Bankruptcy glossary

Bankruptcy terms, explained in plain English

From "automatic stay" to "reaffirmation," the words you'll hear in a Colorado bankruptcy case, defined simply. Search or browse by letter.

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341 meeting of creditorsAlso: Meeting of creditors: A short hearing, usually held by video in Colorado about a month after filing, where the trustee asks you routine questions under oath. Creditors may attend but rarely do. It usually takes about 10 minutes, and your attorney attends with you. Bankruptcy timeline →

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Adversary proceeding: A lawsuit filed inside a bankruptcy case, with a complaint, summons, and the chance for discovery and trial. Examples include a creditor's complaint that a debt shouldn't be discharged because of fraud, or a trustee's lawsuit to recover a payment. Bankruptcy litigation →
ArrearsAlso: Arrearage: Missed payments you're behind on, such as past-due mortgage or car payments. Chapter 13 lets you catch up on arrears over the life of your plan. Chapter 13 bankruptcy →
Automatic stay: A court order that takes effect the moment a bankruptcy case is filed and stops most collection activity, including calls, lawsuits, garnishments, foreclosures, and repossessions. It can be limited if you had another bankruptcy case dismissed within the past year. Chapter 7 bankruptcy →

B

Bankruptcy: A federal legal process, governed by Title 11 of the U.S. Code (the Bankruptcy Code), that lets people and businesses eliminate or reorganize debts under the protection of the court.
Bankruptcy court: A federal court that hears only bankruptcy cases. Colorado has one: the U.S. Bankruptcy Court for the District of Colorado, in Denver, which handles cases from across the state.
Bankruptcy estate: All of your property as of the day you file, which is created automatically when the case begins. Exemptions let you take back the property you're allowed to keep. The trustee can sell only non-exempt property for creditors. Chapter 7 bankruptcy →
Bankruptcy petitionAlso: Petition: The official form that starts a bankruptcy case. It's filed along with schedules listing your assets, debts, income, and expenses. Documents needed →

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Chapter 11: A reorganization chapter used mainly by businesses, and by individuals whose debts are too large for Chapter 13. It's more complex and expensive than Chapter 7 or 13.
Chapter 13Also: Reorganization, wage earner's plan: A bankruptcy where you repay part of your debts through a court-approved 3 or 5 year plan and keep your property. It's often used to save a home or car you're behind on, or when income is too high for Chapter 7. Chapter 13 bankruptcy →
Chapter 7Also: Liquidation, straight bankruptcy: The most common consumer bankruptcy. Eligible debts are discharged in about three to four months without a repayment plan. The trustee can sell non-exempt property, but most Colorado cases are no-asset cases where filers keep everything. Chapter 7 bankruptcy →
ClaimAlso: Proof of claim: A creditor's written request to be paid from the bankruptcy case, filed with the court along with proof of the debt. Most creditors in Chapter 7 and 13 cases must file within 70 days after the case is filed. Bankruptcy litigation →
Collateral: Property that secures a debt, such as a house for a mortgage or a car for a car loan. If the debt isn't paid, the creditor can take the collateral.
ConfirmationAlso: Plan confirmation: The bankruptcy court's approval of a Chapter 13 plan. The trustee and creditors can object first, and any objections must be resolved, by agreement or at a hearing, before the plan is confirmed. Chapter 13 bankruptcy →
Consumer debtor: A person whose debts are mainly personal or household debts rather than business debts. The means test applies to consumer debtors.
Conversion: Changing a bankruptcy case from one chapter to another, most often from Chapter 13 to Chapter 7 when circumstances change. Chapter 7 vs. 13 →
Cramdown: In Chapter 13, reducing a secured debt to the value of the collateral in some situations, such as a car loan older than about 2½ years. The rest is treated like unsecured debt. Chapter 13 bankruptcy →
Credit counselingAlso: Financial management course: Two short courses required in bankruptcy: a credit counseling course within 180 days before filing, and a personal financial management course before discharge. Both are taken from approved providers, usually online. Documents needed →
Creditor: A person or business you owe money to.

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Debt relief agency: A term the Bankruptcy Code uses for anyone, including attorneys, who is paid to help people with bankruptcy. That's why bankruptcy law firms include this phrase in their advertising.
Debtor: The person or business that files for bankruptcy.
Deficiency balance: What's still owed after collateral is repossessed or foreclosed and sold for less than the loan balance. A deficiency is usually dischargeable in bankruptcy. Chapter 7 bankruptcy →
DischargeAlso: Discharge order: A court order that permanently releases you from personal liability for your dischargeable debts and forbids creditors from trying to collect them. In Chapter 7 it usually comes about three to four months after filing. In Chapter 13 it comes after the plan is completed. Chapter 7 bankruptcy →
Discharge injunction: The part of the discharge that prohibits creditors from collecting discharged debts. Creditors who violate it can be held in contempt and ordered to pay damages. Consumer protection →
Dismissal: Ending a bankruptcy case without a discharge, for example for missed Chapter 13 payments or missing documents. A dismissal can limit protection in a later case.
Disposable income: Income left after allowed expenses on the means test. It helps decide whether you qualify for Chapter 7 and how much unsecured creditors must receive in Chapter 13. Chapter 7 or 13 screener →

