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Terms and Definitions in Bankruptcy Law

Minnesota Bankruptcy Law Attorneys Helping You Through the Bankruptcy Process

Bankruptcy has a language of its own, which is often difficult for people to understand if they don't work in the legal field. Below you will find a definition of common terms and procedures you will encounter if you file for Chapter 7 or Chapter 13 bankruptcy protection.

When you work with one of the experienced Minnesota bankruptcy law attorneys at Neff Law Firm, P.A., we will help you understand the bankruptcy process and your rights under the law. We are devoted to helping clients get back on their feet financially. Contact the Neff Law Firm, P.A., to schedule a consultation with a lawyer. With offices in Edina (Minneapolis) and Roseville (St. Paul), we are convenient to people across the Twin Cities and Minnesota.

Bankruptcy Law Terms

Assets: The property and money of the person filing for bankruptcy.

  • Exempt Asset/Property: Property owned by the debtor that cannot be taken during bankruptcy to pay creditors. These include items such as tools used to make a living, cars up to a certain value, or a portion of the equity in a home. Please talk with your lawyer for more specific information about what part of your personal property is an exempt asset.
  • Non-Exempt Asset: Property such as luxury property, second homes, etc. that may be taken by the bankruptcy trustee and sold to pay creditors.

Automatic Stay: An automatic order halting all collection activities against a debtor, including collection calls or letters, foreclosures, wage garnishments, repossessions and lawsuits, as soon as the debtor files for bankruptcy and throughout the bankruptcy process. Once the bankruptcy is filed, creditors are only allowed to contact the debtor through his or her attorney.

Bankruptcy Petition: The document filed to begin the bankruptcy process.

Bankruptcy Chapter 7: The section of the U.S. Bankruptcy Code that allows people or businesses to discharge all qualifying debt. The process may include sale of the debtor's non-exempt property and distribution of the proceeds to creditors.

Bankruptcy Chapter 13: The section of the U.S. Bankruptcy Code that allows a bankruptcy trustee, under supervision of the court, to set up a modified repayment plan for a bankrupt debtor. The plan is based on the debtor's ability to pay and generally lasts from 3-5 years. Once the approved plan is successfully completed, any remaining debt covered by the plan is discharged.

Creditor: A person or company to whom money is owed.


  • Secured Debt: A debt that is backed by collateral that a creditor can repossess or place a lien against if the debt is not repaid. Examples of secured debts include home mortgages and car loans.
  • Unsecured Debt: A debt for which there is no collateral, such as a credit card debt or a medical bill.
  • Dischargeable Debt: A debt that qualifies to be discharged under U.S. bankruptcy law. These can be secured or unsecured debts.
  • Non-Dischargeable Debt: A debt that cannot be discharged under U.S. bankruptcy law; for example, some tax debt, child support payments, etc. A bankruptcy lawyer can explain whether specific debts are dischargeable, dischargeable only under certain circumstances, or completely non-dischargeable.

Debtor: A person or company owing money to another.

Discharge: To release the debtor from responsibility for the debt, to forgive the debt, to permanently prevent the creditor from taking action against the debtor to collect on the debt.

Exemptions: See Assets, exempt assets.

Joint Petition: When a husband and wife jointly petition for bankruptcy.

Liquidation: A sale of a debtor's property in order to repay debt


  • Objection to Discharge: When a creditor objects to a debtor being released from their responsibility for debt
  • Objection to Exemption: When a creditor objects to a debtor claiming certain property as being exempt from sale (liquidation)

Reaffirmation Agreement: An agreement a debtor makes with a creditor that the debtor will pay off the debt even though it has been discharged in bankruptcy. Reaffirming debt is typically done so the debtor can retain property that is being used as collateral against the debt and would otherwise be repossessed or foreclosed upon.

Trustee: A person appointed by a bankruptcy judge to supervise the administration of a bankruptcy case, monitor repayment plans and disclosure statements, and creditors' committees and meetings of creditor; to review the debtor's petition and schedules. In Chapter 7, the trustee liquidates property and distributes money to creditors. In Chapter 13, the trustee oversees the debtor's repayment plan, receives payments from the debtor, and disburses payments to creditors according to the structure of the plan.

Bankruptcy Law Processes and Procedures

Confirmation Hearing: A hearing in a Chapter 13 bankruptcy at which the bankruptcy judge approves or rejects the debtor's proposed payment plan.

Credit Counseling: Education classes that debtors must complete before they may file for bankruptcy.

Meeting of Creditors: A meeting at which creditors and the bankruptcy trustee may ask debtors questions under oath about their finances, assets and liabilities (also called a 341 meeting).

Motion to Lift Automatic Stay: A legal request by a creditor to be allowed to take action against a debtor who has filed for bankruptcy. This motion is typically sought by creditors holding debts they claim are non-dischargeable in bankruptcy.

Repayment Plan: In Chapter 13, a court-supervised plan for a debtor to repay some or all qualifying debt over time.

Contact a Minnesota bankruptcy law attorney from Neff Law Firm, P.A., to discuss your specific situation and your options for debt relief by filing for Chapter 7 or Chapter 13 bankruptcy protection. Make an appointment at either our Roseville (St. Paul) or Edina (Minneapolis) law office. We offer flexible appointment times for your convenience.

We are a debt relief agency. We help people file for relief under the Bankruptcy Code.
The information contained herein on Chapter 7 and 13 does not constitute the giving of legal advice. The reader should not rely on this information. This information does not substitute for the advice of a licensed lawyer related to Chapter 7 and 13 bankruptcies or any other legal subject.
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From talking with Neff Law Firm, P.A. lawyers I have found that they explain bankruptcy processes and terms very well. I really like the way these lawyers explain things in a straight forward way. Insurance industry professional