Bankruptcy Basics

Consider before going further: If doing your own income tax returns is too complicated for you, how do you reasonably expect to be able to correctly fill out the paperwork for your own bankruptcy case?

See if you qualify for free legal assistance at one of these legal aid organizations: New York City Bankruptcy Assistance Program; The Legal Aid Society of Mid-New York, Inc. (Broome, Cayuga, Chenango, Cortland, Delaware, Herkimer, Jefferson, Lewis, Madison, Oneida, Onondaga, Oswego and Otsego Counties); The Legal Aid Society of Rochester, New York (Monroe County)

Another possible option if you have below-median income is UpSolve.

The Law   Districts   Forms
Sole Proprietors   Discharge Limitations   Taxes   Student Loans
Glossary   Articles   Financial Discrimination

The Law

The Bankruptcy Code is Title 11 of the United States Code. The Chapters of the Code define and determine general provisions (Chapter 1), case administration (Chapter 3), creditors, the debtor, and the estate (Chapter 5), liquidation (Chapter 7), adjustment of debts of a municipality (Chapter 9), reorganization (usually corporations, partnerships, and LLCs, but can be an individual) (Chapter 11), adjustment of debts of a family farmer (Chapter 12), adjustment of debts of an individual (Chapter 13), and cross-border insolvency (Chapter 15). When referring to a bankruptcy case, reference is made to whether it is a Chapter 7, 9, 11, 12, 13, or 15 case. The provisions of Chapters 1, 3, and 5 are applicable to them all.

Other parts of the United States Code are also applicable to bankruptcy cases. For example, Title 18 of the United States Code contains provisions pertaining to bankruptcy crimes, and Title 28 to judiciary and judicial procedure.

The entire United States Code is published online by the United States Government Publishing Office and the Office of the Law Revision Counsel.

Practice before the U.S. Bankruptcy Courts is governed by the Federal Rules of Bankruptcy Procedure, as modified and adopted in each district. You can find the local rules at the website of each district. It may be that, if you are filing a Chapter 7 bankruptcy, all the rules you need to know are already integrated into the forms, filing instructions, and notices you receive from the court, and you have no issues that would require you to look up any particular rule. However, even a Chapter 7 may have an issue that requires knowledge of other rules, such as how to file or defend against a motion.

All debtors are required to read the Bankruptcy Information Sheet developed by the U.S. Department of Justice. Debtors are asked at the Meeting of Creditors as to whether they read it. Note that the Information Sheet is general in nature, and provides limited information. For example, reading its summary of Chapter 7, one would not know of the exemptions available in New York State that protect a debtor's property from even the Trustee. This web page and the Exemptions web page should help put it in context.

Districts

Where a bankruptcy case is to be filed is determined by the Debtor's county of residence. Click on the applicable district below to access the official bankruptcy forms, do-it-yourself tutorials, and information on where to file, how much the filing fee is, and other matters pertaining to filing your own case. Some forms are also provided below.

The Eastern District of New York has two divisions. The Brooklyn Division serves the counties of Richmond, Kings, and Queens. The Central Islip Divisions serves the counties of Nassau and Suffolk.

The Northern District of New York has three divisions. The Albany Division serves the counties of Albany, Clinton, Columbia, Essex, Greene, Rensselaer, Saratoga, Schenectady, Schoharie, Ulster, Warren and Washington. The Utica Division serves the counties of Broome, Chenango, Delaware, Franklin, Fulton, Hamilton, Herkimer, Lewis, Madison, Montgomery, Oneida, Otsego and St. Lawrence. The Syracuse Division serves the counties of Cayuga, Cortland, Jefferson, Onondaga, Oswego, Tioga, and Tompkins.

The Southern District of New York has three divisions. The Manhattan Division serves the Bronx and New York counties . The Poughkeepsie Division serves the counties of Dutchess, Orange, Putnam, and Sullivan counties, with concurrent jurisdication over Greene and Ulster. The White Plains Division serves the counties of Rockland and Westchester.

