About Bankruptcy Laws & Terms

Bankruptcy Overview

Bankruptcy laws are Federal laws provided under the U.S. Constitution. They are aimed at giving people burdened by debt the chance to get rid of overburdening debt and get a fresh financial start! Our law firm is dedicated to helping individuals obtain debt relief through the practice of bankruptcy. Federal bankruptcy laws such as Chapter 7 and Chapter 13 are here to protect you while you recover financially. Only bankruptcy can save your home, relieve mortgage debt, eliminate credit card, medical, vehicle, tax and other burdensome debt. 


Automatic stay: The order issued automatically upon the filing of a bankruptcy case which stops all collection actions against the debtor, the debtor's property or the property of the estate.

Assets: Assets are every form of property that the debtor owns. The debtor must disclose all of his assets in the bankruptcy schedules

Chapter 7: The most common form of bankruptcy, a Chapter 7 case is a legal proceeding that settles and eliminates debts, available to individuals, married couples, partnerships and corporations. It is often referred to “straight bankruptcy” or “liquidation bankruptcy”.

Chapter 13: Another common form of bankruptcy, a repayment plan for individuals with debts within legal range. It provides for repayment of some or all of the debts from future income over a period of 3 to 5 years.

Creditor: The person or organization whom the debtor owes money to or has some other form of legal obligation.

Debtor: The debtor is the person, partnership or corporation who is liable for debts, and who is the subject of a bankruptcy case.

Discharge: The legal elimination of debt through a bankruptcy case. When a debt is discharged, it is no longer legally enforceable against the debtor.

Dischargeable: Debts that can be eliminated in bankruptcy. Certain debts are not dischargeable; that it, they may not be discharged through bankruptcy or may only be discharged through Chapter 13. Family support and criminal restitution are examples of debts which cannot be discharged. Debts incurred by fraud can only be discharged in Chapter 13.

Dismissal: The termination of a bankruptcy case. Dismissal is the penalty for many essentially minor infractions of bankruptcy procedures. After a case is dismissed, the debtor and the creditors have the same rights as they had before the bankruptcy case was commenced.

Exemptions: Exemptions are the kinds of property that are legally beyond the reach of creditors or the bankruptcy trustee. The debtor in bankruptcy keeps the exempt property.

Lien: An interest in real or personal property which secures a debt; the lien may be voluntary, such as a mortgage or involuntary, such as a judgment or tax lien.

Means Test: This was added to the Bankruptcy Code in 2005, it is intended to screen out those filing Chapter 7 who are able to repay some part of their debts. Debtors who do not pass the means test may convert their case to another chapter of bankruptcy.

Non-dischargeable: A debt that cannot be eliminated trough bankruptcy. The scope of the discharge in Chapter 13 differs from the discharge in Chapter 7.

Petition: The document that starts a bankruptcy case. The filing of the petition consists of an order for relief and results in the automatic stay. "Pre-petition" refers to anything that happened before the bankruptcy petition was filed, and "post-petition" refers to anything after the bankruptcy petition was filed.

Secured: To assure payment of a debt to a creditor by pledging property such as a home mortgage or an automobile.

Unsecured: A debt is unsecured if there is no collateral as security for the debt. Most consumer debts such as credit card debt, medical bills, personal loans, money judgments and certain older taxes are unsecured.

Trustee: Individual appointed by the U.S. District Court who manages and oversees the affairs of bankruptcy cases.