As with any area of law, bankruptcy law has its own buzzwords used by judges and lawyers that may not make sense to clients. While some bankruptcy law buzzwords may be easy to figure out, it does not hurt to have a cheat sheet.

Bankruptcy Law Cheat Sheet

• 341 Meeting: Also known as a Trustee Meeting or Meeting of Creditors, this is a required appearance by debtors in which they must answer questions under oath from a trustee assigned to administer their case. This is a public meeting which creditors can attend, although, as a practical matter, they rarely participate in Chapter 7 bankruptcy or Chapter 13 bankruptcy cases. The name of this meeting comes from the fact it is described in bankruptcy law, specifically Section 341 of the U.S. Bankruptcy Code.
• 2004 Exam: This is a more private and lengthy examination of debtors under oath by a trustee or creditor, usually scheduled when the typically brief 341 Meeting does not provide the opportunity to adequately address questions in a particular case. Most cases in Chapter 7 bankruptcy and Chapter 13 bankruptcy do not require a 2004 Exam. Such exams may occur when a case involves a currently operating or recently closed business or the debtors simply have more complex financial affairs.
• Automatic Stay: This is the Protective Order of the Bankruptcy Court found on the Notice sent to all creditors in a bankruptcy case directing them to cease all collection activity. Bankruptcy law intends this order as a way to protect a debtor during the life of their case and is usually only set aside if the creditor files a motion with the court asking the Automatic Stay be lifted for one reason or another. A debtor can oppose such a motion and request a hearing before the stay is lifted.
• BAP: This stands for Bankruptcy Appellate Panel. It is essentially an appellate court found in each federal judicial circuit which hears disputes regarding the rulings of a local bankruptcy judge.
• BAPCPA: This stands for Bankruptcy Abuse Prevention and Consumer Protection Act, which is a federal statute reforming U.S. bankruptcy laws in 2005.
• Chapter 13 Plan: This is a document which is filed in a Chapter 13 bankruptcy case proposing a specific schedule of payments during the life of the Chapter 13 case and giving direction to the Trustee as to how the funds paid should be distributed among creditors. Such a plan must be confirmed by the bankruptcy court and may have to be amended before it is approved to address objections by the trustee or creditors.
• CMI: This stands for current monthly income. Despite the fact that it sounds like a current or forward-looking number, the way Congress has defined this term for purposes concerning bankruptcy law, it is actually a backward-looking number. CMI is the average gross monthly income of a debtor or joint debtors for the six-month period prior to filing bankruptcy. This number is used as part of the Means Test which is discussed below.
• Creditor: A person, business or lender to whom money is owed.
• Debtor: A person or business who owes money to a creditor or creditors. This is the person or persons filing bankruptcy.
• Discharge: This is the word used to describe a debt that is cancelled as a result of a bankruptcy. The bankruptcy court issues a Discharge Order which discharges the debts. A debt which cannot normally be cancelled in bankruptcy (e.g. a student loan or most tax debts) is considered non-dischargeable.
• Means Test: This is a formula created by Congress in its reform of the U.S. bankruptcy laws in 2005 by which CMI and other factors are considered to determine if a person qualifies to be in a Chapter 7 bankruptcy or, if they are in a Chapter 13 case, to help determine an appropriate plan payment.
• Priority Debt: This is a debt which has preference over other debts with regard to the order in which it may be paid should there be a distribution in a Chapter 7 bankruptcy or in any payment plan in a Chapter 13 bankruptcy. Examples of debts which have priority over general unsecured debts include tax debts, domestic support obligations and wages owed to former employees.
• Recorded Deed of Trust: This is the official documentation proving a mortgage holder has a lien against real estate. A deed of trust is recorded when it bears the date and time stamp in the upper right-hand corner, providing it was filed with the Recorder of Deeds. An unrecorded copy of a deed of trust without such a stamp is not considered proper proof of a lien.
• Schedules: These are sets of documents, Schedules A through J, which are filed with the Bankruptcy Petition and other required documents, including the SOFA (see below), which disclose a person’s financial affairs to the Court. A person has a duty to honestly and accurately disclose all information requested on these schedules. Information disclosed in these schedules includes a listing of all real estate owned, all personal property owned, all secured debts, all priority debts, all unsecured debts, all co-debtors, all unexpired contracts or leases, all income, and all monthly living expenses.
• Secured Debt: This is a debt where the person owing the money has pledged some asset as collateral for the debt. This collateral may be subject to repossession or foreclosure should there be a default. Secured debts include home and car loans.
• SOFA: This stands for Statement Of Financial Affairs. It is a series of questions regarding personal financial history which is part of the schedules and required documents filed with the court when a person initiates their bankruptcy case.
• Trustee: Also known as the Interim, Chapter 7 or Chapter 13 Trustee, this is a person assigned by the Court to administer a bankruptcy case. A debtor has a duty to cooperate with the assigned trustee in their case. The trustee generally must investigate the financial affairs of a debtor filing bankruptcy, verify that they have honestly and accurately disclosed their financial information in the schedules filed with the Court, determine if there are any assets to be liquidated for the benefit of creditors (in Chapter 7), to verify a proposed payment plan will meet its stated goals and the requirements of law (in Chapter 13), to verify a debtor qualifies to be in the chapter of bankruptcy they have filed, and to make any necessary distributions to creditors.
• Unsecured Debt: This is a simple debt where there is no collateral securing the indebtedness. Examples of unsecured debts include most credit cards, medical bills, signature loans, payday loans, old utility bills, amounts owed to former landlords, and so on.
• UST: This stands for United States Trustee. This is an office in the United States Department of Justice that supervises all the bankruptcy trustees. Occasionally the UST Office will take particular interest in a case, and do its own review. This is sometimes a random check, and other times it is based upon concerns that a particular case may be considered an abusive filing of some kind.