Debt Help USA
Glossary of Debt Terms

A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the bankruptcy court.

An agreement to continue performing duties under a contract or lease.

If you fail to pay money as ordered in a Court Judgement, the creditor can apply to the court to have money deducted from your wages. Deductions are made at the rate of payment decided by the court as reasonable.

An injunction that automatically stops lawsuits, foreclosure, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.

Employed mainly by the Court to enter into your property and take goods to sell at auction to cover debt that you owe to a lender.

A proceeding in U.S. Bankruptcy Court that may legally release a person from repaying debts owed. However, if there is any equity in a bankrupt’s home or other assets, they will usually be sold to repay debts. Credit reports normally include bankruptcies for up to 10 years.

An officer of the judiciary serving in the judicial district of Alabama and North Carolina who, like the United States trustee, is responsible for supervising the administration of bankruptcy cases, estates, and trustees, monitoring plans and disclosure statements, monitoring creditors’ committees, monitoring fee applications, and performing other statutory duties.

The informal name for title 11 of the United States Code (11 U.S.C. §§ 101-1330), the federal bankruptcy law.

The bankruptcy judges in regular active service in each district; a unit of the district court.

All legal or equitable interests of the debtor in property at the time of the bankruptcy filing. (The estate includes all property in which the debtor has an interest, even if it is owned or held by another person.)

A judicial officer of the United States district court who is the court official with decision-making power over federal bankruptcy cases.

A formal request for the protection of the federal bankruptcy laws. (There is an official form for bankruptcy petitions.)

A private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases to represent the interests of the bankruptcy estate and the debtor’s creditors.

A bankruptcy case in which the debtor is a business or an individual involved in business and the debts are for business purposes.

Under the new Bankruptcy Law, credit counseling services would, in effect, become the "gatekeepers" of the bankruptcy system because individuals would be ineligible to file for bankruptcy unless they first obtained a certificate from a credit counseling service approved by a United States Trustee.

A reorganization bankruptcy, usually involving a corporation or partnership. (A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.)

The chapter of the Bankruptcy Code providing for adjustment of debts of a "family farmer," as that term is defined in the Bankruptcy Code.

The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)

A person appointed to administer a chapter 13 case. (A chapter 13 trustee’s responsibilities are similar to those of a chapter 7 trustee; however, a chapter 13 trustee has the additional responsibilities of overseeing the debtor’s plan, receiving payments from debtors, and disbursing plan payments to creditors.)

The chapter of the Bankruptcy Code providing for "liquidation," i.e., the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.

A person appointed in a chapter 7 case to represent the interests of the bankruptcy estate and the unsecured creditors. (The trustee’s responsibilities include reviewing the debtor’s petition and schedules, liquidating the property of the estate, and making distributions to creditors. The trustee may also bring actions against creditors or the debtor to recover property of the bankruptcy estate.)

The balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt.

A creditor’s assertion of a right to payment from a debtor or the debtor’s property.

Attempted recovery of a past-due credit obligation by a collection department or agency.

The first or initiatory document in a lawsuit that notifies the court and the defendant of the grounds claimed by the plaintiff for an award of money or other relief against the defendant.

Approval of a plan or reorganization by a bankruptcy judge.

A bankruptcy case filed to reduce or eliminate debts that are primarily consumer debts.

A credit bureau record on a given individual. It may include: consumer name, address, Social Security number, credit history, inquiries, collection records, and public records such as bankruptcy filings and tax liens.

Debts incurred for personal, as opposed to business, needs.

A claim that my be owed by the debtor under certain circumstances, for example, where the debtor is a cosigner on another person’s loan and that person fails to pay.

Formal document sent to inform you that a creditor has begun legal proceedings against you. You are given 14 days to respond to the form. Ignoring the claim will result in a Judgment being registered by default and an order to pay the whole amount immediately.

A credit bureau is a reporting agency that is a clearinghouse for information on the credit rating of individuals or firms. It is often called a credit repository or a Consumer Reporting Agency. The three largest credit bureaus in the United States are Equifax, Experian and TransUnion.

A type of credit score based solely on data stored at the major credit bureaus. It offers a snapshot of a consumer's credit risk at a particular point in time, and rates the likelihood that the consumer will repay debts as agreed.

A record of how a consumer has repaid credit obligations in the past.

An agreement by which a person is legally bound to pay back borrowed money or used credit.

Information communicated by a credit reporting agency that bears on a consumer's credit standing. Most credit reports include: consumer name, address, credit history, inquiries, collection records, and any public records such as bankruptcy filings and tax liens.

