Adversary proceeding - An action brought in the bankruptcy court primarily to determine the dischargeability of a specific debt, or objecting to the discharge of all debts.

Answer - A document issued by the defendant in a law suit stating the legal defenses to the plaintiff's summons and complaint.

Automatic stay - The law which takes effect immediately upon the filing of a bankruptcy petition prohibiting creditors from taking any action to compel collection of a debt.

Bankruptcy - A condition where a debtor cannot pay debts now or as they become due, and uses the protection of the law to reorganize their financial affairs by liquidating certain property or formulating a repayment plan.

Bankruptcy Code - Federal laws which govern bankruptcy proceedings.

Bankruptcy estate - the property of a debtor which comes under the jurisdiction of the bankruptcy court and trustee when filing for protection under the Bankruptcy Code.

Collateral - Property which is pledged as security for the repayment of a debt.

Conversion - The procedure for switching a case from one chapter to another under the Bankruptcy Code.

Creditor - One who is owed a debt under a legal obligation or promise.

Creditors meeting - A meeting required under Section 341 of the Bankruptcy Code, conducted by the trustee, and where the debtor can be examined concerning assets, finances or improper conduct having a bearing on the case.

Creditor reporting agency - A private agency, such as TRW or Equifax, primarily engaged in the operation of keeping and reporting certain financial information about people to various lenders and other subscribers.

Debtor - One who owes a debt.

Default - A failure to perform a legal obligation imposed by law or contract.

Deficiency - the unpaid balance of a secured debt after a creditor has repossessed and sold the collateral, and applied the proceeds towards the debt owed.

Discharge - The cancellation of a legal obligation or debt.

Discharge order - An order issued by a bankruptcy court judge directing that a debtor is no longer legally responsible for certain debts.

Equity - The value of property to its owner after all liens and encumbrances are satisfied and the costs of sale paid.

Execution - The legal process of enforcing a judgment by seizing and selling property of a debtor.

Exemption - A state or federal law which allows a debtor to retain certain property from a trustee or creditor so that a debtor is left with the basic necessities of life.

Foreclosure - A forced sale of real estate by a creditor to satisfy a defaulted mortgage, delinquent property taxes or a judgment.

Garnishment - A legal process where a debtor's property under another persons control can be taken and applied as payment towards a debt.

Hardship discharge - A special discharge granted by a bankruptcy court judge for certain debts, not normally dischargeable, under a finding of compelling circumstances which would make repayment of the debt an "undue hardship".

Homestead exemption - An exemption allowed a debtor for a certain amount of equity in the debtor's principle residence. New York debtors are allowed to exempt up to $10,000 of equity, or $20,000 where a husband and wife own the property jointly.

Judgment - The legal outcome resulting from a court action determining that a liability does or does not exist.

Judgment creditor - A creditor who has obtained a judgment in its favor and can now enforce the judgment by execution on property.

Judgment debtor - A person who has a judgment for money damages taken against them for an unsatisfied debt.

Judgment lien - A lien which attaches to real estate owned by the debtor when a creditor files a judgment with the county clerk's office where the property is located.

Lien - A legal interest in collateral which allows a creditor to take and sell the collateral should the debtor default. See also security interest.

Priority debt - Debts which have a special legal status entitling them to be paid ahead of secured and unsecured debts after property is liquidated in bankruptcy.

Mortgage - A lien on real estate.

Personal property - Movable property, also known as chattels. Also includes intangible property such as stocks, bonds or other securities.

Proof of claim - A document a creditor must file with the bankruptcy court in order to receive payment on their claim.

Purchase money security interest (PMSI) - A lien created when a loan or credit is specifically given to the debtor for the purchase of the item taken as collateral.

Reaffirmation agreement - A written agreement which legally re-obligates a debtor to pay a debt after bankruptcy. Usually given in exchange for allowing the debtor to keep collateral or obtain some other benefit from the creditor.

Reaffirmation hearing - A procedure no longer required under the bankruptcy code to validate reaffirmation agreements and protect debtors by ensuring that they understand their rights and obligations under the new agreement.

Real property - Land, real estate.

Redemption - The right of a debtor to regain title to property under a pending foreclosure proceeding by paying the judgment before sale; or a payment to creditor for the return of property taken, under a pending legal action such as repossession or replevin.

Secured debt - A debt subject to a security interest.

Security agreement - A written document which creates or provides for a security interest in collateral.

Security Interest - See lien.

Summons and complaint - Documents used to begin a civil court action to collect a debt.

Trustee - an individual, usually a local attorney, appointed to represent creditors in a bankruptcy proceeding, and responsible for administering the liquidation of assets in Chapter 7, or disbursing payments to creditors under a Chapter 13 Plan.

Unsecured debt - A debt not subject to a security agreement.