Absolute Priority
The order of payment to the different classes of creditors mandated by the Bankruptcy Code.
Accord and Satisfaction
An agreement to settle a contract dispute by accepting less than what’s due.
Adequate Protection
The right of a party with an interest in the debtor’s property to assurances its interest will not be diminished during the individual’s bankruptcy proceedings.
Adjustable Rate Mortgage
A mortgage loan with an interest rate that goes up and down in accordance with a designated market indicator.
Administration Claim
The debt incurred by the debtor after the bankruptcy commences with court approval.
Adversary Proceeding
A lawsuit arising related to a bankruptcy case.
Appraisal
A professional and legitimate determination of the value of some property or assets like a house or a car.
Arrangement
The agreements worked out concerning the conditions under which a bankrupt entity may operate.
Assume
An agreement to continue the guidelines laid out in a contract or lease.
Automatic Stay
An injunction effective immediately after a bankruptcy petition is filed that stops lawsuits, foreclosures, wage garnishments, and all other collection activities against the debtor/filer.
Avoidance Power
When the court negates certain transactions a debtor has prior to the bankruptcy filing.
Balloon Payment
A large final payment due at the end of a contract your monthly payments didn’t cover, typicall or texty for a car or a home loan.
Ballot Date
The deadline to which all votes on a reorganization plan is accepted.
Bankruptcy
Bankruptcy is a legal proceeding afforded to people who are unable to handle a financial crisis by relieving you of paying off your debts or by providing you with protection while attempting to pay off those debts. Bankruptcy is available so that you can have a fresh start.
Bankruptcy Code
The more common name for title 11 of the United States Code — the federal bankruptcy law.
Bankruptcy Court
The specialized court in where bankruptcy-related matters under the Federal Bankruptcy Act are handled.
Bankruptcy Estate
All legal or equitable interests in property of the debtor at the time of the bankruptcy filing.
Bankruptcy Judge
A judicial officer of the United States district court who is the court official with decision-making power.
Bankruptcy Petition
The official forms filed which opens the bankruptcy case.
Bankruptcy Trustee
A person appointed by the bankruptcy court to oversee the case filed.
Bar Date
The deadline creditors have to file against a debtor.
Bulk Sales Law
A law that regulates the transfer of business assets so business owners cannot dispose of assets that avoid creditors.
Capitalized Interest
The accrued interest added to the principal balance of a loan while you are not making payments; or your payments are insufficient to cover both the principal and interest due.
Chapter 7
The chapter of the Bankruptcy Code providing for “liquidation.” Chapter 7 Bankruptcy was enacted to allow persons who are hopelessly burdened by debt to have an opportunity for a new beginning by wiping out unsecured debts (debts that aren’t tied to any specific item of property, most commonly credit cards).
Chapter 11
The chapter of the Bankruptcy Code providing for reorganization — usually involving a corporation or business partnership.
Chapter 12
The chapter of the Bankruptcy Code providing for adjustment of debts of a “family farmer” or a “family fisherman.”
Chapter 13
The chapter of the Bankruptcy Code designed to enable individual debtors the option of applying a percentage of their future earnings to a portion of their current debts over an extended period of time. Chapter 13 authorizes the wage earner to keep the property (like your home and car) while consolidating and reorganizing debt, allowing the debtor a reasonable opportunity to arrange installment-payments of what is owed out of future income.
Claim
A creditor’s assertion of a right to payment by the debtor.
Class
The different levels of claims against a debtor.
Collateral
Property used to guarantee payment of a secured debt.
Collection Agency
A company hired by a creditor to collect a debt that it is owed.
Confirmation
Approval of a plan of reorganization or liquidation by a bankruptcy judge.
Consumer Debtor
A debtor who owes primarily consumer debts.
Consumer Debts
Debts incurred for personal needs.
Contested Matter
Those legal issues that are disputed, but are not within the definition of adversary proceedings.
Consumer Leasing Act
A federal law that requires lease agreements to include certain defined terms.
Contingent Claim
A claim that may be owed by the debtor’s cosigner on another person’s loan and the cosigner also fails to pay.
Consumer Credit Counseling Service (CCCS)
A national non-profit agency that helps debtors plan budgets and repay their debts.
Contract
A legally binding agreement involving two or more people or businesses that sets forth what the parties will or will not do.
Conversion
Changing bankruptcy chapters such as a debtor mobbing from a Chapter 7 to a Chapter 13.
Cooling Off Rule
The act that allows you to cancel a contract within a specified time period after signing it.
