Bankruptcy has its own vocabulary. This glossary defines key terms in plain language for filers in the District of New Jersey.
341 Meeting (Meeting of Creditors) -- A hearing about 30 days after filing where the trustee and creditors can ask you questions under oath. Learn more at 341meeting.org.
Automatic Stay -- Federal court order that stops most creditor actions the instant you file. 11 U.S.C. section 362. automaticstay.org.
Bankruptcy Estate -- All of your legal interests in property as of the filing date.
Chapter 7 -- Liquidation bankruptcy. Non-exempt assets sold, remaining eligible debts discharged in 3-4 months.
Chapter 13 -- Reorganization for individuals with regular income. Repay debts over 3-5 years, keep your property.
Claim -- A creditor's right to payment from the estate (secured, priority unsecured, or general unsecured).
Confirmation -- Court approval of a Chapter 13 plan.
Credit Counseling -- Required course within 180 days before filing.
Current Monthly Income (CMI) -- Average monthly income over 6 months before filing. Used for means test.
Debtor -- The person who files bankruptcy.
Discharge -- Court order eliminating personal liability on eligible debts. 524injunction.com.
Dismissal -- Termination without a discharge. bankruptcydismissed.com.
Disposable Income -- Income after allowable expenses. In Chapter 13, all goes to the plan.
Exemptions -- Laws protecting certain property. New Jersey does not have its own bankruptcy exemptions -- filers must use the federal exemption system under 11 U.S.C. section 522(d). Key: $27,900 (federal) homestead, $4,450 (federal) vehicle.
Foreclosure -- Lender takes property when borrower defaults. New Jersey uses judicial, typically taking 12-18 months (the slowest in the United States).
Garnishment -- Court-ordered wage/bank deduction. New Jersey limit: 10% of gross income (one of the most protective limits in the country). garnishedwages.org.
Lien -- Creditor's legal claim on property as security for a debt.
Liquidation -- Sale of non-exempt assets by the Chapter 7 trustee.
Means Test -- Calculation for Chapter 7 eligibility. New Jersey median: $68,047 for 1 person. bankruptcymeanstest.org.
Motion for Relief from Stay -- Creditor request to lift the automatic stay.
No-Asset Case -- Chapter 7 case with no non-exempt assets to liquidate. Most consumer cases.
Non-Dischargeable Debt -- Debts surviving bankruptcy: student loans, child support, alimony, recent taxes, fraud, DUI.
Petition -- The official document filed to begin a case.
Plan -- Chapter 13 repayment proposal over 3-5 years. Must be confirmed by the court.
Preference Payment -- Payment to a creditor within 90 days before filing (1 year for insiders) recoverable by trustee.
Priority Debt -- Must be paid in full in Chapter 13: recent taxes, support obligations, employee wages.
Proof of Claim -- Creditor's assertion of amount owed.
Reaffirmation Agreement -- Voluntary agreement to remain liable on a debt to keep the collateral.
Schedules -- Detailed forms listing all assets, debts, income, and expenses.
Secured Debt -- Debt backed by collateral (mortgage, car loan).
Statement of Financial Affairs (SOFA) -- Questionnaire about financial history.
Trustee -- Court-appointed official administering the case.
Unsecured Debt -- Debt without collateral (credit cards, medical bills).
Wildcard Exemption -- Exemption applicable to any property. Federal: $1,475 plus up to $13,950 of unused homestead.
Discharge eliminates your liability on eligible debts -- the successful outcome. Dismissal terminates the case without a discharge, leaving you still owing all debts.
A federal order that instantly stops most creditor actions when you file -- garnishment, foreclosure, repossession, lawsuits, and collection calls.
These debts survive bankruptcy: child support, alimony, most student loans, recent taxes, fraud debts, and DUI-related debts.
A calculation comparing your income to the New Jersey median ($68,047 for 1 person) to determine Chapter 7 eligibility.
A required hearing about 30 days after filing where the trustee asks questions under oath. Typically 5-10 minutes. Creditors rarely attend.
Use our free screener to check if prior filings affect your eligibility for a new bankruptcy discharge.
Free Discharge Screener How to File Guide