The likelihood that an individual will pay his or her credit obligations as agreed. Borrowers who are more likely to pay as agreed pose less risk to creditors and lenders.

This term is often used to refer to credit bureau risk scores. It broadly refers to a number generated by a statistical model which is used to objectively evaluate information that pertains to making a credit decision.

A person to whom or business to which the debtor owes money or that claims to be owed money by the debtor.

The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. It's also called a consolidation loan.

A person who has filed a petition for relief under the bankruptcy laws.

A failure to make a loan or debt payment when due. Usually an account is considered to be "in default" after being delinquent for several consecutive 30-day billing cycles.

A notice issued by a creditor when a financial agreement that was been made between you and your creditor fails because the arrangement has not been kept. A default notice is the lender informing you that they are intending to take step to recover the money you owe them.

An individual (or business) against whom a lawsuit is filed.

A failure to deliver even the minimum payment on a loan or debt payment on or before the time agreed. Accounts are often referred to as 30, 60, 90 or 120 days delinquent because most lenders have monthly payment cycles.

A release of a debtor from personal liability for certain dischargeable debts. (A discharge releases a debtor from personal liability for certain debts know as dischargeable debts (defined below) and prevents the creditors owed those debts from taking any action against the debtor or the debtor’s property to collect the debts. The discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and personal contact.)

A debt for which the Bankruptcy Code allows the debtor’s personal liability to be eliminated.

A written document prepared by the chapter 11 debtor or other plan proponent that is designed to provide "adequate information" to creditors to enable them to evaluate the chapter 11 plan of reorganization.

Federal legislation that prohibits discrimination in credit. The ECOA originally was enacted in 1974 as Title VII of the Consumer Credit Protection Act.

The value of a debtor’s interest in property that remains after liens and other creditors’ interests are considered. (Example: If a house valued at $60,000 is subject to a $30,000 mortgage, there is $30,000 of equity.)

Generally includes contracts or leases under which both parties to the agreement have duties remaining to be performed. (If a contract or lease is executory, a debtor may assume it or reject it.)

A description of any property that a debtor may prevent creditors from recovering.

Property or value in property that a debtor is allowed to retain, free from the claims of creditors who do not have liens.

Property that the Bankruptcy Code or applicable state law permits a debtor to keep from creditors.

A bankruptcy case filed either without schedules or with incomplete schedules listing few creditors and debts. (Face sheet filings are often made for the purpose of delaying an eviction or foreclosure.)

Federal legislation that promotes the accuracy, confidentiality and proper use of information in the files of every "consumer reporting agency". The FCRA was enacted in 1970.

An individual, individual and spouse, corporation, or partnership engaged in a farming operation who meet certain debt limits and other statutory criteria for filing a petition under chapter 12.

Credit bureau risk scores produced from models developed by Fair Isaac Corporation are commonly known as FICO scores. Fair Isaac credit bureau scores are used by lenders and others to assess the credit risk of prospective borrowers or existing customers, in order to help make credit and marketing decisions. These scores are derived solely from the information available on credit bureau reports.

A transfer of a debtor’s property made with intent to defraud or for which the debtor receives less than the transferred property’s value.

The characterization of a debtor’s status after bankruptcy, i.e., free of most debts. (Giving debtors a fresh start is one purpose of the Bankruptcy Code.)

An item on a consumer's credit report that shows that someone with a permissible purpose (under FCRA rules) has previously requested a copy of the consumer's report. Fair Isaac credit bureau risk scores take into account only inquiries resulting from a consumer's application for credit.

A director, officer, or person in control of the debtor; a partnership in which the debtor is general partner; a general partner of the debtor; or a relative of a general partner, director, officer, or person in control of the debtor.

Any relative of the debtor or of a general partner of the debtor; partnership in which the debtor is a general partner; general partner of the debtor; or corporation of which the debtor is a directory, officer, or person in control.

Debt to be paid at regular times over a specified period. Examples of installment debt include most mortgage and auto loans.

An insurance rating based solely on credit bureau data stored at the major credit bureaus. It offers a snapshot of an individual's insurance risk at a particular point in time, and helps insurers evaluate new and renewal auto and homeowner insurance policies.

A court-approved mechanism under which two or more cases can be administered together. (Assuming no conflicts of interest, these separate firms or individuals can pool their resources, hire the same professionals, etc.)

One bankruptcy petition filed by a husband and wife together.

A delinquent payment; a failure to deliver a loan or debt payment on or before the time agreed.

A charge upon specific property designed to secure payment of a debt or performance of an obligation.

