Common Bankruptcy Terms
Common Bankruptcy Terms
If you are considering filing for bankruptcy, there may be many legal terms with which you are unfamiliar. The glossary below is intended to provide some background on some of the legal terms that are specific to the bankruptcy process. If you have questions about filing for bankruptcy or if you come across a term you do not know, attorney Kevin M. Schmidt is bankruptcy attorney with years of experience helping clients navigate this often complex and unfamiliar legal process.
Adversary Proceeding – A lawsuit that is begun by filing a complaint with the court regarding a matter that arises in or is related to a bankruptcy case.
Automatic Stay – Immediately upon filing a bankruptcy petition, the automatic stay stops all actions against a debtor to try to collect a debt (e.g., foreclosures, demands for payment, lawsuits, garnishments).
Bankruptcy Code – Common reference to the federal bankruptcy law found in Title 11 of the United States Code.
Bankruptcy Estate – The bankruptcy estate includes all the property in which the debtor may have an interest.
Bankruptcy Petition – The formal document, in the form of official forms, that the debtor files with the bankruptcy court to begin a case.
Claim – A creditor’s declaration of a right to payment from the debtor.
Confirmation – The bankruptcy judge’s approval of a Chapter 13 repayment plan.
Creditor – Any party to which the debtor owes money.
Credit Counseling – Required education that the debtor must complete both before filing for bankruptcy and again before his or her case is complete.
Current Monthly Income – The average monthly income that the debtor received over the six months before he or she filed for bankruptcy.
Debtor – The person who filed for bankruptcy.
Discharge – A release from liability from certain debts.
Dischargeable Debt – Debt that the Bankruptcy Code allows to be eliminated through the bankruptcy case.
Exemption – The property that the debtor is allowed by law to keep from unsecured creditors. For related information on exemptions, visit an earlier blog post here.
Joint Petition – A bankruptcy case filed by spouses together.
Liquidation – Sale of a debtor’s property with the money from the sale distributed to creditors as repayment on a debt.
Means Test – The name of the process used to determine whether a debtor can file a chapter 7 bankruptcy case. The test is based on the debtor’s current monthly income. For more information on chapter 7 versus 13, please see our previous blog post on the topic.
No-asset Case – A Chapter 7 cases where the debtor has no assets available to liquidate for payment of creditors’ claims.
Nondischargeable Debt – Types of debt that cannot be discharged in bankruptcy. Examples of nondischargeable debts include support obligations (child and domestic) and certain taxes.
Plan – A debtor’s proposal that explains how he or she will repay creditors’ claims in a chapter 13 case.
Schedules – The official forms that the debtor uses to list all of the debtor’s financial information and property.
Trustee – The individual who is appointed and responsible for reviewing the debtor’s case, representing the interest of unsecured creditors, recovering property of the estate for the benefit of creditors, and ensuring the integrity of the bankruptcy system.
Work with a Merrillville Bankruptcy Attorney
The above represents a general list of some of the more common terms encountered throughout a bankruptcy case. If you have questions about filing for bankruptcy, contact Kevin M. Schmidt at 219-756-0555 for a free consultation about whether bankruptcy is right for your situation. As an experienced Merrillville bankruptcy attorney, he knows that every situation is different and will help tailor a solution to fit your needs.