Are you considering filing for bankruptcy? If so, it’s easy to feel overwhelmed or even downright confused. But with the right attorney on your side, you can successfully navigate the process with clarity and ease.


As you begin the filing process, you may encounter several legal terms that may be unfamiliar to you, but comprehending these terms is critical to your overall understanding of your case. To help you better understand common legal bankruptcy terms, Ron Lunquist, Attorney at Law, shares several important definitions below.



Assets are any type of property owned by the person who files for bankruptcy. They may include funds in financial accounts, personal property, real estate, and even money owed (accounts receivable) to the individual filing for bankruptcy.


Automatic Stay

When an individual files for bankruptcy, an injunction — called an automatic stay — is imposed against that person’s creditors. The injunction prevents any further collection actions against the individual, including lawsuits, wage garnishments, foreclosures, and even phone calls.


Bankruptcy Court

A division of the federal court system that handles bankruptcy cases. The active judge, administrator, and trustee assigned to an individual’s bankruptcy case are part of bankruptcy court.


Bankruptcy Discharge

Release of the debtor from personal liability for specific dischargeable debts per U.S Bankruptcy Code. Bankruptcy discharge prevents creditors from taking any further collection actions against the individual who filed for bankruptcy or even communicating with the debtor regarding money owed.


Bankruptcy Dismissal

When a bankruptcy case is dismissed, that means the court has dropped the individual’s case. Dismissal does not release the debtor from personal liability for any debts owed.


Bankruptcy Petition

A document filed by the debtor or creditor which opens the bankruptcy case. In a voluntary case, the debtor files the petition; in an involuntary case, the creditor files the petition.


Chapter 7

The chapter of the U.S. Bankruptcy Code that provides for liquidation of the debtor's non-exempt assets. In most Chapter 7 bankruptcy cases, the debtor does not end up losing personal property. 


Chapter 13

The Chapter of the U.S. Bankruptcy Code that provides for a restructuring of an individual’s personal debts. In a Chapter 13 bankruptcy case, the debtor has a repayment plan that the debtor proposes to the court.



The party to whom the debtor owes money.



The individual who owes money to one or more creditors.


Exempt Property

According to U.S. Bankruptcy Code, certain property owned by the debtor may not be subject to liquidation by unsecured creditors. This is known as exempt property. The type and amount of exempt property allowed in a bankruptcy case are determined on a state-by-state basis.  Minnesota is a very generous state in regard to protecting property. 


Means Test

The method used to determine whether an individual qualifies to file for bankruptcy and the type of bankruptcy — Chapter 7 or Chapter 13 — he or she can file for. The means test takes into account both the amount of the person’s debt and their current monthly income.


Non-Dischargeable Debt

Debts that cannot be eliminated by filing for bankruptcy. Non-dischargeable debts include but are not limited to:


●        Most local, state, and federal taxes

●        Most student loans (unless the debtor can prove undue hardship)

●        Alimony or child support

●        Debts obtained by false pretenses or fraud


Pre- and Post-Petition

Pre-petition refers to legal actions that occur before an individual files for bankruptcy. Post-petition refers to legal actions that occur after the individual has formally begun the bankruptcy process.


Secured Debt

Debt that is backed by assets or property, which the creditor has the legal right to repossess in the event of default. Common examples of secured debt include tax liens, auto loans, and home mortgages.



A bankruptcy trustee is an officer of the U.S. Justice Department assigned to represent the bankruptcy estate. The trustee oversees and administers the entire bankruptcy case, including reviewing all paperwork and distributing any funds or assets to creditors, if necessary.


Unsecured Debt

Unsecured debts are not tied to assets or property. With this type of debt, the creditor has no assurance of payment from the debtor — credit was extended based solely on the creditor’s determination of the individual’s ability to repay the debt.


For a full list of common bankruptcy terms, check out the U.S. Courts Bankruptcy Basics Glossary.


Ron Lundquist: Your Trusted Twin Cities Bankruptcy Attorney

If you’re considering filing for bankruptcy, it’s important to understand what your options are and what you’re entitled to. Please don’t hesitate to get in touch with me, Ron Lundquist, Attorney at Law, to discuss your financial needs and whether bankruptcy is the right option to help you start fresh. To learn more or request a free consultation, call my office today at 651-454-0007 or send me a message, and I’ll be in touch.