Dallas / Fort Worth Bankruptcy Glossary  

Adversary Proceeding - A bankruptcy lawsuit related to, but separate from, a debtor's bankruptcy case.  

Arrears - The amount of money that is past due on a debt.  If you are three months behind on a $600 a month car payment you would be $1800 in arrears.

Asset Case - A bankruptcy case where there is money to distribute to creditors.  Very few cases in the Dallas / Fort Worth Texas area are asset cases.  Asset cases stay open much longer than No Asset Cases and as a result can be more complex and have higher legal fees associated with them.

Assets - All the property of a debtor.  This can include cash, savings, personal property, real estate, stocks, and retirement accounts.

Automatic Stay - A bankruptcy court order similar to a restraining order that takes effect as soon as your petition is filed.  The automatic stay prevents your creditors from calling you, attempting to collect any debt from you, or foreclose on your property without asking the court for permission first.

Bankruptcy Mill - A term used to describe some high-volume bankruptcy law firms that provide very little client service.  These types of law firms often force clients to deal with secretaries and paralegals instead of allowing them to interact with attorneys.  A bankruptcy mill may charge a lower price than other attorneys to entice clients to retain them.  They then make up for the money they lost by providing a significantly lower level of service.  They may also try to shoehorn all cases into a certain framework to increase how efficiently they can handle their cases.  This approach may shortchange many clients because the specifics of their individual case may be overlooked or mishandled in an effort to increase profitability.

Bar Date - The deadline for creditors to file a claim against a debtor.

Bench Trial - A trial before a judge without a jury.  The judge acts as both the judge and jury.

Chapter 7 - The most common type of bankruptcy.  Also called straight bankruptcy or liquidation bankruptcy.  The new bankruptcy law attempts to make it harder to qualify for this type of bankruptcy.  Although it is more difficult for some people to qualify for this chapter of bankruptcy now, the overwhelming majority of people who would have qualified for Chapter 7 under the old law still qualify under the new law.

Chapter 11 - In this type of bankruptcy debts are reorganized.  Although individuals may file Chapter 11, this chapter is usually used by businesses.

Chapter 13 - In this type of bankruptcy debtors with regular income pay back some of their debts over a 36 to 60 month period.  A Chapter 13 allows you to keep your home from being foreclosed on by allowing you to make up late payments.  Also called wage-earner bankruptcy or personal reorganization bankruptcy.

Chapter 20 - An unofficial term that is used to describe the filing a Chapter 7 followed by a Chapter 13 filing.

Collateral - Property that can be repossessed or foreclosed on if a debt is not paid. 

Confirmation - The approval of a debtor's plan of reorganization by the bankruptcy court.

Creditor - The people or businesses to whom a debtor owes money.

Creditor's Attorney - The lawyer, or lawyers, that represent the interests of banks, credit-card companies, and other creditors in the bankruptcy process.

Cross Collateralization  - This is where a piece of property acts as collateral for more than one loan.  Example:  You borrow money from a bank to purchase a car.  The car acts as collateral to secure your repayment of the car loan.  If you do not make your car payments the bank can reposes the car.  Let's say that in addition to your car loan you have a credit card with that same bank.  If the credit card is cross collateralized with the car loan then the bank can reposes your car if you don't make your credit card payments, even if you are current on your car payments.  This is a common contract provision when dealing with credit unions.

Debtor - The person or business seeking the protection of the bankruptcy laws.  This is the person or business declaring bankruptcy.

Debtor's Attorney - The lawyer, or lawyers, that represent the interests of an individual or company that has declared bankruptcy. 

Discharge - A bankruptcy court order that eliminates your debts.  Also called a discharge order. 

Discharge Injunction - A court order that replaces the Automatic Stay once a bankruptcy discharge order is entered.  It has a similar effect to the automatic stay, but is technically different in many respects. 

Dismissal - This is a bankruptcy court order that says your case cannot go forward.  This is usually negative.

EOUST - An abbreviation for the Executive Office for the United States Trustees.

Equity - The value of a piece of property after you subtract any money still owed on the property.  If your home is currently worth $200,000 and you owe $75,000 on the mortgage you have $125,000 in equity.

Executory Contract - A contract where some or all of the obligations of the contract have not been completed.  A one year apartment lease where five months remain before the lease ends is an example of an executory contract.

Exemptions - Rules that allow you to keep certain property even though you are declaring bankruptcy.  Common examples of exempt property include you house, car, clothing, and household goods.  Debtors can generally choose either federal or state exemptions depending on which is more beneficial in their particular situation.  Exemptions, especially under the new law, can be very complex.  Your lawyer can help you figure out which exemptions are most beneficial for your situation. 

Foreclosure - The legal process by which the owner of real estate loses that real estate to a lien holder.

Hearing - An appearance, in court, before a judge.  Typically the term hearing is used to describe a court appearance that is relatively short in duration, especially when compared to a full trial.

Judgment Creditor - A person or business that is owed money as a result of winning a court case.

Judgment Debtor - A person or business that owes money as a result of losing a court case.

Jury Trial - A trial with a judge and a jury.  The judge decides issues of law and the jury decides issues of fact.  Contrast with a Bench Trial.

Lien - A interest in property which secures a debt. 

Liquidated Debt - A debt where the amount owed is not in question.

Means Test - A complex mathematical formula and calculation that uses IRS and Census Bureau data integrated with your personal financial data to determine if your case will be presumed to be abusive.

Median Income Test - A comparison of your income to the the median income for a family of your size in your state.  If your income is lower than the median you do not have to perform the Means Test.  If your income is greater than the median you must perform the Means Test.

