Bankruptcy Terms

You may be wondering, “Who files a joint petition?,” “What does discharge mean?” or even “What is bankruptcy?” The Callahan Law Firm is here to familiarize you with some of the most common terms when it comes to bankruptcy.

Automatic Stay
An injunction that stops any further proceedings and collection activities against a debtor once a bankruptcy petition is filed.

Bankruptcy
The legal process for which an individual debt is handled.

Bankruptcy Estate
All legal equity of the debtor at the time of the bankruptcy filing.

Bankruptcy Petition
A formal request to the court for protection under the federal bankruptcy laws.

Bankruptcy Trustee
An individual appointed by the court to represent the interests of the bankruptcy estate and the debtor’s creditors.

Contingent Claim
A claim where the debtor is a cosigner on another person’s loan and the person fails to pay.

Creditor
An individual or entity to which the debtor owes money.

Debtor
An individual that has filed a petition under the bankruptcy laws.

Discharge
The debtor is released from any liability from debt, and prevents creditors from taking any action against the debtor to collect the debt. This discharge prohibits the creditor from any contact with the debtor.

Equity
Value of a debtor’s interest in property that remains after a creditor’s interests are considered.

Exempt Property
Property that a debtor is allowed to retain, restricted from claims of creditors.

Joint Petition
A bankruptcy petition filed by a husband and wife.

Lien
A charge on a specific property designed to secure payment on an obligation.

Liquidation
Sale of a debtor’s property which is then used to pay off creditors.

Nondischargeable Debt
A debt that cannot be eliminated by bankruptcy, such as a student loan.

Schedules
List where debtor accounts for all assets, liabilities and other financial information. This official form must be submitted with the bankruptcy petition, or soon after.

Secured Creditor
An individual or entity holding a claim against a debtor that is secured by a lien on property.

Secured Debt
Debt such as a mortgage, or other similar liens.

Statement of Financial Affairs
Another form or document that must be filed by the debtor, this form includes questions that must be answered covering topics such as sources of income, transfers of property, and lawsuits by creditors.

Statement of Intention
A declaration made by a chapter 7 debtor of plans on how to deal with his/her consumer debt.

Undersecured Claim
A debt that is secured by property that is worth less than the amount of the debt.

Unliquidated Claim
A claim with an undetermined value.

Unscheduled Debt
A debt that has been left out of the debt schedules filed with the courts.

Unsecured Claim
A claim where the creditor has no hold or liens against the debtor.