A creditor’s claim for a fixed amount of money.

A sale of a debtor’s property with the proceeds to be used for the benefit of creditors.

A request by a creditor to allow the creditor to take an action against a debtor or the debtor’s property that would otherwise be prohibited by the automatic stay.

A chapter 7 case where there are no assets available to satisfy any portion of the creditors’ unsecured claims.

A debt that cannot be eliminated in bankruptcy.

A trustee’s or creditor’s objection to the debtor’s being released from personal liability for certain dischargeable debts.

A trustee’s or creditor’s objection to a debtor’s attempt to claim certain property as exempt, i.e., not liable for any pre-petition debt of the debtor.

A party who is actually and substantially interested in the subject matter, as distinguished from one who has only a nominal or technical interest in it.

A person or business that files a formal complaint with the court.

A debtor’s detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time.

A transfer of a debtor’s property made after the commencement of the case.

The arrangement (or rearrangement) of a debtor’s property to allow the debtor to take maximum advantage of exemptions. (Pre-bankruptcy planning typically includes converting nonexempt assets into exempt assets.)

A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy (or within one year if the creditor was an insider) that gives the creditor more than the creditor would receive in the debtor’s chapter 7 case.

The Bankruptcy Code’s statutory ranking of unsecured claims that determines the order in which unsecured claims will be paid if there is not enough money to pay all unsecured claims in full.

An unsecured claim that is entitled to be paid ahead of other unsecured claims that are not entitled to priority status. Priority refers to the order in which these unsecured claims are to be paid.

A written statement describing the reason a debtor owes a creditor money. (There is an official form for this purpose.)

All legal or equitable interests of the debtor in property as of the commencement of the case.

An agreement by a chapter 7 debtor to continue paying a dischargeable debt after the bankruptcy, usually for the purpose of keeping collateral or mortgaged property that would otherwise be subject to repossession.

Debt owed on an account that the borrower can repeatedly use and pay back without having to reapply every time credit is used. Credit cards are the most common type of revolving account.

Lists submitted by the debtor along with the petition (or shortly thereafter) showing the debtor’s assets, liabilities, and other financial information. (There are official forms a debtor must use.)

See "credit score".

A statistical formula that is used, usually with the help of computers, to estimate future performance of prospective borrowers and existing customers. A scoring model calculates scores based on data such as information on a consumer's credit report.

An individual or business holding a claim against the debtor that is secured by a lien on property of the estate or that is subject to a right of setoff.

Money borrowed that is secured on an asset, i.e. house, car or furniture, if terms of payment are not kept to, the lender may demand the monies back by the sale or return of the asset that money was secured on.

Debt backed by a mortgage, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default.

A series of questions the debtor must answer in writing concerning sources of income, transfers of property, lawsuits by creditors, etc. (There is an official form a debtor must use.)

A declaration made by a chapter 7 debtor concerning plans for dealing with consumer debts that are secured by property of the estate.

The characterization of a bankruptcy case filed by an individual whose debts are primarily consumer debts where the court finds that the granting of relief would be an abuse of chapter 7 because, for example, the debtor can pay its debts.

Putting the assets and liabilities of two or more related debtors into a single pool to pay creditors. (Courts are reluctant to allow substantive consolidation since the action must not only justify the benefit that one set of creditors receives, but also the harm that other creditors suffer as a result.)

Once taken into account your income and necessary outgoings, the remaining funds are called your available surplus; monies that are free to use as you wish.

Any mode or means by which a debtor disposes of or parts with his/her property.

The representative of the bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the United States trustee or Bankruptcy Administrator.

A business not authorized to practice law that prepares bankruptcy petitions.

A claim for which a specific value has not been determined.

A debt secured by property that is worth less than the amount of the debt.

An officer of the Justice Department responsible for supervising the administration of bankruptcy cases, estates, and trustees, monitoring plans and disclosure statements, monitoring creditors’ committees, monitoring fee applications, and performing other statutory duties.

A lawsuit brought by a landlord against a tenant to evict the tenant from rental property--usually for nonpayment of rent.

A debt that should have been listed by a debtor in the schedules filed with the court but was not. (Depending on the circumstances, an unscheduled debt may or may not be discharged.)

A claim or debt for which a creditor holds no special assurance of payment, such as a mortgage or lien; a debt for which credit was extended based solely upon the creditor’s assessment of the debtor’s future ability to pay.

Refers to a loan where monies are not secured on any asset or property. (Usually relates to credit card debt).

A transfer of a debtor’s property with the debtor’s consent.