Meeting of Creditors - A meeting the debtor must attend that gives creditors a chance to question the debtor.  Despite its name, creditors and their attorneys rarely attend these meetings and meetings usually last less than five minutes.  Generally, the only people who attend creditor meetings are those who have filed bankruptcy, their attorney, and the bankruptcy trustee.  Also referred to as the first meeting of creditors, creditor's meeting, or a 341 meeting.

Motion to Lift Stay - A court document filed, usually by a creditor's attorney, asking the bankruptcy court for permission to perform certain acts (such as foreclosure) prohibited by the automatic stay.  Also called a motion for relief from stay.

NACBA - An acronym for the National Association of Consumer Bankruptcy Attorneys

No Asset Case - A bankruptcy case where there is no money to distribute to creditors.  Most cases in the Dallas Fort Worth area are no asset cases.

Non Purchase Money Security Interest - A lien against property that did not arise as a result of a loan used to purchase that property.  Let's say you own some stock and you approach the bank for a personal loan.  If you to put the stock up as collateral to secure the personal loan then a Non Purchase Money Security Interest would be created.  This is because the money you are borrowing is not being used to purchase the property that is acting as the collateral (the stock).

Offset - When a creditor takes money it is holding for you and applies it to a debt owed by you.  For example, you have both a savings account and a credit card with Bank A.  You miss several credit card payments so Bank A takes the money in your savings account to pay the debt owed on the credit card.  Bank A is using the the savings account as an offset to the credit card debt.  Also called an setoff.

Ombudsman - An individual appointed to receive, investigate, report on, and sometimes resolve complaints against a business, organization, or institution.  In the bankruptcy context, a health-care ombudsman is sometimes appointed when a health-care provider or business files bankruptcy to facilitate patient interaction with the bankruptcy system.

PACER - An acronym that stands for Public Access to Court Electronic Records.  This is the federal court's computerized records system.

Payment Advices - This is the term the bankruptcy code uses to refer to pay stubs.  Bankruptcy debtors are require to file payment advices with their bankruptcy petition.

Petition - A legal document that you or your lawyer files that begins your bankruptcy.

Petition Date- The day your petition is filed.  Many bankruptcy rules focus on whether a certain event occurred pre-petition or post petition.

Preference Payment - When a debtor, prior to filing bankruptcy, pays one creditor ahead of their other creditors.  If this payment is within a certain time period period prior to the bankruptcy the bankruptcy trustee can sue the creditor and recover that payment.  The rational is that one creditor should not get "preference" over the other creditors and that all creditors should share equally according to the priority level of the debt owed to them.

Proof of Claim - A written document that a creditor, or their attorney, files with the bankruptcy court in order to receive payment for a debt.

Purchase Money Security Interest (PMSI) - A lien against property that arose as a result of money being borrowed to purchase that property.  A car loan would be an example of a PMSI because the money lent to the borrower was used to purchase the car.

Redemption - In a Chapter 7 bankruptcy this is the right of a debtor to keep secured personal property by paying its current value rather than the full loan value.  If your car is worth $4000, but you still owe $9000 on it a redemption forces the car lender to let you have the car for $4000.  You must normally pay the redemption amount as a lump sum. 

Reaffirmation Agreement - An agreement between a debtor and a creditor that says the debtor will continue to pay a debt even though a bankruptcy discharge entitles them not to pay it.  This agreement is usually entered into in order to prevent losing property where the loan used to purchase that property has not yet been paid completely.  Signing a reaffirmation agreement can have some significant risks.  Your bankruptcy lawyer can advise you whether or not signing a reaffirmation agreement is a good idea given the specific facts of your case.

Schedules - The set of documents filed with the bankruptcy court that lists your assets, debts, and other important information.

Secured Debt - A debt where certain property (collateral) can be repossessed or foreclosed upon if the debt is not paid.

Setoff - When a creditor takes money it is holding for you and applies it to a debt owed by you.  For example, you have both a savings account and a credit card with Bank A.  You miss several credit card payments so Bank A takes the money in your savings account to pay the debt owed on the credit card.  Bank A is using the the savings account as a setoff to the credit card debt.  Also called an offset.

Substantial Abuse - A term that refers to actions by a debtor that show the debtor is abusing the bankruptcy laws and does not deserve the protections of the bankruptcy court.  The new bankruptcy laws have replaced the concept of "substantial abuse" with the concept of "abuse".  The courts will have to interpret what this change in terminology means when applied to actual cases.

Statement of Financial Affairs - A document that you or your lawyer files with the bankruptcy court that lists many of the relevant details of your financial life.

Title 11 - This is the part of the United States Code where the bankruptcy laws are found.

Trustee - The individual in charge of administering the bankruptcy case.  This person is not the Judge in your case and has no final decision making authority.  However, the trustee will be in charge of running your creditor meeting and may ask for additional information from you in order to be able to properly do their job.  This person is normally a bankruptcy lawyer appointed by the United States Trustee's office. 

United States Trustee Program - A component of the U.S. Justice Department that oversees the administration of bankruptcy cases and monitors for abuse of the bankruptcy system.  The U.S. Trustee appoints the private trustees that directly administer most individual bankruptcy cases.

Unsecured Debt - A debt where no property can be repossessed or foreclosed upon if the debt is not paid without first obtaining a court judgment.  Most credit cards fall into this category of debt.  Medical debts and signature loans from banks are also normally examples of unsecured debts.

Universal Default -  When a default on one account causes a technical default in another account that is in good standing.  Example:  Universal default clauses allow Credit Card A to raise your interest rate even though you paid them on time because you had a late payment to Credit Card B.  This creates a situation where one late payment may be all that is needed to raise your interest rate on all your credit cards to the 20 to 30 percent range.