petition.
A right to receive fixed payments periodically for a specified duration. The right to periodic payments is commonly acquired under a life insurance policy, pension, or personal injury settlement.
A formal request, usually in writing, to a court to ask the court to grant certain relief by signing a court order. See also Motion.
An unpaid or overdue debt.
Asset and No Asset Cases
An asset case is one in which money is likely to be recovered for distribution to unsecured creditors over and above the costs of administration and the debtor’s exemptions. A no asset case is one in which there is no money to distribute to unsecured creditors.
To transfer rights or property.
An agreement to continue performing duties under a contract or lease.
Automatic Stay
An injunction that arises under federal law and automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor and debtor’s property the moment a bankruptcy petition is filed. The automatic stay may be limited or not apply at all if a debtor has filed a prior bankruptcy case.
Federal law permits the debtor to eliminate, or to avoid, certain liens that interfere with an exemption the debtor has claimed. The trustee also may avoid payments or other transfers of property that are made before the bankruptcy case is filed.


A uniform, federal statutory system for collective creditor payment from the debtor’s non-exempt property.
Bankruptcy Code
The informal name for title 11 of the United States Code (11 U.S.C. §§ 101 – 1330), the federal bankruptcy law.
Bankruptcy Court
The branch of the federal judicial system that presides over bankruptcy cases.
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 Judge
A judicial officer of the United States district court who is the court official with decision-making power over federal bankruptcy cases.
Bankruptcy Petition
A formal request for protection under the federal bankruptcy laws. The filing of the bankruptcy petition commences the bankruptcy case. See also Petition.
Bankruptcy Trustee
A private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases to represent the interests of the bankruptcy estate and the debtor’s creditors.
Bar Date
A date set by the court that is the last day to file a Proof of Claim.
Business Bankruptcy
A bankruptcy case in which the debtor is a business or an individual involved in business and the debts are for business purposes.


The caption of a pleading or other document filed with the Court is the heading which shows the names of the parties, name of the Court, the case number assigned by the Court and, if applicable, the adversary proceeding number.
Certificate of Document
The process by which a copy of a document or docket is signed and verified as a true copy by the court.
Chapter 7, or Straight Bankruptcy Case
A type of bankruptcy in which the debtor’s assets are liquidated by a Court-appointed trustee. Corporations, partnerships and individuals may file a Chapter 7 bankruptcy.
Chapter 7 Trustee
A person appointed in a Chapter 7 case by the United States Trustee to represent the interests of the bankruptcy estate and the unsecured creditors. The trustee’s responsibilities include: presiding at the meeting of creditors (§341(a) meeting), reviewing the debtor’s petition and schedules, liquidating the non-exempt property of the estate, and if applicable, making distributions to creditors. The trustee may also bring actions against third parties or the debtor to recover property of the bankruptcy estate.
Chapter 11, or Reorganization Case
A type of bankruptcy in which debtors attempt to obtain creditor approval of a plan of reorganization providing for the payment of debts and disposition of assets that must be approved by the Bankruptcy Court. A trustee is not appointed unless the creditors convince the Court to oust the debtor’s current management. Corporations, partnerships and individuals may file a Chapter 11 bankruptcy. Chapter 11 was primarily designed for business reorganizations.
Chapter 12, Family Farmer or Fisherman Case
This chapter is similar to a Chapter 13 case; however, eligibility to file under this chapter is limited to family farmers or fishermen.
Chapter 13 Case
A type of bankruptcy in which an individual with “regular income” proposes a plan—an arrangement of debts and assets (up to a three- to five-year period); previously called a “wage earner” bankruptcy. Only an individual may file a Chapter 13, and must meet specified debt thresholds and limits. A standing trustee serves only as disbursing agent to collect part of the debtor’s income and pay it out under the plan.
Chapter 13 Plan
A debtor’s detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time. When confirmed, the plan becomes binding on the debtor and his or her creditors unless modified under certain limited circumstances.
Chapter 13 Trustee
A person appointed by the United States Trustee to serve as trustee for all Chapter 13 cases filed in a region. The Chapter 13 trustee serves as a disbursing agent, collects payments from the debtor, makes distributions to the creditors, and makes recommendations to the court as to whether debtor’s plan should be confirmed.
A right to payment.
Class (of claims or interests)
Claims or interests that have been placed in the same category for treatment in bankruptcy.
Persons who are both liable on the same debt.
Property that is subject to a lien or security interest.
Common Law Lien
A lien arising by operation of common law, not by agreement, statute, or court order. Common law liens are typically intended to provide security for charges owing to a person for who has repaired or improved personal property or provided services at the owner’s request.
A complaint is the first document filed in an adversary proceeding that notifies the court and the defendant of the relief sought by the plaintiff against the defendant and the grounds for that claim.
Confirmation, Chapter 13
Approval of a plan by a bankruptcy judge for a debtor to pay creditors, provided that specific criteria are met (for a Chapter 13 plan, the confirmation criteria are listed in 11 U.S.C. § 1325(a)). The acceptance of a plan is determined by the debtor’s budget provided to the Court, list of assets, and ability to make monthly plan payments. Regular monthly income from all sources must be disclosed including salary, commissions, investment income, tax refunds, public benefits, and unemployment compensation. Any change to the debtor’s income or expenses must be disclosed to the Court. Modification to the plan after the confirmation hearing may be at the request of the debtor, trustee or an unsecured creditor.
Consumer Bankruptcy
A bankruptcy case filed to reduce or eliminate debts that are primarily incurred for personal or household purposes.
Consumer Debt
A debt incurred by an individual primarily for personal, family, or household purposes. Taxes are neither consumer debts nor business debts.
Contingent Claim
A claim that may be owed by the debtor under certain circumstances, for example, where the debtor is a cosigner on another person’s loan and that person fails to pay.
The confirmation of a plan despite opposition from some creditors.
A person or business to which the debtor owes money.
Creditor Matrix
A list of creditors and their representatives with their full addresses. The Court uses this list to mail notices to all the debtor’s creditors.
Creditors’ Meeting
See 341 Meeting.
Cure of Default
The payment of arrears or the rectification of any other breach of contractual obligation so that the party’s performance is brought into compliance with the terms of the contract.