The Western District of New York has six divisions. The Buffalo division serves Erie County. The Rochester Division serves the counties of Chemung, Livingston, Monroe, Ontario, Schuyler, Seneca, Steuben, Wayne and Yates. The Batavia Division serves the counties of Genesee, Orleans, and Wyoming. The Mayville Division serves the county of Chautauqua. The Niagara Division serves Niagara county. The Olean Division serves the counties of Allegany and Cattaraugus.

The U.S. Trustee's Office maintains a list of approved Credit Counseling Agencies and approved Debtor Education Providers. A debtor must obtain credit counseling no sooner than 24 hours before filing bankruptcy, but no more than 180 days prior. The debtor education course must be taken after filing bankruptcy, and a debtor cannot obtain a discharge of debts without filing a Certificate of Debtor Education with the court.

Forms

Filling out bankruptcy forms requires reference to many financial documents to fill in the blanks. Many of these documents (such as copies of one's most recent federal and state tax returns, deeds, mortgages, car titles, and car notes) must also be provided to the Trustee assigned to one's bankruptcy case. Six months of paystubs, for the six months prior the month of filing (if filing on January 1st, six months would be July through December) are needed to fill out Form B122 (the "means test"). Trustees also frequently request copies of bank statements for the three to six months prior to filing.

If one does not have a copy of one's most recent federal tax return, a transcript of it may be obtained from the Internal Revenue Service.

The Federal Fair Credit Reporting Act (FCRA) requires each of the three nationwide consumer reporting companies (Experian, Transunion, and Equifax) to provide you with a free copy of your credit report, at your request, once every twelve months. You may order the free credit reports at: 1-877-322-8228 or Annual Credit Report.  You will be asked a few questions about your past credit transactions in order to confirm your identity. In preparation for filing for bankruptcy, you may want to obtain reports from all three companies in case a creditor is listed on one, but not on the other. At other times, you may want to obtain one report every four months in order to continuously check for errors and identity theft.

Not all creditors report information to consumer reporting companies (a/k/a credit bureaus), regardless of whether people have positive or negative histories with them. There is no legal requirement that they do so. Therefore, the credit reports may not reflect all debts. This is one of the reasons that it is important to keep track of all your debts.

Mandatory forms in Chapter 7 bankruptcy cases: Voluntary Petition (B101, and if the filing involves an eviction, B101A and B101B), Certificate of Credit Counseling (provided by counseling service), Summary of Schedules (B106 Summary), Schedules A/B, C, D, E/F, G, H, I, J (B106 A/B, C, D, E/F, G, H, I, J), Declaration concerning schedules (B106 Declaration), Verification of Mailing Matrix, Mailing Matrix, Statement of Financial Affairs (B107), Statement of Intention (B108), Notice Required by 11 U.S.C. §342(b), Chapter 7 Statement of Your Current Monthly Income (B122A-1 "Means Test"). Depending on the filer's/debtor's income, the Means Test may direct the use of supplementary forms. The data required for completing the 122A forms and the 122C Forms are found at the website of the U.S. Department of Justice. See also additional information on Means Testing from the U.S. Department of Justice. The filer is also required to disclose one's full Social Security number on form B121 and file it along with the other completed forms; however, that does not become a public document. If the filer's income is 150% of the poverty line or less, the filer can apply to have the filing fee waived by filling out the Application (B103B). The filer can also ask to pay the fee in installments, provided there is good cause for it (B103A). The filer must also check with the Clerk's Office in his/her District to find out if there are any mandatory local forms. Note that while an individual debtor cannot be involuntarily placed in bankruptcy without a certain amount of debt, 11 U.S.C. §303(b), there is no minimum amount of debt needed in order for a debtor to voluntarily file a bankruptcy case.

