Acceleration Clause - A provision in a contract which allows a creditor the right to immediately demand repayment of the entire amount of a debt upon a debtor's default.

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.

Credit Bureau - A private agency, such as Equifax, TransUnion or Experian, primarily engaged in the operation of keeping and providing financial and public record information about people to various lenders and other subscribers for approved purposes.

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.

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 backed by on a lien on collateral.

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.