Glossary of Terms

 

Chapter 7 is a section of the bankruptcy code that allows individuals and businesses to liquidate their non-exempt assets in exchange for an elimination of their debts

Chapter 13 is a section of the bankruptcy code that allows individuals to reorganize their debts by making a single, monthly payment through the court-appointed trustee

Liquidation is the process of converting property into cash to pay creditors in exchange for relief from debt

Reorganization is the process of modifying creditor rights to reduce or eliminate debt upon the payment of a specific sum of money

A bankruptcy petition is the official form that is filed with the court by a debtor seeking a discharge of debts; it is accompanied by various schedules and a statement of financial affairs

A debtor is an individual or business that owes a sum of money

A creditor is an individual or business that is owed a sum of money

Discharge is the legal cancellation of a personal debt obligation

The automatic stay is a federal law that requires most collection activity to immediately and automatically suspend, discontinue or terminate upon the filing of a bankruptcy petition

Exemptions are provided by federal law and specify what types of property, and in what amounts, a debtor can protect or keep property from liquidation

341(a) meeting of creditors is the formal, recorded meeting where the debtor is placed under oath and asked questions about their financial affairs

Mortgage Modification is the process by which a mortgage lender changes the terms of the mortgage loan to reduce the monthly payment.

Loss Mitigation Program is a court-monitored program that allows a debtor/homeowner to work with their mortgage lender to pursue mortgage modification and other foreclosure alternatives