Plain-language definitions of 45+ bankruptcy terms. Written for Kansas City residents filing in the Western District of Missouri or the District of Kansas.
A debtor whose household income exceeds the state median for their household size. Above-median debtors in Missouri or Kansas must complete the full means test calculation to qualify for Chapter 7. If they file Chapter 13, their plan must last 5 years rather than 3. The median income figures are updated periodically by the U.S. Census Bureau and published by the U.S. Trustee Program.
Payments or other measures required to protect a secured creditor's interest in collateral during bankruptcy. For example, if you own a car with a loan, the court may require you to keep making monthly payments and maintain insurance while the case is pending. Adequate protection ensures the creditor's collateral does not lose value during the automatic stay. Governed by 11 U.S.C. section 361.
A lawsuit filed within a bankruptcy case. Adversary proceedings have their own docket number and follow the Federal Rules of Bankruptcy Procedure Part VII. Common examples include actions to determine whether a debt is nondischargeable, to recover preferential transfers, or to object to a debtor's discharge entirely. In Kansas City, adversary proceedings are heard by the same bankruptcy judge assigned to the main case.
A federal court order under 11 U.S.C. section 362 that takes effect the instant a bankruptcy petition is filed. It immediately stops most creditor actions including lawsuits, wage garnishments, foreclosures, repossessions, and collection calls. The automatic stay applies in both W.D. Mo. and D. Kan. cases. Creditors who knowingly violate the stay can be held in contempt and ordered to pay damages. The stay remains in effect until the case is closed, dismissed, or the debt is discharged.
A debtor whose household income falls at or below the state median for their household size. Below-median debtors automatically pass the means test and qualify for Chapter 7 without further analysis. If they file Chapter 13, their repayment plan can be as short as 3 years. Missouri and Kansas have different median income thresholds.
A requirement for Chapter 13 plan confirmation under 11 U.S.C. section 1325(a)(4). The test requires that each unsecured creditor receive at least as much through the plan as they would have received in a Chapter 7 liquidation. If you have significant non-exempt assets, your Chapter 13 plan payments may need to be higher to satisfy this test.
A type of bankruptcy that eliminates most unsecured debts in approximately 3 to 4 months. Sometimes called "liquidation bankruptcy," though most Chapter 7 cases are "no-asset" cases where the debtor keeps all property. Eligibility requires passing the means test. The filing fee is $338. In Kansas City, Chapter 7 cases are handled by the W.D. Mo. court (Missouri side) or D. Kan. court (Kansas side). Full Chapter 7 guide.
A type of bankruptcy designed for business reorganization. The debtor typically remains in control of the business as a debtor in possession and proposes a plan to restructure debts. Subchapter V, added in 2019, streamlines the process for small businesses with debts under $7.5 million. Chapter 11 is more complex and expensive than Chapters 7 or 13, but it allows a business to continue operating while reorganizing. Full Chapter 11 guide.
A specialized type of bankruptcy for family farmers and family fishermen. It works similarly to Chapter 13 but with higher debt limits and provisions tailored to agricultural operations. Chapter 12 is relatively rare but important in the agricultural areas surrounding Kansas City.
A type of bankruptcy that allows individuals with regular income to repay debts over a 3 to 5 year plan while keeping their property. It is commonly used to catch up on mortgage arrears, car payments, or tax debts. No means test is required, but you must have sufficient disposable income to fund a plan. The filing fee is $313. The W.D. Mo. has a Chapter 13 dismissal rate of approximately 40.4%. Full Chapter 13 guide.
A protection under 11 U.S.C. section 1301 that applies only in Chapter 13 cases. It prevents creditors from collecting a consumer debt from any individual who is also liable on that debt, such as a cosigner or guarantor. For example, if your parent cosigned a car loan and you file Chapter 13, the codebtor stay prevents the lender from going after your parent while you make plan payments. This protection does not exist in Chapter 7.