An obligation to pay money.
An individual, partnership, corporation, or other business entity liable on a debt. In bankruptcy, the debtor is the person concerning whom a bankruptcy case has been commenced.
Debtor’s Equity
The debtor’s ownership interest in property after deducting the value of any mortgages or other liens against the property.
The debtor’s breach of contract, often the failure to pay a debt on the due date.
The shortfall that results when a debt is undersecured, that is, when the property securing the debt is worth less than the amount owing, so that the sale of the property does not fully satisfy the debt.
The official order of the Bankruptcy Court that releases the debtor from unsecured debts incurred before bankruptcy and bars creditors from future collection efforts on released debts. Secured debts are not discharged, except to the extent that the collateral is insufficient to cover the amount of the claim.
Refers to a process or finding on whether a particular debt is not eligible for discharge.
A dismissal is an order or judgment terminating a motion, adversary proceeding or bankruptcy case.
Dismissal with Prejudice
A dismissal of a case with prejudice prohibits the party from bringing the same case, claim or cause of action again.
Disposable Income
The portion of a debtor’s income that is not reasonably necessary for the maintenance and support of the debtor or a dependent and not necessary for the operation of any business in which the debtor is engaged.
The summary of pending legal matters and their times, dates, and places. Law firms often maintain a docket as a calendar system. Court clerks maintain dockets of all proceedings in cases to indicate matters pending on the Bankruptcy Court’s calendar.


Emergency Filing
A bankruptcy case filed either without schedules or with incomplete schedules listing few creditors and debts. (Emergency filings are often made for the purpose of delaying an eviction or foreclosure.)
See Lien
Equity Cushion
The amount of collateral’s value above the amount of the lienholder’s debt secured by that collateral.

Created by the filing of a bankruptcy petition, the estate consists of all assets and equitable interests of the debtor. The representative of the estate in a Chapter 7 or 13 case is the trustee.

These include:

  • A house, cooperative apartment, condominium, vacation time-share,
  • Cash, savings account, checking account, credit union account;
  • Stocks, bonds, savings bonds;
  • Tax refunds;
  • Security deposits;
  • Life insurance, if the debtor is the beneficiary on a life insurance policy and the insured dies within six months after the debtor beneficiary filed for bankruptcy, any inheritance the debtor receive will be included as an asset;
  • A pension, profit sharing plan, annuity, IRA or other type of retirement plan;
  • Furniture and appliances, television sets, radios, stereo systems and components, computers, VCRs;
  • Books, art, collectibles such as baseball cards, stamps or coins;
  • Clothing, jewelry and tools;
  • A car, truck, motorcycle; and
  • Personal injury or other potential claims the debtor may have against others whether filed or not filed.
Executory Contract
A contract under which both parties to the agreement have duties remaining to be performed. (If a contract is executory, a debtor may continue to fulfill the terms of the contract or lease (“assume” it) or cancel the contract or lease (“reject” it).) Examples of an executory contract are: a lease for a residence, car or equipment, or an employment agreement, home improvement contract or service contract or for delivery of goods in the future.
Exemption (Exempt property)

