Adversary Proceeding - A lawsuit filed by a creditor or interested party in a debtor's bankruptcy case. For example, a creditor may file an adversary proceeding to request the court find its debt to be non-dischargeable.

Arrears or Arrearage - The amount a debtor past due or behind in payments as of the bankruptcy petition filing date.

Assets - Items owned by a debtor, including personal property (cars, money in bank accounts, stock) and real property.

Automatic Stay - An injunction that arises on the filing of a bankruptcy petition which protects the debtor from lawsuits, foreclosure, garnishments and all collection efforts.

Bankruptcy Code - Bankruptcy laws are found in Title 11 of the United States Code. Bankruptcy is a federal law.

Bankruptcy Estate - Generally, property of the estate includes all property the debtor owns at the time of the filing of the bankruptcy case. From the bankruptcy estate, an individual debtor can claim certain property exempt.

Chapter 7 - Chapter 7 is commonly referred to as a "liquidation bankruptcy" or "straight bankruptcy" in which a debtor obtains a fresh start approximately four months after the bankruptcy filing date. Chapter 7 will eliminate or discharge most types of unsecured debts.

Chapter 11 - Chapter 11 is a provision under the Bankruptcy Code for reorganization of the debtor's financial affairs or business. Chapter 11 is available to all forms of individuals, partnerships and corporations.

Chapter 12 - A reorganization chapter for family farmers whose debts fall within certain limits.

Chapter 13 - A payment plan bankruptcy which lasts for a period of three to five years depending on the types and amounts of debt involved. Chapter 13 is frequently used to stop foreclosure proceedings on real property or stop repossession of a vehicle. Chapter 13 can be used to pay delinquent income taxes or child support at 0% interest over three to five years.

Claim - A contention that money is owed by the debtor to a Creditor.

Confirmation - The judicial process by which a bankruptcy judge approves a plan of reorganization of a debtor in Chapter 11, 12, and 13 cases. Each chapter has a different criteria to be met in order to confirm a plan.

Consumer Debt - Debt incurred by an individual primarily for personal, family, or household purposes.

Conversion - The act of changing (converting) a bankruptcy from one chapter to another (Chapter 7 to Chapter 13 or Chapter 13 to Chapter 7).

Creditor - Any person or business to which a debtor owes money on or before the bankruptcy petition filing date.

Debt - A liability on a claim.

Debt for Child Support - A debt owed for maintenance or support of a child of the debtor.

Debtor - A person who owes money or services to another person or entity.

Default - Failure to make payments on time as provided for in a contract.

Delinquency - Failure to make payments when payments are due. A loan is considered delinquent when the payment is not made on the due date.

Denial of Discharge - A court order which prevents a debtor from wiping out his or her debts. Misconduct, dishonesty or lack of cooperation of a debtor can lead the bankruptcy court to deny the debtor's discharge.

Dischargeable - Debtors file bankruptcy anticipating most of their debts can be eliminated in a bankruptcy. Certain debts are not dischargeable which means the bankruptcy will not eliminate those debts. Examples of non-dischargeable debts are child support and recent income taxes. Usually student loans are not dischargeable but there are rare exceptions.

Discharge - The court will enter an Order of Discharge at the conclusion of a bankruptcy case. When a debt is discharged, the debt is no longer enforceable against a debtor. Creditors cannot attempt to collect a discharged debt.

Equity - The value of property (real or personal) over and above the indebtedness against it. For example, if a vehicle is worth $10,000 and the vehicle creditor is owed $8,000, there is $2,000 of equity in the vehicle.

Exemptions - A debtor can claim exemptions in certain types of property. "Exempt" property is property the law permits you to keep when you file bankruptcy. Click here to see the most common Oregon exemptions.

Family Farmer - An individual or married couple engaged in a farming operation whose debts do not exceed certain limits which arise out of a farming operation owned or operated by the individual or married couple and the individual or married couple derive more than 50% of their gross income from the farming operation. Certain corporations and partnerships can also be family farmers.

Fair Market Value - The price at which a buyer would be willing to pay and a seller would be willing to sell property. Bankruptcy assets are typically valued at their liquidation, fire sale or garage sale values.

Garnishment - Method by which a creditor collects on a judgment by requiring an employer or bank to turn over funds belonging to the debtor to the garnishing creditor. The creditor can "garnish" (collect from) any third party which is holding money belonging to debtor.

General Unsecured Claim - Creditor's claim for payment for which the creditor holds no security or collateral. Common types of general unsecured claims are medical bills, credit cards, and unsecured personal loans.

Insolvent - A financial condition such that the sum of a person or entity's debts is greater than the person or entity's assets.

Judicial Lien - Lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding.

