Glossary of Common Bankruptcy Terms

The following definitions are given for informational purposes only, and do not constitute legal advice.  Additional information can be found in our bankruptcy articles and news section.

341 Meeting (also known as a "first meeting of creditors") - This is a mandatory meeting between the debtor and creditors.  It is generally held within a month of the filing of the bankruptcy.  

Chapter 7 - Bankruptcies filed under Chapter 7 of the Bankruptcy Code in which property of value is sold or liquidated by a court-appointed trustee to pay your creditors.  Some personal items and real estate may be kept.  Debt is discharged.  In many cases, there are not enough items of value to be sold.

Chapter 11 - Bankruptcies filed under Chapter 11 of the Bankruptcy Code are mostly used by businesses.  You may continue to operate your business, but the creditors and court must approve a repayment plan.  No trustee is appointed.

Chapter 12 - Bankruptcies filed under Chapter 12 of the Bankruptcy Code are the "family farmers" version of Chapter 13 filings.

Chapter 13 - Bankruptcies filed under Chapter 13 of the Bankruptcy Code are known as "the wage earners bankruptcy."  A court-approved budget and repayment plan is set up based on your regular income.  A trustee is appointed to make sure you honor the terms of your repayment plan. 

Discharge - A court order which states that you do not have to pay your debts.  Some debts cannot be discharged, such as alimony, child support, student loans, court fines and criminal restitution.

Exemption - Generally, an exemption is an asset that you can keep after bankruptcy, free and clear from your creditors.  Exemptions will vary from state to state.  Typical exemptions include your homestead, a motor vehicle, professional tools, etc.  You need to check with your state to see whether your state uses the federal bankruptcy exemptions or has implemented its own schedule of exemptions.

Reaffirmation Agreement - If a debt can be discharged, you can chose to pay for it anyway under a reaffirmation agreement that is voluntary and must be approved by the court.

Trustee - This is an agent of the court who manages the property of the debtor for the benefit of creditors, generally appointed by the court in Chapter 7 and Chapter 13 cases.  This is not the same as the United States Trustee, which is an administrative agent of the federal bankruptcy courts.