Glossary

• Library: How to File for Chapter 7 Bankruptcy (Nolo) (2022 Ed.)

Glossary

341 hearing. A hearing that the debtor is required to attend in a bankruptcy case, at which the trustee and creditors might ask the debtor questions about his or her property, information in the documents and forms he or she filed, and his or her debts.

341 notice. A notice sent to the debtor and the debtor's creditors announcing the date, time, and place for the first meeting of creditors. The 341 notice is sent along with the notice of bankruptcy filing and information about important deadlines by which creditors have to take certain actions, such as filing objections.

342 notice. A notice that the court clerk is required to give to debtors pursuant to Section 342 of the bankruptcy code to inform them of their obligations as bankruptcy debtors and the consequences of not being completely honest in their bankruptcy cases.

707(b) action. An action taken by the U.S. Trustee, the regular trustee, or any creditor, under the authority of Section 707(b) of the bankruptcy code, to dismiss a debtor's Chapter 7 filing on the ground of abuse.

Abuse. Misuse of the Chapter 7 bankruptcy remedy. This term is typically applied to a Chapter 7 bankruptcy filing that should have been filed under Chapter 13 because the debtor appears to have enough disposable income to fund a Chapter 13 repayment plan.

Accounts receivable. Money or other property that one person or business owes to another for goods or services. Accounts receivable most often refer to the debts owed to a business by its customers.

Administrative expenses. The trustee's fee, the debtor's attorneys' fee, and other costs of bringing a bankruptcy case that a debtor must pay in full in a Chapter 13 repayment plan. Administrative costs are typically 10% of the debtor's total payments under the plan.

Administrative Office of the United States Courts. The federal government agency that issues court rules and forms to be used by the federal courts, including bankruptcy courts.

Adversary action. Any lawsuit that begins with the filing of a formal complaint and formal service of process on the parties being sued. For instance, an adversary action can be brought to determine the dischargeability of a debt or recover property transferred shortly before filing for bankruptcy.

Affidavit. A written statement of facts, signed under oath in front of a notary public.

Allowed secured claim. A debt secured by collateral or a lien against the debtor's property, for which the creditor has filed a proof of claim with the bankruptcy court. The claim is secured only to the extent of the value of the property—for example, if a debtor owes $5,000 on a note for a car that is worth only $3,000, the remaining $2,000 is an unsecured claim.

Amendment. A document filed by the debtor changing one or more documents previously filed with the court. A debtor often files an amendment because the trustee requires changes to the debtor's paperwork based on the testimony at the meeting of creditors.

Animals. An exemption category in many states. If your state simply allows you to exempt "animals," you can include livestock, poultry, or pets. Some states exempt only domestic animals, which usually covers all animals except pets.

Annuity. A type of insurance policy that pays out during the insured's life unlike life insurance, which pays out at the insured's death. Once the insured reaches the age specified in the policy, he or she receives monthly payments until death.

Appliance. A household apparatus or machine, usually operated by electricity, gas, or propane. Examples include refrigerators, stoves, washing machines, dishwashers, vacuum cleaners, air conditioners, and toasters.

Arms and accoutrements. Arms are weapons (such as pistols, rifles, and swords); accoutrements are the furnishings of a soldier's outfit, such as a belt or pack, but not clothes or weapons.

Arms-length creditor. A creditor with whom the debtor deals in the normal course of business, as opposed to an insider (a friend, relative, or business partner).

Articles of adornment. See "jewelry."

Assessment benefits. See "stipulated insurance."

Assisted person. Any person contemplating or filing for bankruptcy who receives bankruptcy assistance, whose debts are primarily consumer debts, and whose nonexempt property is valued at less than $192,450. A person or an entity that offers help to an assisted person is called a "debt relief agency."

Automatic stay. An injunction issued by the bankruptcy court when a debtor files for bankruptcy. The automatic stay prohibits most creditor collection activities, such as filing or continuing lawsuits, making written requests for payment, or notifying credit reporting bureaus of an unpaid debt.

Avails. Any amount available to the owner of an insurance policy other than the actual proceeds of the policy. Avails include dividend payments, interest, cash or surrender value (the money you'd get if you sold your policy back to the insurance company), and loan value (the amount of cash you can borrow against the policy).