Cosigner
A person who signs their name to a credit application, lease or loan agreement to help someone qualify and secure a loan or product. If the primary debtor does not pay, the cosigner is fully responsible for the loan or debt.
Creditor
The person or business the debtor owes (or claims to owe) money to.
Credit Counseling
In Bankruptcy, CC usually refers to two things: The “individual or group briefing” from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing. And the “instructional course in personal financial management” in Chapter 7 and Chapter 13 an individual debtor must complete before the discharge of debt.
Credit Bureau
A company that collects and sells information about an individual’s credit history.
Credit Insurance
Insurance a lender requires a borrower to purchase to cover the loan.
Credit Report
An account of an individual’s credit history and pertinent personal information.
Creditor
A person or entity that a debt is owed.
Current Monthly Income
The average monthly income received by the debtor over the six calendar months before commencement of the bankruptcy case.
Debt
An amount of money, service, or an item of property that is owed to somebody or some business entity.
Debt Collector
A person who works with the collections’ department of an original creditor to track down debtors who get them to pay what they owe.
Debtor
A person who owes money and has filed a petition for relief under the Bankruptcy Code.
Default
A failure to perform a legal duty like neglecting to make a mortgage or car loan payment on time.
Defendant
An individual (or business) a lawsuit is filed against.
Delinquency
Failure to make payments when they are due.
Discharge (of Debts)
A release of a debtor from personal liability for certain dischargeable debts set forth in the Bankruptcy Code.
Dischargeable Debt
An amount of money, service, or an item of property that can be eliminated through the Bankruptcy Code.
Disclosure Statement
A written document prepared by the Chapter 11 debtor in order to provide “adequate information” for creditors to evaluate the Chapter 11 plan of reorganization.
Effective Date
The point at when the plan of reorganization commences.
Equity
The value of a debtor’s interest in property that remains after liens and other creditor interests are considered.
Examiner
A court appointee with responsibilities to oversee certain parts of the proceedings.
Executory Contract or Lease
Includes contracts or leases under which both parties in the agreement have duties remaining to be performed.
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.
Fair Credit Billing Act (FCBA)
The federal law that gives you rights when an error occurs on your credit card statement.
Fair Credit Reporting Act (FCRA)
The federal law designed to prevent inaccurate information from entering or remaining on a credit report.
Fair Debt Collections & Practices Act (FDCPA)
The federal law that outlaws unfair debt-collection practices by debt collection agencies.
Family Farmer or Family Fisherman
An individual engaged in the business of farming or fishing who meets certain debt limits and other statutory criteria for filing a petition under Chapter 12.
Fee Examiner
Court appointee responsible for monitoring money as planned is paid to the proper professional organizations.
Forbearance
Voluntarily refraining from doing something, such as asserting a legal right.
Foreclosure
The forced sale of real estate to pay off a loan on which the owner of the property has defaulted.
Forfeiture
The loss of property (or a privilege) due to breaking a law.
Fraud
Intentionally deceiving another person causing that individual or business to suffer a loss.
Fraudulent Transfer
A transfer of a debtor’s property made with intent to defraud or for which the debtor receives less than the transferred property’s value.
Fresh Start
The characterization of a debtor’s status after bankruptcy, i.e., free of most debts. (Giving debtors a fresh start is one purpose of the Bankruptcy Code.)
Garnishment
Court ordered method of debt collection where a percentage of an individual’s salary is paid to a creditor.
Grace Period
A period of time when an individual does not have to make payments on a debt.
Guarantor
A person who makes a legally binding promise to pay another person’s debt if the person they signed for defaults.
Insider (of Individual Debtor)
Any relative or general partner of the debtor.
Intangible Property
Personal property that has no physical existence.
Insolvency
When a business is failing.
Interest
A commission an individual pays the bank or other creditor for lending money or extending credit.
Joint Administration
A court approved mechanism under which two or more cases can be administered together.
Joint Petition
The combination of one or more bankruptcy petition; typicall or texty filed together by a husband and wife.
Lien
The right of a secured creditor to take, hold or sell the property of a debtor as security or payment.
Liquidation
A sale of a debtor’s property where the proceeds are used to benefit the creditors.
Liquidated Claim
A creditor’s claim for a fixed amount of money.
Loan Consolidation
The process of combining multiple loans into one.
Matrix
The debtor’s mailing list for their creditors.
Means Test
The section of the Bankruptcy Code applied to determine whether an individual debtor’s Chapter 7 filing is presumed to be an abuse of the Code requiring dismissal or conversion to a Chapter 13.