The court order approving a debtor's repayment plan in Chapter 13, Chapter 11, or Chapter 12. Confirmation means the plan meets all statutory requirements and is binding on all parties. In Chapter 13, the plan must satisfy the best interests test, the debtor must commit all disposable income, and the plan must be proposed in good faith. Confirmation hearings in W.D. Mo. are typically scheduled 30 to 45 days after the 341 meeting.
A mechanism that allows the court to confirm a plan over the objection of a dissenting class of creditors, provided certain requirements are met. In Chapter 13, cramdown most commonly refers to reducing a secured claim to the current value of the collateral. For example, if you owe $15,000 on a car worth $10,000, you may be able to "cram down" the secured claim to $10,000 and pay the remaining $5,000 as an unsecured claim. The vehicle must have been purchased more than 910 days before filing for this to apply.
A mandatory pre-filing requirement under 11 U.S.C. section 109(h). You must complete a credit counseling course from an approved provider within 180 days before filing your bankruptcy petition. The course takes about 60 to 90 minutes and costs approximately $15 to $25. This is a separate requirement from debtor education, which occurs after filing. Both W.D. Mo. and D. Kan. require proof of completion before the case will proceed.
A mandatory post-filing financial management course required under 11 U.S.C. section 111. You must complete this course after filing but before receiving your discharge. The course covers budgeting, money management, and use of credit. It takes about 2 hours and costs approximately $10 to $25. Failure to complete the course will result in the case closing without a discharge.
In Chapter 11 bankruptcy, the debtor typically continues to operate the business and manage its affairs rather than turning control over to a trustee. The debtor in possession has most of the powers and duties of a trustee, including the right to use property of the estate and operate the business. The debtor in possession must file regular financial reports with the court and the U.S. Trustee. Governed by 11 U.S.C. section 1107.
The court order that permanently eliminates a debtor's personal liability for qualifying debts. In Chapter 7, discharge typically occurs about 60 days after the 341 meeting -- roughly 3 to 4 months after filing. In Chapter 13, discharge occurs after all plan payments are completed, which takes 3 to 5 years. Once a debt is discharged, the creditor can never attempt to collect it again. Some debts are nondischargeable.
A court order that closes a bankruptcy case without granting a discharge. When a case is dismissed, the debtor's debts remain, and creditors can resume collection activity. Common reasons for dismissal include failure to make Chapter 13 plan payments, failure to file required documents, or failure to pass the means test. The W.D. Mo. has a Chapter 13 dismissal rate of approximately 40.4%, higher than the national average. A dismissal is different from a denied discharge.
The income remaining after subtracting allowed expenses, as calculated under 11 U.S.C. section 1325(b)(2). In Chapter 13, you must commit all disposable income to your repayment plan. The calculation uses either actual expenses (for below-median debtors) or IRS-based expense standards (for above-median debtors). This amount determines your monthly plan payment.
A state or federal law that protects specific property from being taken by the bankruptcy trustee. Missouri filers must use Missouri exemptions, which include $15,000 for homestead equity, $3,000 for a vehicle, $3,000 for household goods, and $1,500 for clothing. Kansas filers use Kansas exemptions, which are significantly more generous -- including an unlimited homestead exemption and $20,000 for a vehicle. Exemptions are the primary factor in determining what property you keep. Full exemption comparison.
A transfer of property made with the intent to hinder, delay, or defraud creditors, or a transfer made for less than reasonably equivalent value when the debtor was insolvent. Under 11 U.S.C. section 548, the trustee can recover fraudulent transfers made within 2 years before filing. State law (such as Missouri's Uniform Voidable Transactions Act) may extend the look-back period. Transferring assets to family members before filing bankruptcy is a common example that trustees scrutinize.
A legal process by which a creditor with a court judgment can take money directly from your paycheck or bank account. In Missouri, creditors can garnish up to 25% of your disposable earnings or the amount by which your weekly earnings exceed 30 times the federal minimum wage, whichever is less. Filing bankruptcy triggers the automatic stay, which immediately stops all garnishments. Learn more about wage garnishment.