Mandatory forms in Chapter 13 bankruptcy cases: same as Chapter 7, except cannot ask for a waiver of the filing fee. Additionally, Chapter 13 filers must file a Chapter 13 Plan. Note that there is a maximum aount of debt a debtor can have when filing a Chapter 13 case. As of April 1, 2016, the non-contingent, liquidated, unsecured amount is $394,725.00 and the non-contingent, liquidated, secured amount is $1,184,200.00. 11 U.S.C. §109(e). A Chapter 13 Trustee can request a Debtor to file amended Schedules I and J each year, which may result in a request for a higher Plan payment if income has gone up significantly compared to expenses.

Always check for the latest official forms at the website of the United States Courts.

Every form has a specified purpose. Real estate is listed on Schedule A. The Districts vary on what they accept as evidence of value. The following should all be considered when determining value: tax assessor's estimation of fair market value; any appraisal of the property; and Zillow or other estimate. Note that the District may differentiate between valuation of a principal residence and valuation of other real estate. Determine what is the maximum equity one has between the different valuations, and compare how much equity the homestead exemption covers under the federal and New York State laws. As to the question as to how title is held, see the glossary below.

Vehicles are listed on Schedule B. Kelley Bluebook and NADA pricing guides provide information on determining the value of vehicles.

Other personal property is also listed on Schedule B. Values of personal property are determined based on a replacement value standard (fair market value), determined as of the date of the bankruptcy filing. No deduction is permitted for marketing costs. For household goods, replacement value would be the price a retail merchant would charge for such property given its age and condition. A retail merchant may be a second hand (used) or consignment shop. Anticipated tax refunds, including the earned income credit, are assets of the debtor and must be listed on Schedule B.

In filling out Schedules A and B, be mindful of the definition of "bankruptcy estate," defined below. See 11 U.S.C. §541 for what is not property of the estate. For example, property the debtor possesses or controls but belongs to someone else is not property of the estate, and therefore is not listed on Schedule A or B. However, it is listed in the Statement of Financial Affairs in response to the specific question about such. The right to receive Social Security benefits is not property of the estate, and the debtor may omit Social Security benefits received from the B122 "means test."

A debtor need also be aware that certain property that he/she does not own on the date of filing, but becomes entitled to within 180 days after filing bankruptcy, may become property of the estate: An inheritance, benefits from a life insurance policy, and a divorce settlement. 11 U.S.C. §541(5). In other words, the Trustee has to be notified of the after-acquired property and if Schedule A and/or B has to be amended, so may Schedule C, wherein the debtor may claim exemptions on the property. In determining whether after-acquired property is part of the bankruptcy estate, the critical issue is the date that the debtor became entitled to the after-acquiproperty, not the date that the debtor actually received the after-acquired property. For example, if someone dies within the 180-day period and the debtor becomes entitled to life insurance benefits, those funds becomes a part of the estate, even if the debtor does not actually receive the funds until after the expiration of the 180-day period. The triggering event is the person’s death, not the date of the debtor's receipt of the assets. But again, an exemption may apply. (If a debtor has not yet filed a bankruptcy case and knows that he/she might receive an inheritance or life insurance benefits, the debtor could suggest that, rather than leaving the inheritance or life insurance to the debtor outright, it could be left to the debtor in a trust in his/her favor. If the trust is properly constructed and includes a valid “spendthrift” provision, then the trust and its assets are immune to claims of the debtor's creditors and would not become part of the bankruptcy estate. If a bankruptcy case has already been filed, requesting dismissal in a Chapter 7 or withdrawing in a Chapter 13, is an option if that is the best way to protect the asset for the debtor, and the benefits of dismissing/withdrawing outweigh the harms.)

See the Exemptions page for information on exemptions that may be claimed on Schedule C.

