Bankruptcy Terms You Should Know

Certain words are unique to Bankruptcy Law or have a different meaning when applied to a bankruptcy case. Following are certain bankruptcy terms and what they mean.

Automatic stay

Upon the filing of a bankruptcy case, an automatic injunction is imposed on all creditors, prohibiting any further collection activities.


In certain circumstances, a debtor may avoid (eliminate) certain liens on property when that lien interferes with (impairs) an exemption. Examples include judicial liens placed on property and second mortgages (lien stripping).

Bankruptcy estate

All of the debtor's interest in property is considered the bankruptcy estate upon the filing of the bankruptcy. From that, the debtor can protect property by claiming it exempt with any remaining, un-exempt property potentially becoming available to the Trustee.

Bankruptcy schedules

The bankruptcy schedules are the forms within the bankruptcy petition which contain information of the debtor's finances, such as debts, income, expenses and property.

Confirmed plan

All Chapter 13 Plans must be confirmed by a judge of the United States Bankruptcy Court. Upon confirmation, the terms of the plan become binding on the debtor and the creditors.

Consumer debt

Debt that is incurred by an individual for personal purposes.


A debtor may convert (switch over) from one type of bankruptcy to another, such as from a Chapter 7 to a Chapter 13 or from a Chapter 13 to a Chapter 7.


The person or company to whom the debtor owes money.


The individual or entity that files a bankruptcy is referred to as a debtor.


The main goal of the debtor is to obtain a discharge: the elimination, through the bankruptcy case, of the obligation to pay a debt.


A debtor may protect or exempt certain property under either federal or state laws. The exempt property does not become part of the bankruptcy estate and is therefore retained by the debtor and does not become available to pay the claims of creditors.


Foreclosures are the actions taken when a borrower fails to make the required mortgage payments on time and the lender forces the sale of the property — often the debtor's home — to pay off the debt.


The interest in property that secures a debt, such as real estate securing a mortgage.

Means test

A calculation created by the Bankruptcy Prevention and Consumer Protection Act which examines the debtor's income for the six-month period prior to the filing of the bankruptcy petition and is used to determine the debtor's disposable income. Pass the means test and you qualify to file a Chapter 7 bankruptcy; fail the means test and you must file a Chapter 13 bankruptcy with the plan payments determined by the monthly disposable income.

Meeting of creditors

After a bankruptcy petition is filed, a meeting is scheduled at which the debtor must attend and creditors may also attend (although that is rarely the case). This meeting is also referred to as the 341 meeting in reference to the section of the bankruptcy code that mandates that the meeting take place.


Certain debts are not discharged in bankruptcy, meaning that the creditors remain responsible for that debt. Examples are student loans and taxes in a Chapter 7 bankruptcy.


The document containing financial information of the debtor which when filed begins the bankruptcy case.

Priority claims

Certain debts are in a higher category than others and must be paid in full before non-priority, unsecured (general unsecured) debts are paid. Examples of priority debts include taxes, spousal and child support, and unpaid wages.

Property of the estate

Property of the debtor that is not otherwise protected as exempt is considered property of the bankruptcy estate, available to be sold by the Trustee and distributed to the creditors.


The debtor may enter into an agreement with a creditor to reaffirm a debt, resulting in the debt no longer being discharged as a result of the bankruptcy.

Relief from stay

A creditor and their lawyer may request of the United States Bankruptcy Court that the automatic stay be lifted so that it may proceed with collection of the debt. An example would be when a debtor has stated his intention to surrender his house in the bankruptcy and the mortgage company wishes to move forward on the foreclosure.

Secured debt

A debt is secured if there is a lien on property of the debtor for repayment of that debt, such as a mortgage on a house.


A trustee, appointed by the bankruptcy court, is assigned to every Chapter 7 and Chapter 13 case, to review the schedules filed by the debtor and to look after the interests of the creditors.

Unsecured debt

As opposed to secured debt, unsecured debt has no collateral securing its payment.

Make Sure Your Debts Are Fully Discharged

Call our Franklin office at 508-528-8885 for a free consultation with a Massachusetts bankruptcy attorney. You can also contact the Law Offices of Ira C. Yellin, LLC, to learn more about our legal services.

When representing consumer debtors in connection with bankruptcy, the Law Offices of Ira C. Yellin, LLC, is a debt relief agency as defined by the Bankruptcy Code, 11 USC § 101(12A).