Definition of Bankruptcy TermsAll legal issues come with a whole slate of new terms, bankruptcy is no different, so we’ll help explain some of the most common ones you’ll encounter.

  • 341 Meeting

A meeting between the bankruptcy filer, his/her creditors and the bankruptcy trustee so the trustee gets a better grasp of the entire situation and so either party can bring up concerns.

  •  Automatic Stay

An automatic stay goes into effect as soon as your bankruptcy petition is filed, it prevents creditors from taking any further actions against you.

  •  Discharge

At the end of your bankruptcy the court will discharge some of your debts, this means that you are no longer responsible for any payments.

  •  Exempt Debt

If your debts are deemed exempt then you cannot expect them to be discharged, in other words, you’re still required to pay.

  •  Exempt Property

Exempt property refers to your assets which the court decides do not need to be seized to pay off debts, these assets are yours to keep.

  •  Means Test

Before you can file a Chapter 7 bankruptcy you’ll need to pass a means test, where your income over the previous six months is evaluated and compared to a predefined state limit.

  •  No Asset Case

A no asset case is when a Chapter 7 bankruptcy filer doesn’t have any assets of value so nothing will be liquidated.

  •  Reaffirmation

Reaffirmation is where a bankruptcy court discharges your debt but you still agree that you’re responsible and commit to repayment.

  •  Release of a Stay

This is a petition that creditors can file asking the court to remove the automatic stay for them so they can continue to seek repayment.