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Equity: What your property is worth minus the debts secured by it. For example, a home worth $400,000 with a $300,000 mortgage has $100,000 in equity. Exemptions protect equity up to set limits. Chapter 7 bankruptcy →
ExemptionsAlso: Exempt property: Laws that protect certain property from being taken in bankruptcy, up to set values. Colorado filers must use Colorado's exemptions, which protect things like home equity, vehicles, retirement accounts, household goods, and tools of the trade. Chapter 7 bankruptcy →

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Foreclosure: The legal process a lender uses to take and sell a home after missed mortgage payments. Filing bankruptcy before the sale stops it, and Chapter 13 can let you catch up and keep the home. Chapter 13 bankruptcy →
Fraudulent transfer: A transfer of money or property for less than it was worth, or made to hinder creditors, before bankruptcy. The trustee can sue to recover it, generally reaching back 2 years under federal law and further under Colorado law. Bankruptcy litigation →

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Garnishment: A court order requiring your employer or bank to pay part of your wages or account balance to a creditor. Filing bankruptcy stops most garnishments immediately. Chapter 7 bankruptcy →

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Homestead exemption: The exemption that protects equity in the home you live in. In Colorado it protects up to $250,000, with a higher limit for older or disabled homeowners. Chapter 7 bankruptcy →

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Involuntary bankruptcy: A bankruptcy case filed against a debtor by creditors, rather than by the debtor. The debtor can contest it. Bankruptcy litigation →

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Joint petition: One bankruptcy case filed by a married couple together.
Judgment: A court's decision that you owe a debt, usually after a creditor sues you. It allows the creditor to garnish wages or bank accounts. Most judgments for dischargeable debts are wiped out by the discharge.
Judgment lienAlso: Judicial lien: A lien created when a judgment is recorded against your property, such as your home. In some cases it can be removed in bankruptcy if it impairs your homestead exemption. Bankruptcy litigation →

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Lien: A creditor's legal claim against property to secure a debt. A lien can stay on the property after bankruptcy even when your personal liability is discharged.

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Means test: A required calculation that compares your household income over the last six months to the median for Colorado. It decides whether you qualify for Chapter 7 and, in Chapter 13, the plan length and minimum payment to unsecured creditors. Chapter 7 or 13 screener →
Median income: The middle income for households of your size in Colorado, published by the U.S. Trustee Program and updated periodically. It's the starting point of the means test. Chapter 7 or 13 screener →

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No-asset case: A Chapter 7 case where all of the filer's property is protected by exemptions, so the trustee has nothing to sell. Most Chapter 7 cases are no-asset cases. Chapter 7 bankruptcy →
Non-exempt property: Property, or property value, that isn't protected by an exemption and can be sold by a Chapter 7 trustee for creditors. Chapter 7 bankruptcy →
Nondischargeable debt: A debt that survives bankruptcy. Examples include child support and alimony, most student loans, recent taxes, criminal fines, and debts a court finds came from fraud. Listed in section 523 of the Bankruptcy Code. Chapter 7 bankruptcy →

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PreferenceAlso: Preferential transfer: A payment to a creditor within 90 days before filing, or within 1 year to a relative or other insider, that the trustee may be able to recover. Bankruptcy litigation →
Priority debt: Certain unsecured debts the Bankruptcy Code puts first in line, such as domestic support obligations and some taxes. In Chapter 13 they must generally be paid in full. Chapter 13 bankruptcy →
Pro se: Representing yourself without an attorney.

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Reaffirmation agreement: An agreement to keep paying a debt, usually a car loan, after bankruptcy so you can keep the property. The debt is then no longer discharged. Agreements are filed with the court and can be canceled within a short window. Chapter 7 bankruptcy →
Redemption: In Chapter 7, keeping personal property like a car by paying the lender its current value in a lump sum, instead of the full loan balance.
Relief from stay: A creditor's request that the court lift the automatic stay so it can proceed against collateral, such as foreclosing or repossessing. Bankruptcy litigation →
Rule 2004 examination: A court-authorized examination under oath, with document requests, used by trustees and creditors to investigate a debtor's finances. Bankruptcy litigation →

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Schedules: Forms filed with the petition listing your property, debts, income, expenses, and other financial details. Documents needed →
Secured debt: A debt backed by collateral, such as a mortgage or car loan.

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Trustee: A person appointed to administer a bankruptcy case. A Chapter 7 trustee reviews your case, runs the meeting of creditors, and sells any non-exempt property. A Chapter 13 trustee reviews your plan, collects your payments, and pays your creditors. Bankruptcy timeline →

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U.S. Trustee: A division of the U.S. Department of Justice that oversees bankruptcy cases and trustees and watches for abuse of the system.
Unsecured debt: A debt not backed by collateral, such as credit cards, medical bills, and most personal loans.

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