A right granted by state or federal law to an individual debtor to hold specified property free from the claims of creditors. Some examples of property a debtor may claim as exempt are:

  • A house, cooperative apartment, condominium, vacation time-share, cemetery plot;
  • Cash, savings account, checking account, credit union account;
  • Stocks, bonds, savings bonds;
  • Tax refunds;
  • Security deposits;
  • Life insurance, if the debtor is the beneficiary on a life insurance policy and the insured dies within six months after the debtor filed for bankruptcy, any inheritance the debtor receives will be included as an asset;
  • A pension, profit sharing plan, annuity, IRA or other type of retirement plan;
  • Furniture and appliances, television sets, radios, stereo systems and components, computers,
  • Books, art, collectibles such as baseball cards, stamps or coins;
  • Clothing, jewelry and tools;
  • Equity in an automobile or house;
  • A car, truck, motorcycle; and
  • Personal injury or other potential lawsuits the debtor may have against others whether filed or not filed.


Family Farmer
An individual, individual and spouse, corporation, or partnership engaged in a farming operation that meets certain debt limits and other statutory criteria for filing a petition under Chapter 12.
First Meeting of Creditors
A hearing that is conducted by a representative of the U.S. Trustee’s office. Its primary business is the examination under oath of the debtor regarding his or her assets, liabilities, and financial condition. See also 341 Meeting.
The process whereby a lienholder enforces the lien following the debtor’s default and subjects the collateral to satisfaction of the debt. Following seizure, the collateral is normally sold and its proceeds applied to payment of the debt.
Fradulent Conveyance or Transfer
A transfer of a property by the debtor for less than the true value of the property during the year (or more) before bankruptcy or with the intent to hinder, delay, or defraud creditors.


A creditor’s levy on property of the debtor in the possession of a third party, or on a debtor or obligation due by the third party to the debtor. Common examples include wage garnishments whereby an employer is ordered by a court to pay a portion of the debtor’s wages to a creditor.
Good Faith
Honesty in belief or purpose.


To guarantee against any loss which someone else might suffer. For example, a spouse in a divorce proceeding may agree to assume debts of the marriage and see that the other spouse is not forced to pay.
In Forma Pauperis
Describes permission given by a judge to a debtor, who meets certain income criteria, to proceed without paying court fees or costs.
Someone with a particularly close relationship to the debtor. An insider can be a relative, partner, or affiliated company.
Inability to pay debts, determined by one of two tests: (1) inability to pay debts as they become due; or (2) an excess of liabilities over assets.
Involuntary Petition
A Chapter 7 or 11 bankruptcy filed by creditors against an insolvent debtor.


Joint Administration
A court-approved mechanism under which two or more cases can be administered together. (Assuming no conflicts of interest, these separate businesses or individuals can pool their resources, hire the same professionals, etc.)
Joint Petition
A bankruptcy case filed by husband and wife together.
Judge of the United State Bankruptcy Court or Bankruptcy Judge
The official title of the judicial officer presiding over a bankruptcy case. Bankruptcy judges are appointed to fourteen year terms.
Judicial Lien
Any lien arising under court proceedings.
Jurisdiction is the legal authority to hear and decide a case. The United States District Court has original and exclusive jurisdiction over all cases under the Bankruptcy Code.


The seizure or taking control of property pursuant to a court order.
A creditor’s right to repossess or foreclose specific property if the borrower fails to make loan payments. Liens are taken to secure the payment of a debt or the performance of an obligation.
To convert assets into cash.
Liquidated Claim
A claim for a fixed amount of money.


