Reference

Bankruptcy
Glossary

Key terms defined in plain English — for debtors, attorneys, and VBA students.

3 A B C D E M N P R S T U W
3
341 Meeting
The "Meeting of Creditors" required under 11 U.S.C. § 341. The debtor must appear and answer questions under oath from the trustee and any attending creditors. In most Chapter 7 cases, this meeting lasts 5–10 minutes. Creditors rarely appear. It is not a court hearing — it is held in a meeting room.
A
Automatic Stay
An immediate injunction that takes effect the moment a bankruptcy petition is filed (11 U.S.C. § 362). The automatic stay stops all collection actions, lawsuits, garnishments, foreclosures, repossessions, and creditor contact — instantly, without any court order required.
B
Bankruptcy Estate
All property in which the debtor has a legal or equitable interest at the time of filing (11 U.S.C. § 541). The estate is administered by the trustee in Chapter 7 cases. Certain property is excluded from the estate (e.g., post-petition earnings in Chapter 7).
Bankruptcy Petition Preparer
A non-attorney who prepares bankruptcy petitions for compensation, authorized under 11 U.S.C. § 110. Petition preparers must disclose their identity and compensation, sign every document they prepare, and may not give legal advice. They work under the direction of a licensed attorney.
C
Chapter 7
Liquidation bankruptcy. Non-exempt assets are surrendered to a trustee in exchange for the discharge of most unsecured debts. Most Chapter 7 cases are "no-asset" cases where the debtor has no non-exempt property to liquidate. Discharge typically occurs 90–120 days after filing.
Chapter 12
Bankruptcy reorganization available to family farmers and family fishermen with regular annual income (11 U.S.C. Chapter 12). Structured similarly to Chapter 13 but with provisions adapted for agricultural income cycles.
Chapter 13
Reorganization bankruptcy for individuals with regular income. The debtor proposes a 3–5 year repayment plan. Upon successful completion, remaining qualifying unsecured debts are discharged. Allows debtors to save homes, retain non-exempt assets, and pay non-dischargeable debts.
Claim
A creditor’s right to payment from the debtor. Claims are filed in bankruptcy using Official Form 410 (Proof of Claim). Priority claims are paid before general unsecured claims. Secured claims are backed by collateral.
Confirmation
Court approval of a Chapter 13 plan. The plan must be proposed in good faith, comply with the Bankruptcy Code, and be in the best interests of creditors. The trustee and creditors may object to confirmation.
Codebtor
A person who is jointly liable with the debtor on a debt — a co-signer, guarantor, or joint account holder. The automatic stay may temporarily protect codebtors in Chapter 13 cases (11 U.S.C. § 1301).
Cramdown
In Chapter 13, the ability to reduce a secured claim to the current value of the collateral. Most commonly used for vehicle loans: if the car is worth $8,000 but the loan balance is $12,000, the $8,000 is a secured claim and the $4,000 difference becomes an unsecured claim.
Current Monthly Income (CMI)
The average monthly income the debtor received from all sources (except Social Security) during the six calendar months before filing. CMI is calculated on Official Form 122A-1 or 122C-1 and is used in the means test.
D
Discharge
The legal elimination of a debtor’s personal liability for a debt. A discharged debt is permanently unenforceable against the debtor. Discharge is the goal of most bankruptcy filings. Not all debts are dischargeable — see non-dischargeable debts.
Disposable Monthly Income (DMI)
In Chapter 13, the amount left over after allowed deductions from Current Monthly Income. DMI determines the minimum amount unsecured creditors must receive under the plan. Calculated on Form 122C-2 for above-median debtors.
E
Exemptions
Specific types and amounts of property that a debtor is entitled to keep free from creditor claims under state or federal law (11 U.S.C. § 522). Minnesota allows debtors to choose between Minnesota state exemptions and federal exemptions. Common exemptions include homestead, vehicle, retirement accounts, and household goods.
Executory Contract
A contract where both parties still have material obligations to perform. Common examples include apartment leases, car leases, and service agreements. Executory contracts must be disclosed on Schedule G and the debtor (through the trustee or plan) may assume or reject them.
M
Means Test
The calculation required under BAPCPA 2005 (11 U.S.C. § 707(b)) to determine whether an individual qualifies for Chapter 7 relief. Compares the debtor’s CMI to the state median income. Above-median debtors must complete a second calculation using IRS expense standards.
N
Non-Dischargeable Debt
Debts that survive bankruptcy and remain owed after discharge (11 U.S.C. § 523). Common non-dischargeable debts include most student loans, recent taxes, domestic support obligations (child support, alimony), debts from fraud, and criminal fines.
P
PACER
Public Access to Court Electronic Records — the federal judiciary’s online system for accessing court records. Bankruptcy attorneys and petition preparers use PACER to search prior cases, review filed petitions, and access court documents. Available at pacer.uscourts.gov.
Priority Claim
Unsecured claims that receive payment before general unsecured claims in bankruptcy. Categories include domestic support obligations (highest priority), administrative expenses, certain wages, and certain tax claims. Must be paid in full in Chapter 13 plans (11 U.S.C. § 507).
Proof of Claim
Official Form 410. Filed by creditors to formally assert their right to payment from the bankruptcy estate. The filing deadline is the "bar date" set by the court. Secured creditors who fail to file may lose their secured status.
R
Reaffirmation Agreement
A voluntary agreement between a debtor and a secured creditor to continue the pre-petition debt relationship. Commonly used for car loans where the debtor wants to keep the vehicle and continue making payments. Must be filed with the court and approved by the judge.
S
Secured Claim
A claim backed by collateral — property that the creditor has a lien on and can take if the debt is not paid. Mortgages and auto loans are the most common secured claims. Secured claims are listed on Schedule D.
SOFA
Statement of Financial Affairs — Official Form 107. Requires the debtor to disclose financial history for the prior two years, including income, payments to creditors, lawsuits, property transfers, and business interests. One of the most scrutinized documents by trustees.
T
Trustee
In Chapter 7, a private trustee appointed to administer the bankruptcy estate — reviewing the petition, liquidating non-exempt assets, and distributing proceeds to creditors. In Chapter 13, a standing trustee who receives and distributes plan payments. The U.S. Trustee Program oversees both.
U
Unsecured Claim
A claim not backed by collateral. If the debtor defaults, the creditor has no right to take specific property. Credit card debt, medical bills, and personal loans are unsecured. General unsecured claims are typically paid pennies on the dollar (or nothing) in Chapter 7, and a plan-determined percentage in Chapter 13.
W
Wildcard Exemption
A flexible exemption under federal or state law that can be applied to any property the debtor chooses. Under federal exemptions (11 U.S.C. § 522(d)(5)), the wildcard allows debtors to exempt up to $1,475 of any property, plus any unused portion of the homestead exemption up to $13,950.