Any personal injury must be listed on Schedule B. 11 U.S.C. §541. Any contingency or other representation contract may be rejected by the Chapter 7 Trustee as an executory contract under 11 U.S.C. §363, unless the Trustee hires the attorney to bring the action on behalf of the estate. The Trustee can settle the claim on notice to all creditors, F.R.B.P. 9019. If the injury is not listed, the debtor may later be estopped from bringing a claim against the tortfeasor. See Superior Crewboats, Inc. v Primary P&I Underwriters, 374 F.3d 330 (5th Cir. 2004); McIntosh Builders, Inc. v. Ball, 264 A.D.2d 869, 695 N.Y.S.2d 196 (3rd Dept. 1999). If the claim is not worth pursuing, the Chapter 7 Trustee may abandon it, and then it is up to the Debtor to pursue it outside of bankruptcy. Whether it is worth pursuing by the Trustee is dependent on the chances of recovery, for what amount, and whether all or most of the proceeds would be covered by the Debtor's exemptions.

There are rules in bankruptcy as to the addresses that must be provided for creditors on Schedules D, E/F, and G, from which the mailing matrix is created. 11 U.S.C. §342(c)(2) provides that:

(A) If, within the 90 days before the commencement of a voluntary case, a creditor supplies the debtor in at least 2 communications sent to the debtor with the current account number of the debtor and the address at which such creditor requests to receive correspondence, then any notice required by this title to be sent by the debtor to such creditor shall be sent to such address and shall include such account number.
(B) If a creditor would be in violation of applicable nonbankruptcy law by sending any such communication within such 90-day period and if such creditor supplies the debtor in the last 2 communications with the current account number of the debtor and the address at which such creditor requests to receive correspondence, then any notice required by this title to be sent by the debtor to such creditor shall be sent to such address and shall include such account number.

Additionally, 11 U.S.C. §342(f)(1) provides that "[a]n entity may file with any bankruptcy court a notice of address to be used by all the bankruptcy courts or by particular bankruptcy courts, as so specified by such entity at the time such notice is filed, to provide notice to such entity in all cases under chapters 7 and 13 pending in the courts with respect to which such notice is filed, in which such entity is a creditor." These addresses may be found through the bankruptcy court's website.

The Statement of Financial Affairs contains questions that require reference to a debtor's filed tax returns for the prior two years. Copies of his/her tax returns may be obtained from the Internal Revenue Service using Form 4506T-EZ. Copies of tax returns for the prior two years must also be furnished to the Trustee. See the Glossary below for more information on the Meeting of Creditors and what has to be provided to the Trustee.

Other mandatory forms:
Official form: Notice Required by 11 U.S.C. §342(b) for Individuals Filing for Bankruptcy
Official form: Certification of Notice Under §342(b) of the Bankruptcy Code
Official form: Disclosure of Attorney Compensation
Northern District: Payment Advice Form - file with petition and schedules
Northern District: Domestic Support Obligation Form - fill out and give to Trustee at Meeting of Creditors
Northern District: Amendment to Correct SS Number - complete if filed case with error in Social Security number
Consultation Agreement or similar agreement when consultation given.
Statement Mandated by Section 527(b) of the Bankruptcy Code
§527(b) Disclosure
Notice to Client(s) Who Contemplate Filing Bankruptcy

Additional forms that may be of use:
Statement Regarding Debtor Identification
Change of Address of Creditor: a Debtor may need to file with the court when receives returned mail.
Stipulation Extending Discharge Bar Date for when the Meeting of Creditors has been delayed.
Order Reopening Case for Debtor to file Certificate and obtain Discharge
Notice of Hearing of Motion
Motion to Redeem Personal Property
Motion to Redeem Vehicle
A Certificate of Service must be filed with the Court in order for any motion or adversary proceeding to be heard. The type of service that must be made is determined by procedural rules in the federal rules of procedure.
Certificate of Service - Mail
 
Some Chapter 13 forms:
Notice of Amendment to Schedule F - Chapter 13
Application to Dismiss Case by Chapter 13 Debtor(s).
Application to Split and Convert Case by Chapter 13 Debtor or Joint Debtor, convert to Chapter 7. Form may be modified to apply solely for splitting of case, or solely for converting case from Chapter 13 to Chapter 7.
Application to Incur Non-Emergency Debt in a Chapter 13 (Standing Trustee for NDNY, Utica Division)
Motion - Declare Mortgage Current for when mortgage arrears were paid through a Chapter 13 Plan.