Lien - A claim or encumbrance on property (real or personal) to secure payment of a debt or performance of an obligation. Examples are mortgages, trust deeds or UCC security interests.

Lien Avoidance - The process by which a debtor can wipe out certain kinds of liens that impair an allowed exemption. Judgment liens that have attached to the debtor's home can often be avoided. Any debtor with judgment liens against their homestead, should consult with a lawyer to see if the liens can be avoided.

Liquidated - A debt is liquidated when the amount owing is a fixed, determined amount.

Non-Dischargeable - A debt that cannot be wiped away in bankruptcy. Debts which are non-dischargeable survive the bankruptcy discharge and can be collected by a creditor.

No Asset Case - A Chapter 7 case where a trustee determines that there are no significant non-exempt assets to liquidate, and declines to pursue the assets. The debtor retains all real and personal property.

Personal Property - Property that is not real property. Examples of personal property are vehicles, furniture, clothing, jewelry and stocks.

Petition - The document which is signed by a debtor to commence a bankruptcy case.

Post-Petition - Claims or events arising after the filing of a petition in bankruptcy.

Preference - Certain transfers or payments that are valid outside of a bankruptcy can be undone by a bankruptcy trustee. A debtor cannot treat certain creditors more favorably than other creditors before a bankruptcy. A creditor who has received a greater amount of money than other similarly-situated creditors can be required to return the payment to the trustee if paid within the preference period, which is 90 days for non-insider creditors and up to one year for relatives or insiders.

Pre-Petition - Claims, events or debts arising before a bankruptcy petition was filed.

Priority - Section 507 of the Bankruptcy Code sets out the order in which unsecured claims against the debtor are to be paid. All claims in a higher priority must be paid in full before claims with a lower priority receive any distribution.

Priority Claims - Certain debts, such as domestic support oblitations and income taxes are considered "priority claims" and must be paid in full before general unsecured claims are paid. In a chapter 13, all priority claims must be paid in full before a debtor can complete his or her chapter 13 case and receive a discharge.

Proof of Claim - Document filed by a creditor which shows how much money is owed by the debtor. Creditors are required to attach evidence of the claim and amounts owed. The court fixes a deadline for filing a proof of claim.

Property of the Estate - Generally, property of the estate includes all property the debtor owns at the time of the filing of the bankruptcy case. From the bankruptcy estate, an individual debtor can claim certain property as exempt. In a chapter 7 case, non-exempt property of the estate may be collected and sold by the bankruptcy trustee.

Reaffirm - In a Chapter 7 case, the debtor can voluntarily reaffirm a debt that would otherwise be discharged in bankruptcy. Usually, when a debt is reaffirmed, the same terms and conditions apply as in the original contract. If the debtor fails to pay on a reaffirmed debt, the creditor can collect any collateral (if a secured debt), sell the collateral and collect on the deficiency.

Relative - An individual related by affinity or consanguinity within the third degree as determined by common law, or individual in a step or adoptive relationship within such third degree.

Relief from Stay - A creditor can request the bankruptcy judge to lift the automatic stay and permit a specified action against the debtor. If the motion is granted by the judge, the moving party is free to take whatever action the court allowed.

Repossession - If debtor is in default of the terms of the security instrument, the creditor can repossess (take) its collateral, sell the collateral and apply the proceeds from sale to the outstanding debt owed.

Retain - In a Chapter 7 case, the debtor can retain property secured by a loan so long as the loan continues to be paid according to the terms of the contract. The underlying debt will be discharged. However, the debtor is legally entitled to keep the collateral so long as the debt continues to be paid. If the debt is not paid, then the creditor can repossess its collateral but can thereafter take no further collection activity against the debtor for the discharged debt.

Schedules - The documents required to be filed by the debtor which lists, among other things, the debtor's assets, liability, income, expenses and financial affairs.

Secured Debt - A creditor holds a secured claim against a debtor when the creditor has taken real or personal property as collateral for a loan. If the debtor fails to pay on the loan, then the creditor can exercise its rights under the security agreement and foreclose on or repossess its collateral.

Security Interest - A lien created by an agreement between the debtor and creditor.

Statutory Lien - A lien arising solely by force of a statute on specified circumstances or conditions.

Surrender - In a Chapter 7 or Chapter 13 case, a debtor can voluntarily surrender (turn over) collateral (such as a car) to the secured creditor.

Transfer - Every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an interest in property. The word "transfer" includes but is not limited to sales, assignments, deeds, mortgages, items sold at garage sales and even gifts.

Trustee - The trustee is a representative of a bankruptcy estate and represents the interests of the creditors in the bankruptcy case.

Unsecured - A claim or debt is unsecured if the creditor does not hold a consensual lien, or a judicial or statutory lien against a debtor's property to secure payment of the debt.