Richard N. Lipow: Specializing in Bankruptcy in all of Chester, Delaware, Lancaster and Montgomery Counties, including King of Prussia, Wayne, West Chester, Paoli, Malvern, Exton, Coatesville, Pennsylvania.

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Bankruptcy Terms and Definitions

 

Bankruptcy has its own language. Here is a brief definition of some of those terms used in this site and in the Bankruptcy Code. This is by no means intended as a comprehensive or complete listing. However, we hope what is included may resolve, and clarify, some of the more common but still complex questions.
 

Handy Organizer for Bankruptcy

This is a helpful checklist for your initial visit to our office.
 

More About Chapter 13

Chapter 13 bankruptcy is often referred to as the "individual debt adjustment" chapter. It is the chapter selected in approximately one-third of all the bankruptcies filed around the country each year. As in a Chapter 7 bankruptcy, the debtor is seeking a discharge, which is the document mailed to the debtor and all creditors by the Clerk of the Bankruptcy Court toward the end of the case advising that the debtor is no longer legally responsible for repaying discharged debts. In a Chapter 13 bankruptcy proceeding, the debtor is essentially saying to his or her creditors that his or her household generates a certain sum, such as $5,000 per month, that it spends a certain sum, say $4,600 per month, on its normal going forward obligations such as rent or mortgage, car payments, utilities, food and groceries, insurance, medical, transportation, etc., and, accordingly, has net funds of say $400 left over at the end of each month to offer to repay to the pre-bankruptcy creditors, all of whom are put on the proverbial back burner when the bankruptcy petition is first filed.
 

More about Chapter 7

Chapter 7 bankruptcy is a "straight bankruptcy" or "liquidation bankruptcy." It is the most common chapter; approximately two-thirds of all the bankruptcies filed around the country each year are Chapter 7s. In a Chapter 7 bankruptcy proceeding, the debtor is seeking a discharge, which is a document mailed to the debtor by the Clerk of the Bankruptcy Court toward the end of the case. The discharge is the document which essentially states that the debtor is no longer legally responsible for repaying his or her creditors. There are a few "prices" one pays for the privilege of receiving a Chapter 7 discharge. There are three primary components to every Chapter 7 bankruptcy proceeding: assets, liabilities, and income.

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What is a Chapter 13 Bankruptcy Case?

In a Chapter 13 bankruptcy proceeding, the debtor is essentially saying to creditors that his or her household generates a certain sum, that it spends a certain sum on its normal obligations such as rent or mortgage, car payments, utilities, food and groceries, insurance, medical needs, or transportation, and, accordingly, has a limited amount of funds left over at the end of each month to repay to the prebankruptcy creditors, all of whom lose priority when the bankruptcy petition is first filed.
 

What is a Chapter 7 Bankruptcy Case?

This process is a "straight bankruptcy" or "liquidation bankruptcy." It is the most common, making up about two-thirds of all the bankruptcies filed around the country each year. In a Chapter 7 bankruptcy proceeding, the debtor is seeking a discharge, which is a document mailed to the debtor by the Clerk of the Bankruptcy Court toward the end of the case.