The exemption that protects equity in your primary residence. Missouri's homestead exemption is $15,000 per filer ($30,000 for married couples filing jointly). Kansas has an unlimited homestead exemption, meaning you can protect your entire home equity regardless of value, as long as the property is on 1 acre or less within city limits or 160 acres in a rural area. This is one of the most significant differences between filing on the Missouri vs. Kansas side of Kansas City. See all exemptions.
A legal claim on property that secures payment of a debt. Common liens include mortgages (on real estate), car loans (on vehicles), and judgment liens (from court judgments). Liens generally survive bankruptcy -- even if the underlying debt is discharged, the lien remains on the property unless it is avoided or stripped through a separate motion. In Chapter 13, certain junior liens on a home that are entirely unsecured can sometimes be "stripped off."
A calculation comparing what unsecured creditors would receive in a hypothetical Chapter 7 liquidation versus what they would receive under a proposed Chapter 13 or Chapter 11 plan. This analysis is required to satisfy the best interests test. The analysis starts with the value of all non-exempt assets, subtracts the costs of liquidation, and determines the amount available for unsecured creditors.
A calculation required under 11 U.S.C. section 707(b) that determines eligibility for Chapter 7. The first step compares your household income over the prior 6 months (annualized) to the median income in your state for your household size. If you are below median, you qualify automatically. If above median, a second calculation of allowed expenses determines whether you have enough disposable income to fund a Chapter 13 plan. Missouri and Kansas have different median income thresholds. Means test guide.
The midpoint income level for your state and household size, as determined by the U.S. Census Bureau. If your income is below the median, you automatically qualify for Chapter 7 and can propose a 3-year Chapter 13 plan. If above, you must complete the full means test calculation and any Chapter 13 plan must last 5 years. The figures are updated periodically and differ between Missouri and Kansas.
A formal request asking the court to close a bankruptcy case without granting a discharge. Motions to dismiss can be filed by the U.S. Trustee, a creditor, or the court on its own initiative. In Chapter 7, the most common basis is failing the means test (abuse under section 707(b)). In Chapter 13, motions to dismiss are most often filed by the trustee for failure to make plan payments. The debtor has the right to respond and request a hearing.
A debt that cannot be eliminated in bankruptcy. Common nondischargeable debts under 11 U.S.C. section 523(a) include most student loans, recent income taxes (generally the last 3 tax years), child support and alimony, debts arising from fraud or willful injury, court-ordered restitution, and certain government fines. Some debts are automatically nondischargeable, while others require a creditor to file an adversary proceeding. Full list of nondischargeable debts.
A change to a confirmed Chapter 13 or Chapter 11 repayment plan. Modifications may be requested by the debtor, the trustee, or an unsecured creditor when circumstances change -- for example, a job loss, increased income, or new expenses. The modified plan must still meet all confirmation requirements. In Chapter 13, modification is governed by 11 U.S.C. section 1329. In Chapter 11, modification is governed by section 1127 (or section 1193 in Subchapter V cases).
A payment made to a creditor within 90 days before filing bankruptcy (or within 1 year if the creditor is an insider, such as a family member) that gives that creditor more than they would have received in a Chapter 7 liquidation. The trustee can sue to recover preferential transfers under 11 U.S.C. section 547 and redistribute the money equally among all creditors. Common examples include paying off a loan to a relative or making large payments on one credit card while ignoring others.
A debt that receives special treatment under 11 U.S.C. section 507 and must be paid before general unsecured creditors. Priority claims include domestic support obligations (child support and alimony), certain tax debts, wages owed to employees (up to a cap), and administrative expenses of the bankruptcy case. In Chapter 13, most priority claims must be paid in full through the plan.
A form filed by a creditor with the bankruptcy court asserting that the debtor owes them money. The form includes the amount owed, the basis for the claim, and any supporting documents. In Chapter 13 and Chapter 11 cases, only creditors who file a proof of claim will receive distributions through the plan. The deadline to file a proof of claim is set by the court -- typically 70 days after the petition date for non-governmental creditors. Governed by Bankruptcy Rule 3001.
