Common Bankruptcy Terms

• Approved credit counseling course

  congress enacted, as a part of the Bankruptcy Abuse Prevention and Consumer Act of 2005, a requirement that anyone seeking bankruptcy relief had to participate in an approved credit counseling course. Consumers can find a list of agencies that have this approval here.

• Bankruptcy Abuse Prevention and Consumer Act of 2005

  made broad changes to bankruptcy laws, many of the bills elements where specifically designed to make it more difficult for consumers to file for bankruptcy

• Chapter 7

  referred to as a liquidation bankruptcy, generally assets are reported to a bankruptcy trustee and sold and the proceeds are paid to the creditors of the individual or company, if the debtor is a company it ceases operations.

• Chapter 13

  bankruptcy proceedings that allow an individual to restructure debt and then produce a repayment plan(rather than liquidating). Typically a Chapter 13 bankruptcy repayment plan is between 36 and 60 months.

• Exempt assets

  assets that a debtor can keep according to either federal or state law when filing bankruptcy. Laws vary widely from state to state what constitutes exempt assets

• Means Testing

  another requirement within the Bankruptcy Abuse Prevention and Consumer Act of 2005, which requires that debtors fall into certain levels of income to qualify for a Chapter 7 bankruptcy. Generally, if a debtors median income is less than the median in the state of residence, in most cases the debtor is eligible to file chapter 7 bankruptcy.

• No asset Chapter 7

  when all of a debtors assets are exempt or have valid liens then the case is "no asset" and the court will discharge unsecured debts with out a sale and payment of proceeds to creditors

• Non-exempt assets

  everything that is not specifically exempted by federal or state law is non-exempt and must be reported and turned over to the trustee

• Priority claims

  debt that, by law must be paid in a bankruptcy, examples of priority claims are alimony, child support and certain taxes

• Pro se

  a Latin word meaning "for self", when used in the context of filing bankruptcy, means that the debtor has not retained an attorney and represents himself or herself

• Secured Debt

  debt where an item of value is specifically tied to the repayment of borrowed money, examples of secured debt include a home mortgage, or car payment

• Trustee

  a case administer appointed by the court to oversee the bankruptcy, coordinate the sale of assets and distribution of proceeds; the primary role of the trustee is to maximize payment of proceeds from the sale of assets to a debtors unsecured creditors

• Unsecured Debt

  any type of debt were there is no asset of value pledged as a promise to repay the borrowed money, examples of unsecured debt include credit card balances, or medical bills