Below you find definitions for the most common legal terms used in Bankruptcy court. For a complete list and definitions please visit uscourts.gov
An injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed. The automatic say stops creditors from being able to make collection attempts including phone calls to the debtor after a bankruptcy is filed.
A legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title 11 of the United States Code (the Bankruptcy Code).
The informal name for title 11 of the United States Code (11 U.S.C. §§ 101-1330), the federal bankruptcy law.
A judicial officer of the United States district court who is the court official with decision-making power over federal bankruptcy cases.
The document(s) filed by the debtor (in a voluntary case) or by creditors (in an involuntary case) which opens the bankruptcy case. (There are official forms for bankruptcy petitions.)
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.) Often referred to as Straight or Common Bankruptcy
Chapter 12 of the Bankruptcy Code provides for adjustment of debts of a “family farmer,” or a “family fisherman” as those terms are defined in the U.S. Bankruptcy Code. It enables financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts.
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.
Chapter 11 of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals also can seek relief in Chapter 11.
A creditor’s assertion of a right to payment from the debtor or the debtor’s property.
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 must attend prior to filing under any chapter of the Bankruptcy Code; and (2) the “instructional course in personal financial management” in chapters 7 and 13 that an individual debtor must complete before a discharge is entered. There are exceptions to both requirements for certain categories of debtors, exigent circumstances, or if the U.S. trustee or bankruptcy administrator have determined that there are insufficient approved credit counseling agencies available to provide the necessary counseling.
A person who has filed a petition for relief under the Bankruptcy Code
An individual (or business) against whom a lawsuit is filed.
A release of a debtor from personal liability for certain dischargeable debts set forth in the Bankruptcy Code. (A discharge releases a debtor from personal liability for certain debts known as dischargeable debts and 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.)
A debt for which the Bankruptcy Code allows the debtor’s personal liability to be eliminated.
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). The availability and amount of property the debtor may exempt depends on the state the debtor lives in.
In bankruptcy cases, certain parties specified in section 109(31) of the Bankruptcy Code with a close relationship to the debtor such as relatives, officers, directors, and affiliates.
