Bankruptcy Terms and Definitions


Assets- anything you own or might own.  Houses, cars, annuities, savings accounts, tools, stocks, bonds, and clothing are all examples.  You must identify (list) everything that you own, or might own, even if you are not done paying for it.

Exempt/Exemptions- this is the process of protecting some limited equity in assets from the control of the trustee.  Which exemptions apply, and permit you to keep specific items is case specific, and can be state specific.

Equity- the money left over in an asset after it is sold.  Example- if you owe $80,000 on a house, and it is worth $100,000, there is $20,000 in equity.  Example- you owe $20,000 on a car worth $15,000, there is no equity (also called negative equity.)  Example- you have $5,000 in a bank account, it is all equity.

Debts/liabilities- money that you owe to someone.  It includes credit cards, medical bills, child support, taxes, fines, mortgages and car payments (whether or not the car or house has been repossessed or foreclosed).

Debtor- a person who has already filed Bankruptcy.  Many people confuse the term debtor with the meaning that there is a presumption that a person owes money, so we prefer to only use the term Debtor as regards a person who filed Bankruptcy.

Judgment Debtor- this is a person who owes money as a result of losing a court case.

Deficiency- this is the balance left when a car or house (or anything else) is taken back or repossessed or foreclosed, if they do not get enough to pay off the loan[s] on the think. Just because you do not have the thing anymore does not mean you do not owe.  There can be defenses, in which case, you should see one of our lawyers versed in defending deficiency collection lawsuits.

Creditors- these are the people to whom you owe the money.  It includes credit card companies, mortgage companies, car finance companies, child support agencies, tax departments, etc.  The people you have to pay are creditors.  For Bankruptcy purposes, there are 3 kinds- secured, priority unsecured, and general unsecured.

Secured Creditors- these are the people to whom you owe money, and have a right to repossess or foreclose if you do not pay.  Examples include car finance companies, mortgage companies, and some other sales type stores.  It does NOT include a regular credit card, or child support.

General Unsecured Creditors- all other creditors, who have nothing to repossess. Credit cards, medical bills, child support, etc.  Some of these are specially classified as Priority Unsecured.

Priority Unsecured Creditors- a special class of unsecured creditors that includes child or spousal support, administrative expenses, certain taxes, and certain other things.  See: 11 U.S.C. §507 for the complete list.

Discharge- an order entered by the Bankruptcy court that your personal responsibility to pay a debt is extinguished.  It does not mean that the debt never existed, or that they cannot foreclose or repossess, only that you cannot be forced to pay.  See, related: Automatic Stay of Bankruptcy

Automatic Stay of Bankruptcy- this is an order that is entered automatically when a person files for Bankruptcy, and prohibits all collection efforts, voluntary or involuntary, during the time when the Bankruptcy is going on.  It does not apply to criminal proceedings at all, and some child or spousal support hearings (but only to the extent of determining the extent of liability).

Non-dischargeable- this means that the debt is will still be owed, and you have personal responsibility to pay even though you filed for Bankruptcy.  See: Debts not dischargeable in Chapter 7, and Debts not dischargeable in Chapter 13.  This means that they can force you to pay.  Similar: reaffirmation

Dischargeable- a debt that can be ordered that you no longer have personal responsibility to pay the debt.

Reaffirmation or reaffirmed debt- this means that you promised to pay the debt, even though you filed Bankruptcy, and after a hearing, the court reviewed and approved your statement that you wished to repay the debt, even though you did not have to sign. You can withdraw or “rescind” a reaffirmation at any time within 60 days or before the discharge, whichever is later.

Dismissed- this means that your Bankruptcy is no longer in effect, and for most purposes, it is the equivalent of never having been filed.  Note: a dismissed Bankruptcy can be reported on your credit file (or credit report) for up to 10 years, even though it was dismissed.

Trustee- this is the person assigned by the court to find all of the things that you own that have equity, and sell them to pay to your unsecured creditors.

Judge- this is the person who reviews the actions of the trustee, and makes decisions about what is to happen.  In most cases, the decision is automatic.

Student Loan- and debt for an educational purpose. This includes loans by private entities, or government guaranteed student loans, Direct Loans, Stafford Loans, Federal Family Education Loan Program (FFELP) loans, and many other debts incurred for the purposes of education.  Room and board are NOT student loans, unless they have been included in a Direct, Stafford, FFELP or other loan.

If Krumbein Consumer Legal Services, Inc. can help you with a Bankruptcy, the Fair Debt Collection Practices Act or the Fair Credit Reporting Act, or other matter, please contact us.



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Krumbein Consumer Legal Services, Inc.

1650 Willow Lawn Drive

Suite 300

Richmond, VA 23230

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