Meeting of Creditors
A meeting held between the filer and the bankruptcy trustee to review the case and files submitted.
Mortgage
A loan when the borrower puts up a real estate title as collateral for a loan.
Motion to Lift the Automatic Stay
A request by a creditor to take action against the debtor that usually would be protected under the automatic stay.
Negotiable Instrument
A document that represents an unconditional promise to pay a specific amount of money upon the demand of its owner
No Asset Case
A Chapter 7 filing where there are no assets available to satisfy any portion of the creditors’ unsecured claims.
Non-Dischargeable Debt
A debt not allowed to be eliminated in bankruptcy.
Non-Exempt Property
The assets an individual risks losing to creditors after a Chapter 7 Bankruptcy is filed or when a creditor sues and wins a judgment.
Nuisance Fees
Money charged by some credit card companies to increase profits when the individual doesn’t use the credit card the way the creditor wants.
Objection to Dischargeability
Opposition by the trustee or creditor to the debtor being released from personal liability for specific eliminated debts.
Objection to Exemptions
A trustee or creditor’s objection to the debtor’s attempt to claim certain property as exempt from liquidation.
Party in Interest
A party who has standing in a matter dealing with a bankruptcy case to be heard by the court.
Petition
The document that once filed commences a bankruptcy proceeding.
Petition Preparer
A non-legal organization where bankruptcy petitions are arranged.
Personal Property
All personal effects other than the land attached to the estate.
Plan
The debtor’s detailed proposal to pay creditors’ claims over a fixed period of time.
Plaintiff
A person or business that files a formal complaint with the court.
Post-Petition Transfer
A transfer of the debtor’s property made after the commencement of the case.
Pre-Bankruptcy Planning
The arrangement of a debtor’s property to take maximum advantage of exemptions.
Preference or Preferential Debt Payment
A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy that provides the creditor with more than they would receive in the debtor’s Chapter 7 Bankruptcy case.
Principal
The person who appoints an attorney to represent them when creating a legal document or action.
Priority
The Bankruptcy Code’s statutory ranking of unsecured claims that determines the order in which those will be paid when there is not enough money to pay all unsecured claims in full.
Priority Claim
An unsecured claim that is entitled to be paid ahead of other unsecured claims that are not entitled to priority status.
Proceeds for Damaged Exempt Property
Money collected to pay for exempt property that is no longer exempt because it has been damaged or destroyed.
Proof of Claim
The written statement and other documentation filed by a creditor that describes the issues with the debtor.
Property (of the Estate)
All legal or equitable interests in property of the debtor at the time the case begins.
Reaffirmation agreement
An official understanding by a Chapter 7 debtor to continue paying a dischargeable debt after the bankruptcy.
Repossession
A creditor’s taking of property that has been pledged as collateral for a loan after the loan goes into default.
Restructuring
Out-of-court attempt by the debtor to reorganize financial matters in order to pay off what is owed.
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
A debt when a creditor has a lien.
Set Off
A counter claim to discharge or reduce the debt.
Schedules
Detailed lists filed by the debtor along with the petition showing assets, liabilities, and other financial information.
Short Sale (of House)
A sale of an individual’s home where the proceeds fall short of what the owner still owes on the mortgage.
Skeleton Filing
Term applied when not all the proper paperwork for a bankruptcy case has been filed.
Statement of Financial Affairs
A series of questions concerning income, transfers of property, lawsuits by creditors, etc., the debtor needs to answer in writing before a bankruptcy is filed.
Statement of Intention
A declaration made by a Chapter 7 debtor regarding plans for dealing with consumer debts that are secured by property of the estate.
Substantial Abuse
Taking frequent requests regarding an individual debtor to file a bankruptcy petition.
Substantive Consolidation
Putting the assets and liabilities of two or more related debtors into a single pool to pay creditors.
Tangible Personal Property
Personal property that can be felt or touched.
Transfer
Where a debtor parts way by any means with their property.
Trustee
The representative of the bankruptcy court who exercises statutory powers.
Truth in Lending Act
The Federal Law that requires credit and charge card companies to disclose interest rates and other information.
U.S. Trustee
An officer of the United States Justice Department responsible for supervising the administration of bankruptcy cases.
Un-liquidated Claim
A request for a claim or debt where a value has not yet been determined.
Un-scheduled Debt
An amount owed that should have been listed by the debtor in the schedules filed with the court but was not.
Unsecured Claim
A claim or debt for when a creditor holds no special assurance of payment.
Voluntary Transfer
A transfer of a debtor’s property with the debtor’s consent