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The formal name of the new bankruptcy law that took effect on October 17, 2005.

Bankruptcy administrator. The official responsible for supervising the administration of bankruptcy cases, estates, and trustees in Alabama and North Carolina, where there is no U.S. Trustee.

Bankruptcy Appellate Panel. A specialized court that hears appeals of bankruptcy court decisions (available only in some regions).

Bankruptcy assistance. Goods or services provided to an "assisted person" for the purpose of providing information, advice, counsel, document preparation or filing, or attendance at a creditors' meeting; appearing in a case or proceeding on behalf of another person; or providing legal representation.

Bankruptcy Code. The federal law that governs the creation and operation of the bankruptcy courts and establishes bankruptcy procedures. (You can find the bankruptcy code in Title 11 of the United States Code.)

Bankruptcy estate. All of the property you own when you file for bankruptcy, except for most pensions and educational trusts. The trustee technically takes control of your bankruptcy estate for the duration of your case.

Bankruptcy lawyer. A lawyer who specializes in bankruptcy and is licensed to practice law in the federal courts.

Bankruptcy petition preparer. Any nonlawyer who helps someone with bankruptcy. Bankruptcy petition preparers (BPPs) are a special type of debt relief agency, regulated by the U.S. Trustee. Because they are not lawyers, BPPs can't represent anyone in bankruptcy court or provide legal advice.

Benefit or benevolent society benefits. See "fraternal benefit society benefits."

Building materials. Items, such as lumber, brick, stone, iron, paint, and varnish, used to build or improve a structure.

Burial plot. A cemetery plot.

Business bankruptcy. A bankruptcy in which the debts arise primarily from the operation of a business, including bankruptcies filed by corporations, limited liability companies, and partnerships.

Certification. The act of signing a document under penalty of perjury. (The document signed is also called a certification.)

Chapter 7 bankruptcy. A liquidation bankruptcy in which the trustee sells the debtor's nonexempt property and distributes the proceeds to the debtor's creditors. At the end of the case, the debtor receives a discharge of all remaining debts, except those that cannot legally be discharged.

Chapter 9 bankruptcy. A type of bankruptcy restricted to governmental units.

Chapter 11 bankruptcy. A type of bankruptcy intended to help a business reorganize its debt load and remain in business. A Chapter 11 bankruptcy is typically much more expensive than a Chapter 7 or 13 bankruptcy because it is more complicated and lawyers must be paid out of the bankruptcy estate.

Chapter 12 bankruptcy. A type of bankruptcy designed to help small farmers reorganize their debts.

Chapter 13 bankruptcy. A type of consumer bankruptcy designed to help individuals reorganize their debts and pay all or a portion of them over three to five years.

Chapter 13 plan. A document filed in a Chapter 13 bankruptcy in which the debtor shows how all of his or her projected disposable income will be used over a three- to five-year period to pay all mandatory debts—for example, back child support, taxes, and mortgage arrearages—as well as some or all unsecured, nonpriority debts, such as medical and credit card bills.

Claim. A creditor's assertion that the bankruptcy filer owes a debt or an obligation.

Clothing. Most states exempt the everyday clothes you and your family need for work, school, household use, and protection from the elements. In many states, luxury items and furs are not included in the clothing exemption category.

Codebtor. A person who assumes an equal responsibility, along with the debtor, to repay a debt or loan.

Collateral. Property pledged by a borrower as security for a loan.

Common law property states. States that don't use a community property system to classify marital property.

Community property. Certain property owned by married couples in Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, Wisconsin, and, if both spouses agree, Alaska. Very generally, all property acquired during the marriage is considered community property, belonging equally to both spouses, except for gifts and inheritances by one spouse. Similarly, all debts incurred during the marriage are considered community debts, owed equally by both spouses, with limited exceptions.

Complaint. A formal document initiating a lawsuit.

Complaint to determine dischargeability. A complaint in an adversary action asking the court to decide whether a particular debt should be discharged at the end of the debtor's bankruptcy case.

Condominium. A building or complex in which separate units, such as townhouses or apartments, are owned by individuals and common areas (lobby, hallways, stairways, and so...