Bankruptcy Terms in Plain English
Bankruptcy comes with its own vocabulary. Here is what the words you will hear actually mean.
- 341 meeting (meeting of creditors)
- A short meeting, held by video in Utah, where the bankruptcy trustee asks you questions under oath about your paperwork. Creditors may attend but rarely do. Your attorney attends with you.
- Adversary proceeding
- A separate lawsuit filed inside a bankruptcy case. It is how you ask the court to discharge student loans or decide whether a particular debt can be wiped out.
- Automatic stay
- The court order that starts the moment you file. It stops most collection calls, lawsuits, garnishments, repossessions and foreclosure sales.
- Bankruptcy estate
- Everything you own and have a right to when you file. Exemptions decide which parts of it you keep.
- Chapter 7
- The type of bankruptcy that wipes out most unsecured debt in a few months, usually without any repayment. Sometimes called liquidation, though most filers keep all their property.
- Chapter 13
- A three-to-five-year repayment plan that lets you keep property, catch up on a mortgage or car loan, and discharge remaining eligible debt at the end.
- Credit counseling
- A short course, usually online, that you must complete within 180 days before filing bankruptcy.
- Debtor
- The person who files for bankruptcy.
- Discharge
- The court order that permanently wipes out your legal obligation to pay eligible debts. Creditors can no longer collect them.
- Exemptions
- Laws that protect certain property from being taken in bankruptcy. Utah filers use Utah exemptions, which cover things like part of your home equity, a vehicle, household goods and retirement accounts.
- Financial management course
- A second short course you take after filing. You must complete it to receive your discharge.
- Means test
- The calculation that decides whether you can file Chapter 7. It compares your income to the Utah median for your household size and, if needed, your allowed expenses.
- Non-dischargeable debt
- Debt that bankruptcy usually does not wipe out, such as child support, recent taxes and criminal fines.
- Reaffirmation agreement
- A voluntary agreement to keep paying a debt after bankruptcy, usually a car loan, so you can keep the property.
- Secured debt
- Debt tied to property the lender can take back, such as a mortgage or car loan.
- Trustee
- The official appointed to administer your case. In Chapter 7 the trustee reviews your paperwork and property; in Chapter 13 the trustee collects your plan payments and pays creditors.
- Undue hardship
- The standard you must meet to discharge student loans. It looks at whether repaying would prevent a minimal standard of living over a long period despite good-faith efforts.
- Unsecured debt
- Debt not tied to property, such as credit cards, medical bills and most personal loans.
General information only, not legal advice. See our bankruptcy FAQ for more.
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