Additional Information:
Bankruptcy Q & As (Northern District of New York)
Information About Audits by the U.S. Trustee's Office.
List of Documents that U.S. Trustee May Request
Chart of Time Limits

Worksheets:
Document Checklist
Statement of Expenses

Keep secured creditor payments current if you intend to keep the item. Do not leave any money deposited in a bank to which you owe money.

Sole Proprietors

Sole proprietors earn income directly from their own professions or businesses, rather than as employees earning salaries or commissions from another. For example, instead of being employed by a firm or a hospital, a lawyer or doctor may open an office in his/her own name, adding the abbreviated qualification of Esq. or M.D or the specification of it being a law or medical office. The assets and debts of each office is that of the solo practicing lawyer or doctor, as it is for all sole proprietorships. However, many other professions have a choice and can operate under the name of its owner or it can do business under a fictitious name known as a "dba" (doing business as). Thus, Rachel the landscaper may do business as Rachel's Gardens or Life In Bloom. In New York State, a sole proprietor wanting to use a name other than his/her own, must register as a dba (Certificate of Assumed Name) with the county clerk in each county he/she will be conducting or transacting business. General Business Law §130. However, the fictitious name is simply a trade name--it does not create a legal entity separate from the sole proprietor owner. Legal title to a vehicle or real estate is in the name of the owner, not the fictitious name.

A sole proprietor is entitled to file a personal bankruptcy case under both Chapter 7 and Chapter 13, and can receive a discharge under either Chapter. A sole proprietor can also file a case under Chapter 11 to reorganize the business, or under Chapter 12 for family farms and fishermen.

A fictitious name can be transferred by an amendment to the Certificate. The name can also be discontinued. General Business Law §130. Given that, is the fictitious name an asset of the debtor? Most fictitious names have no value by themselves --- it is the person behind the name who has a reputation that keeps business coming in. But there are cases when a fictitious name has value and thus can be sold separate from the debtor's business, such as when a name has been trademarked, and when another business with the same or similar name wants to conduct or transact business in the same county, and is unable to do so because the name is already taken by the debtor's business.

On the bankruptcy petition, the debtor is required to list any other name he/she has used in the prior eight years, including all business names (trade names and dbas). The Statement of Financial Affairs also contains questions pertaining to the businesses that a debtor has owned in the prior four years.

Both Chapter 7 and Chapter 13 filings by sole proprietors involve the Chapter Trustee in examining the non-exempt assets of both the individual and his/her business, and the recent financial dealings and affairs of both. The Exemptions page provides information on exempting business assets, such as with "tools of the trade" or "wildcard" exemptions.

The assets of many sole proprietorships do not lend themselves to liquidation by a Chapter 7 Trustee, particularly when a personal services-type business is involved, since the business assets of these entities usually consist primarily of the individual’s skill, knowledge and contacts in a particular field. A sole proprietor can remain in business after the bankruptcy filing, as the Trustee cannot prohibit him/her from earning a living, but the assets of the debtor (the individual and the business) can only be used by the debtor if said assets are (1) exempt property, (2) abandoned by the Trustee or (3) purchased from the Trustee by the debtor. Additionally, 11 U.S.C. §721 provides that "[t]he court may authorize the trustee to operate the business of the debtor for a limited period, if such operation is in the best interest of the estate and consistent with the orderly liquidation of the estate."

Businesses such as partnerships, LLCs and corporations function as separate legal entities. They must file for Chapter 7 bankruptcy separate from their owners. As a result, the liquidation of such a business under Chapter 7 results in the business ceasing to exist. (If these businesses wish to reorganize, they file a Chapter 11 bankruptcy.)

