Bankruptcy Terminology

A required meeting with the Trustee where you answer questions under oath. In Connecticut these meetings are conducted over Zoom. 

The Automatic Stay is an injunction against certain creditor-action seeking to collect debts from a debtor who has declared bankruptcy. Under section 362 of the United States Bankruptcy Code, the stay begins at the moment the bankruptcy petition is filed.

Bankruptcy Courts are federal courts under the United States District Courts that administer the Bankruptcy Code and have exclusive jurisdiction over proceedings under the  bankruptcy code.  

Created upon filing of bankruptcy, the Bankruptcy Estate consists of the debtor’s property and legal and equitable interests owned at the time of filing.

The official filing that begins a bankruptcy case.

In the bankruptcy context, Chapter refers to any one of the several chapters of the Bankruptcy Code, which is Title 11 of the United States Code. 

A process that eliminates most unsecured debt, often without losing property.

A repayment plan lasting 3–5 years that allows you to keep your property.

The structured repayment plan submitted to the court.

A Consumer Debt is debt incurred by an individual primarily for a personal, family, or household purposes.

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A person or company to whom money is owed. "Creditor" is an entity that has a financial claim at the time of the filing of the Debtor’s Bankruptcy Petition. 

The individual, or legal entity, filing for bankruptcy

A bankruptcy discharge a permanent injunction that releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order of the Bankruptcy Court prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts seeking to collect a discharged debt.

The Discharge Order is the order entered by the Bankruptcy Court effecting the Discharge. 

Ending the case without a discharge

Income remaining after necessary expenses, used to fund the Chapter 13 Plan.

A domestic support obligation is any ongoing payment that a person is obligated to pay to their child or former spouse because of a divorce or separation. 

The value of property minus what you owe on debts secured by the property. 

Property you are allowed to keep by application of certain laws, referred to as your exemptios, either set forth in the Connecticut state code and nonbankruptcy federal laws, or in Section 522(d) of the Bankruptcy Code, whichever is most beneficial to you and best meets your goals and priorities in your bankruptcy case. 

A lien is a charge upon specific property to secure payment of a debt. Although a debtor is not personally liable for discharged debts, a valid lien that has not been voided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a creditor whose claim is secured by a lien, often referred to as a secured creditor, may enforce the lien to the extent allowed under state law despite the Discharge of the Debtor’s personal liability on the claim.

The bankruptcy Means Test determines who can file for debt erasure through Chapter 7 bankruptcy. It considers your income, expenses and family size to determine whether you have enough disposable income to repay your debts even if only in part. It was created by Congress to have an objective standard for determining whether a debtor makes too much money to be allowed to Discharge their debt in Chapter 7.

A case where the Debtor has no non-Exempt property that is taken by the Trustee to distribute to creditors.

Property that you cannot protect by your chosen exemptions and, therefore, that the trustee could sell to pay creditors.

An “order for relief” is a traditional bankruptcy term which today is used synonymously with the Bankruptcy Petition which immediately protects the Debtor by the Automatic Stay. Prior to October 1979 when the current Code became effective the Court had to enter a order after the consideration of the “Bankrupt’s” petition to the court. Order for Relief still is applicable in the context of an involuntary bankruptcy which typically would be used against a business entity today. 

In Chapter 11 the plan is a reorganization proposed by the debtor in order to pay creditors over time, thereby keeping the business operational. In Chapter 13 the Plan is the repayment plan created by the debtor and their attorney, filed with the court, and served on  the Chapter 13 Trustee and all creditors and parties with whom the Debtor has a lease or contract. 

Certain Unsecured Debts are given special treatment under the Bankruptcy Code, usually paid in full before other Unsecured Debts which are often referred to as General Unsecured Debts.  Examples include recent income taxes alimony and child support.

An formal written agreement by the Debtor to make oneself liable for a debt, often for a car, after bankruptcy. The agreement, if approved by the court, excepts this debt from the protection of the Discharge. 

Detailed financial disclosures filed with the court.

Secured Debt is money owed to a creditor which is protected by a Lien on a specific collateral such as piece of real property such as a house or land, or personal property such as a car or boat. If the creditor doesn't receive payments in accordance with the security documents, they can take the property and credit the value against the debt. 

The Bankruptcy trustee is appointed by the Office of the United States Trustee, a Department of Justice agency, to represent a debtor’s estate upon filing of bankruptcy. Bankruptcy cases under chapter 7, 13, and Subchapter V of Chapter 11 will have a trustee appointed. In Chapters 7 and 13 the Trustee will administer the Bankruptcy Estate, and interview the Debtor under oath as the Meeting of Creditors, or 341 Meeting. In Chapter 7 the trustee will manage the sale of non-exempt property, then distribute the proceeds to creditors. In Connecticut there is one Chapter 13 Trustee who administers all Chapter 13 cases, reviews proposed Plans, receives the debtor’s monthly payments and distribute them to creditors. 

When a creditor holds a debt that is not secured by a Lien on property owned by the Debtor, the creditor is referred to as an unsecured creditor. Examples of unsecured creditors are credit card companies, utility companies, and medical providers. credit card companies, utility companies, and medical providers. 

Unsecured debt refers to debts that are not backed by collateral. If the borrower defaults on the loan, the lender may not be able to recover their investment because the borrower is not required to pledge any specific assets as security for the debt.