Legal Glossary
Common Bankruptcy Terms
A Guide to Understanding the Language of the Bankruptcy Court
Key Definitions
- Debtor
- The individual or business entity that files the bankruptcy petition.
- Secured Creditor
- A creditor who holds collateral (like a home or car) to guarantee repayment of the debt.
- Automatic Stay
- A powerful court order that immediately stops all collection actions, garnishments, and contact from creditors once a petition is filed.
- Discharge
- The final court order that releases the debtor from personal liability for certain specified types of debts, meaning creditors are legally barred from collecting them.
- Trustee
- A court-appointed official who reviews your schedules, conducts the 341 meeting, and ensures the bankruptcy estate is handled according to the law.
Understanding Exemptions
Exemptions are laws that allow you to keep certain property through the bankruptcy process. Below are common federal exemption limits (these values are doubled for married couples filing jointly):
| Primary Residence Equity | $23,675 |
| Motor Vehicle Equity | $3,775 |
| Household Goods | $11,525 |
| Jewelry | $1,600 |
| Tools of the Trade | $2,375 |
| Wildcard Exemption | $1,250 + unused home equity |
Unsecured vs. Priority Debt
Unsecured Priority Debts are typically nondischargeable, such as recent taxes and student loans. General Unsecured Debts include medical bills and credit cards; these are typically extinguished in a Chapter 7 or partially repaid in a Chapter 13.
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