A voluntary agreement between the debtor and a creditor to remain personally liable on a debt that would otherwise be discharged in Chapter 7. Reaffirmation is most common with car loans -- you agree to keep paying the loan and keep the car, but you give up the protection of the discharge for that debt. Reaffirmation agreements must be filed with the court and approved by the judge if the debtor is not represented by an attorney. Think carefully before reaffirming, because if you later default, the creditor can pursue you for any deficiency.
A motion filed by a creditor asking the court to lift the automatic stay so the creditor can take action against specific property. The most common scenario is a mortgage lender seeking relief from stay to continue a foreclosure when the debtor is not making payments and has no equity in the property. Governed by 11 U.S.C. section 362(d). The debtor has the right to oppose the motion, and the court will hold a hearing.
The detailed forms (Official Forms 106A through 106J) that every bankruptcy filer must complete and file with the court. The schedules list all of your assets (real estate, vehicles, bank accounts, personal property), all of your debts (secured, unsecured, and priority), your income, your expenses, and your executory contracts and leases. Accurate and complete schedules are critical -- false statements can result in denial of discharge or criminal prosecution.
A debt that is backed by collateral, such as a mortgage (secured by your home) or a car loan (secured by your vehicle). The secured portion of the claim is limited to the value of the collateral. If you owe $15,000 on a car worth $10,000, the secured claim is $10,000 and the remaining $5,000 is an unsecured claim. Secured creditors have the right to repossess or foreclose on collateral if payments are not made, subject to the automatic stay.
Official Form 107, filed alongside the schedules. It asks detailed questions about your financial history over the past 2 years (and longer for some questions), including income sources, property transfers, gifts, losses, lawsuits, repossessions, and business interests. The trustee and U.S. Trustee use this form to identify potential preferences, fraudulent transfers, or other issues. All answers are provided under penalty of perjury.
The legal standard for discharging student loans in bankruptcy. Under the Brunner test (used by most courts, including those in the Eighth and Tenth Circuits covering Kansas City), you must prove: (1) you cannot maintain a minimal standard of living while repaying the loans, (2) your financial situation is likely to persist for a significant portion of the repayment period, and (3) you have made good faith efforts to repay. Discharging student loans requires filing a separate adversary proceeding. Recent DOJ guidance has made discharge somewhat more attainable. Learn more.
A required hearing under 11 U.S.C. section 341 that takes place approximately 30 days after filing. The bankruptcy trustee presides and asks you questions under oath about your finances, assets, income, and debts. You must bring a valid photo ID and proof of your Social Security number. Creditors may attend and ask questions, but they rarely do. In Kansas City, 341 meetings are held at the courthouse or by telephone/video. Most last 5 to 10 minutes. Full guide.
A person appointed to administer a bankruptcy case. In Chapter 7, the trustee examines your assets, sells non-exempt property, and distributes proceeds to creditors. In Chapter 13, the trustee collects your plan payments and distributes them to creditors, and monitors your compliance. In Subchapter V of Chapter 11, the trustee facilitates plan negotiations but does not take control of the business. The U.S. Trustee Program oversees all trustees.
A debt that is not backed by collateral. Common unsecured debts include credit card balances, medical bills, personal loans, and utility bills. In Chapter 7, most unsecured debts are discharged entirely. In Chapter 13, unsecured creditors receive whatever amount the plan provides after secured and priority claims are paid -- this can range from 0% to 100% depending on the debtor's disposable income and non-exempt assets.
An exemption that can be applied to any type of property. Missouri's wildcard exemption is $600, plus up to $1,250 of any unused portion of the homestead exemption. This means a renter who does not use the homestead exemption can protect up to $1,850 in any property. Kansas also has a wildcard exemption. The wildcard is often used to protect cash in a bank account, a tax refund, or equity in a vehicle that exceeds the standard vehicle exemption.
Check the FAQ for answers to common Kansas City bankruptcy questions, or browse the full Open Bankruptcy Project for guides on specific topics.
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