Bankruptcy terms,
in plain English

A lawsuit within or related to a bankruptcy case, started by filing a complaint. 1

Assumption is the choice to keep a contract or lease going in bankruptcy and continue to perform it, subject to court approval. 1

An order that takes effect automatically when a bankruptcy case is filed and stops most collection actions against the debtor and the debtor's property. 1

Chapter 13 is the chapter of the Bankruptcy Code that lets an individual with regular income keep property and pay debts over time under a repayment plan, usually three to five years. 2

Chapter 7 is the chapter of the Bankruptcy Code that provides for liquidation: a trustee may sell a debtor's nonexempt property and pay the proceeds to creditors. 3

A claim is a creditor's right to payment from a debtor or the debtor's property. 1

Conversion is moving a bankruptcy case from one chapter to another. The case continues under the new chapter, and with limited exceptions it keeps its original filing date. 4

A person or business the debtor owes money to, or that claims the debtor owes it money. 1

A person, business or government entity concerning which a bankruptcy case has been filed. 1

A court order that ends a bankruptcy case. Unless the court orders otherwise, it does not stop the same debts from being discharged in a later case. 5 6

All the legal or equitable interests a debtor has in property at the time the bankruptcy case is filed, including property held by someone else. 1

A person or business with a close relationship to the debtor, such as a relative, a business partner or a company the debtor controls. 7

Owing more in debts than all of your property is worth at a fair valuation. 7

The meeting required by section 341 of the Bankruptcy Code, where the trustee and others present question the debtor under oath about their finances. 1

The document filed with the bankruptcy court that starts a bankruptcy case. 1

A payment to a creditor shortly before a bankruptcy filing that gives that creditor more than it would receive in a Chapter 7 case, and that the trustee may be able to undo. 8

A creditor's written statement of why the debtor owes money, usually with the amount. There is an official form for it. 1

The decision not to continue an executory contract or unexpired lease in a bankruptcy case. The law treats rejection as a breach of the contract or lease. 9

In the Bankruptcy Code, a relative is a person related by blood or by marriage within the third degree, as the common law counts degrees, or a person in a step or adoptive relationship within that same degree. 7

A person appointed to represent the bankruptcy estate, whose duties may include selling estate property and paying creditors. 1

In Chapter 7, abuse is the legal ground on which a court may dismiss a case filed by an individual whose debts are primarily consumer debts, or convert it with the person's consent, because granting relief would misuse the chapter. 5

The Chapter 7 income test under section 707(b)(2) that determines whether a filing is presumed to be an abuse. 1

The median family income calculated and reported by the Census Bureau, which bankruptcy law uses as the yardstick for a filer's income. 7

In the Bankruptcy Code, "person" includes an individual, a partnership and a corporation. It generally does not include a governmental unit. 7

In the Bankruptcy Code, a debt is liability on a claim: if someone has a right to payment from you, you have a debt. 7 1

A release from personal liability for certain debts. Some debts, such as certain taxes and student loans, cannot be discharged. 1

A debt that bankruptcy does not wipe out, such as child support, certain taxes, most government-funded or government-guaranteed education loans, and criminal restitution. 1

The standard a debtor must meet to discharge student loans. Repaying must impose an undue hardship on the debtor and the debtor's dependents, and it must be proven in an adversary proceeding. 10

Abandonment is when the trustee gives up the bankruptcy estate's hold on a piece of property because it is a burden to the estate or worth too little to be of real benefit to it. 11

Property the Bankruptcy Code or state law lets an individual debtor keep from unsecured creditors. 1

An exemption that lets a person in bankruptcy protect all or part of the equity in the home they live in. Whether it is available, and how much it protects, depends on state law. 1

An agreement to keep paying a dischargeable debt, often a car loan, in exchange for keeping the collateral. 1

A claim or charge on property that secures payment of a debt. 1

A procedure in a Chapter 7 case in which a debtor removes a secured creditor's lien on collateral by paying the creditor the value of the property. The debtor may then keep the property. 1

Confirmation is a bankruptcy judge's approval of a plan. In Chapter 13, it is the court's approval of the debtor's repayment plan. 1

The requirement that, for a Chapter 13 plan to be confirmed, the debtor will be able to make all payments under the plan and to comply with it. 12

An answer is the formal written statement a defendant makes in response to a complaint, setting out the grounds for defense. 1

An appeal is a request by a party that lost on one or more issues, asking a higher court to review a decision and determine whether it was correct. 1

A bankruptcy appellate panel is a panel of three bankruptcy judges that hears appeals from bankruptcy court decisions in place of the district court. 13

A judgment given to the plaintiff because the defendant failed to answer or appear to contest the claim. 1

The process by which the sides in a lawsuit learn about each other's case before trial, using tools such as depositions, interrogatories, requests for admissions and requests for documents. 1

Filing case documents with the court online. The federal courts' system for it is called Case Management/Electronic Case Files, or CM/ECF. 14

A broad term in the Bankruptcy Code that includes a person, an estate, a trust, a governmental unit and the United States trustee. 7

A decision made on the basis of statements and evidence presented for the record, without a trial. It is granted when, on the undisputed facts in the record, one party is entitled to judgment as a matter of law. 1

Borrower defense to repayment is a legal ground for discharging federal Direct Loans when a school's misconduct, related to the loan or to the education it provided, harmed the borrower. 15

A person or business not authorized to practice law that prepares bankruptcy petitions. 1

Representing yourself in court without a lawyer. 1