Adversary Proceeding: A lawsuit within a bankruptcy case. As with an ordinary lawsuit, an adversary proceeding begins when a plaintiff serves a summons and complain on a defendant.

Automatic Stay: A temporary injunction that stops most creditor collection efforts. The stay begins automatically and immediately upon the filing of a bankruptcy case. The stay will remain in place as to the debtor until the earlier of the judge (a) granting a discharge, (b) giving a creditor “relief” from the stay, or (c) closing the case.

Creditor: Someone who is owed money. In bankruptcy, it’s usually the bank or credit card company.

Debtor: Someone who owes money. In bankruptcy, it’s the individual or entity that files for bankruptcy relief.

Deficiency Judgment: A money judgment for the amount not covered by the value of repossessed collateral. Example: Debtor owes Creditor $15,000 for a car loan. Debtor defaults on the loan. Debtor’s car is repossessed and sold by Creditor at auction for $5,000. Creditor may then be entitled to a deficiency judgment of $10,000, the difference between the value of the car and the amount owed. Deficiency judgments are unsecured debts.

Discharge: A permanent injunction that prevents creditors from collecting debts. As a practical matter, the discharge injunction wipes out debt. But a creditor with a mortgage, security interest, or other lien may recover its collateral if the borrower doesn’t pay the discharged debt.

Dividend: The percentage of claims that will get paid to general unsecured creditors by a bankruptcy trustee on a pro rata basis. If the dividend is set at 5%, all general unsecured creditors that file claims will receive 5% of the amount they are owed.

Equity: The value of an asset in excess of the amount of any liens. If your car is worth $15,000 and you still owe $6,000 on the loan, you have $9,000 of equity in the car.

Exemptions: A list of property that bankruptcy debtors are allowed to keep. In Wisconsin, debtors are allowed to use either the federal exemptions or the Wisconsin state exemptions. I can help you decide which list benefits you the most.

Means Test: A financial test designed by Congress to determine whether debtors can file a Chapter 7 bankruptcy or must pay a minimum amount in a Chapter 13. The test has two parts: First, whether the debtor’s income is above or below the state median income. Second, whether that income minus allowed expenses leaves enough left over to pay creditors.

341 Meeting: A short (10-15 minutes) conversation between the trustee and the debtor. The trustee will ask questions about your assets, debts, and other financial matters. Named after section 341 of the Bankruptcy Code, it is also known as the Meeting of Creditors (although creditors rarely appear) or Trustee Meeting.