Means Test
A term describing the standard for dismissing a Chapter 7 consumer case on the grounds of abuse where the debtor’s disposable income, calculated under a formula established under federal bankruptcy law, is deemed sufficient to support payments under a Chapter 13 repayment plan. A version of the means test is also used to measure the debtor’s disposable income in a Chapter 13 case.
A motion is an application for relief or request for an order of the court presented to the Court. Certain motions have response deadlines by which another party shall respond or object to the relief requested in the motion. The person making the motion should provide a memorandum of law in support of the motion or include a statement that no separate memorandum of law is being submitted. Motions may be decided by a judge without a hearing.
Motion to Lift the Automatic Stay
A request by a creditor to allow the creditor to take action against a debtor or the debtor’s property that would otherwise be prohibited by the automatic stay. For example, an order granting the creditor’s motion may allow the creditor to start or to continue a lawsuit in state court to foreclose a mortgage.


No-Asset Case
A Chapter 7 case where there are insufficient assets to allow for a distribution to creditors.
Nondischargeable Debt
A debt that cannot be eliminated in bankruptcy. Some examples of nondischargeable debts are alimony, child support, student loans, and taxes.


Objection to Discharge
A trustee’s or creditor’s objection to the debtor’s being released from personal liability for all debts brought by an adversary proceeding under 11 U.S.C. § 727.
Objection to Exemptions
A trustee’s or creditor’s objection to a debtor’s attempt to claim certain property as exempt.
A judicial command or direction. An order is sought by motion and directs a party to perform an act or to refrain from taking action. A judgment generally is broader than an order, determines all rights at issue, and resolves all matters pending in a dispute. A judgment is sought in an adversary proceeding.
Order for Relief
A court order for relief is an order (“injunction”) that stops all proceedings against the debtor and debtor’s property. The order for relief or automatic stay occurs is effective immediately upon filing a voluntary petition.


Party in Interest
A party who is actually and substantially interested in the subject matter, as distinguished from one who has only a nominal or technical interest in it.
Personal Property
Everything that isn’t real estate, for example, cars, cash, furniture, etc.
The document filed by a debtor that initiates a bankruptcy proceeding. The petition may be filed by the debtor (voluntary case) or by creditors against the debtor (involuntary case). Events that happen before the petition is filed are called prepetition events and those that happen after are called postpetition events.
A debtor’s detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time. When confirmed, the plan is a contract between the debtors and the creditors.
Claims that arise or events that take place after the filing of a bankruptcy case.
Postpetition Transfer
A transfer of a debtor’s property made after the filing of a bankruptcy petition.
Pre-Bankruptcy Planning
The arrangement (or rearrangement) of a debtor’s property to allow the debtor to take maximum advantage of exemptions. (Pre-bankruptcy planning typically includes converting nonexempt assets into exempt assets.)
Generally, certain payments or transfers of a debtor’s property to a creditor within ninety (90) days before the filing of a bankruptcy case (or within one year before the filing of the petition if the creditor was an “insider”) which enables the creditor to receive more than it otherwise would have received in a hypothetical Chapter 7 case. The trustee may take action to nullify or avoid certain preferences and obtain a court order requiring the creditor to return the property or money.
Claims that arise or events that take place before the filing of a bankruptcy case.
Priority Claim
A claim that must be paid before non-priority (or “general”) unsecured claims may be paid anything. Examples of priority claims include certain taxes, child support, wages, consumer deposits, and employee benefit plan contributions.
Proof of Claim
A written statement, filed by a creditor, describing the reason a debtor owes the creditor money. The document also states how much the creditor is owed. Typically, a creditor will not be paid through the bankruptcy unless a proof of claim is filed.
Pro Se
A pro se debtor is a debtor who does not have legal representation.


To assume personal liability after bankruptcy for a debt that would otherwise be discharged in the bankruptcy case.
Reaffirmation Agreement
An agreement between a debtor and a creditor in which the debtor agrees to pay all or a portion of a debt even though the debt would have been discharged otherwise.
An agreement with your mortgage lender letting you pay off your arrearages over time.


Secured Creditor
An individual or business holding a claim against the debtor that is secured by a lien on the debtor’s property.
Secured Debt
A debt that is secured by a lien on the debtor’s property.
When two persons are mutually indebted, the two debts are treated as canceling each other out so that neither need be paid. If one of the debts is smaller, for example, if a debtor owes a creditor $100, but that creditor also owes the debtor $80, under the principles of offset, the debtor could take the position that it only owes the creditor $20 and not the full $100 because of a credit of the debt owed by the creditor to the debtor.
Forms that must be filed with the Bankruptcy Court under penalty of perjury that show the debtor’s assets, liabilities, and other financial information.
Standing Trustee
See Chapter 13 Trustee.
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. The kinds of information which must be provided are:

  • Employment, occupation and income for the last two years;
  • Partnerships or businesses in which debtor has been involved within the past six years;
  • Payments made to creditors within ninety (90) days before filing a bankruptcy petition; Repossessions, transfers or foreclosures occurring within one year before filing a bankruptcy petition including transfers or gifts to relatives;
  • Property the debtor is holding for someone or someone is holding for the debtor;
  • Books and records of financial affairs and their location;
  • Bank, credit union, and brokerages accounts in the debtor’s name closed within one year before filing a bankruptcy petition;
  • Payments to, or payment agreements with, attorneys or any budget or credit counseling service;
  • Casualty losses or gambling losses within the last year;
  • Safe deposit boxes;
  • Prior addresses within the last two years.
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, such as a home (if securing a mortgage) or car. The debtor must disclose whether he or she intends to surrender the asset or keep it. To keep possession of an asset, the debtor must continue to pay for it. The debtor may choose to “redeem” the property, which means that the debtor can arrange to pay the creditor the full current or “market” value of the property in one lump sum, even if the debt is considerably higher. The debtor may “reaffirm” the debt, which means the debtor agrees to continue to make payments until the debt has been paid in full. Either option must be in writing, and under certain circumstances may require approval by the bankruptcy judge.
Statutory Lien
A lien created by operation of law, such as a mechanic’s or landlord’s lien.
A stipulation is a voluntary agreement between opposing parties.
Substantial Abuse
The characterization of a bankruptcy case filed by an individual whose debts are primarily consumer debts where the Court finds that the granting of relief would be an abuse of Chapter 7. A bankruptcy petition should include a detailed list of current sources of income and regular expenses. The trustee assigned to the bankruptcy case may decide that the budget reflects that payment to creditors can be made by the debtor(s) under a plan. If such is the case, the bankruptcy case may be dismissed.
An official court document informing the party served that an action has been filed against them in the court where the summons originated, and that the party is required to appear, on the date indicated on the summons, and answer the complaint in such action.


A written record prepared by the court reporter of the proceedings that took place in court.
Any means by which a debtor disposes of property.
A person appointed by the Bankruptcy Court to administer the bankruptcy estate. In a Chapter 7 case, the trustee’s primary function is a liquidating and collection agent. If a trustee is appointed in a Chapter 11 Proceeding, he is charged with responsibility for proposing a plan of reorganization. In Chapters 12 and 13, a standing trustee exists to administer the plan.


United States Trustee
The Office of the United States Trustee is arm of the U.S. Department of Justice. The U.S. Trustee, not the Bankruptcy Court, appoints trustees from a private panel. The U.S. Trustee program was designated to free the Bankruptcy Courts from administrative supervision over trustees.
Undersecured Claim
A claim for payment that is secured by property that is worth less than the amount of the claim.
Unexpired Lease
A real or personal property lease under which the debtor is the lessee or lessor and that has not ended under its own terms pre-bankruptcy, or that has not been terminated pre-bankruptcy. Only unexpired leases in existence as of the date the petition is filed may be assumed. See also Executory Contract.
Unlawful Detainer Action
A lawsuit brought by a landlord against a tenant to evict the tenant from rental property—usually for nonpayment of rent.
Unliquidated Claim
A claim for which a specific dollar amount has not been determined.
Unscheduled Debt
A debt that should have been listed by a debtor in the schedules filed with the Court but was not. If the debtor fails to list a debt on the bankruptcy petition, it might not be discharged and the debtor may be obligated to pay it unless the creditor actually knew there was a bankruptcy proceeding in time to file a claim in an asset case.
Unsecured Claim
A claim with respect to a debt, the payment of which is not backed by the debtor’s collateral or a lien on property of the debtor.
Unsecured Debt
Debt obligations that are not backed by a security agreement or a lien on property of the debtor.


To cancel, annul, or render of no effect. If a judgment or other is vacated, it is as if the order or judgment were never entered.
A concept determining proper geographical location for filing a bankruptcy case or other action. Venue is proper if the debtor has resided or has a domicile, place of business, or property in the district 180 days preceding the filing of the petition. More than one venue may be proper in a case.
Confirmation of the correctness, truth, or authenticity of a complaint, statement, or document.
Voluntary Case
A case under the Bankruptcy Code in which the debtor has filed a voluntary petition either to reorganize the debtor’s finances or to liquidate the debtor’s assets.
Voluntary Petition
See Petition