Use of a dba name following the filing of a personal Chapter 7 bankruptcy case depends on the circumstances. If the bankruptcy is business related, certainly the "dba" goes out of business just as a partnership, LLC, or corporation would. That does not mean that the debtor has to stop working, but just that he/she needs to get a new business name. If there were no business debts, continuing to use the dba name (when the trustee has not claimed it as an asset) appears to be permissible.

In Chapter 13s, the debtor is choosing either to close or continue his business. In regards to the latter, the dba name may continue to be used. The Chapter 13 Trustee (as well as any creditor) may take a position that the debtor's bankruptcy plan is not feasible because the debtor's business cannot produce the funds needed. If the Chapter 13 Trustee succeeds on that argument, the debtor may propose another plan (which may include the sale of some non-exempt assets by the debtor), convert to Chapter 7, or withdraw his/her Chapter 13 case. When the debtor has employees, there is the concern of meeting payroll, payroll taxes and other overhead, and not slipping further into debt.

The Internal Revenue Service does not require a sole proprietor to obtain a new Employer Identification Number (EIN) due to changing the dba name of the business; however, if he/she is subject to a bankruptcy proceeding, then a new EIN must be obtained. See IRS Publication 1635, Understanding Your EIN.

Discharge Limitations

A Chapter 7 Debtor may not receive a discharge if the Debtor received a discharge in a case commenced within eight years of the filing of the second petition. 11 U.S.C. §727(a)(8). A Chapter 13 Debtor may not receive a discharge if the Debtor received a discharge in a Chapter 7 (or 11 or 12) case commenced within four years of the filing of the Chapter 13 case. 11 U.S.C. §1328(f)(1). (The enactment of this law in 2005 pretty much eliminated "Chapter 20s", the name given to the practice in which a Debtor would first file a Chapter 7 to get rid of unsecured debt, and when that was completed, file a Chapter 13 to address secured debt in a Chapter 13 Plan.) A Chapter 13 Debtor may not receive a discharge if the Debtor received a discharge in a previous Chapter 13 case filed within two years of the current Chapter 13 case. 11 U.S.C. §1328(f)(2). While for most people it is pointless to file a bankruptcy case if a discharge cannot be had, there are instances when a debtor may nevertheless file a case, such as to stop a foreclosure with a payment plan for all the arrears under Chapter 13.

Chapter 7s do not discharge all debts. For example, they do not discharge most taxes. And unless a court rules in favor of a debtor who has brought an adversary proceeding in the bankruptcy case, student loans are not dischargeable. Both examples are discussed in separate sections below.

Debts under 11 U.S.C. §§523(a)(2), (4), and (6) are discharged automatically unless the creditor objects through an adversary proceeding in bankruptcy court. The adversary proceeding has to be filed within 60 days after the Meeting of Creditors. A creditor has the burden of proof on the §523 issues. 11 U.S.C. §523(a)(2) is generally used for statements in writing and actual fraud. 11 U.S.C. §523(a)(4) provides for exception for "fraud or defalcation while acting in a fiduciary capacity, embezzlement or larceny." 11 U.S.C. §523(a)(6) applies "for willful and malicious injury by the debtor to another entity or to the property of another entity." This generally involves hatred or spite related damages but can also relate to intentional tort type issues. Article 185 of the NYS Penal Code specifies when fraud upon creditors is a crime.

A debt incurred pursuant to a settlement agreement is excepted from discharge if the agreement settled claims that, if proven, would have created a nondischargeable debt. Giaimo v. DeFrano (In re DeFrano), 326 F.3d 319 (2d Cir. 2003).

Additionally non-dischargeable are fines and penalties owed to and for the benefit of governmental units, 11 U.S.C. §523(a)(7). That includes parking tickets and EZ pass fines. There may be an argument to discharge the toll amount as an unsecured debt, but with EZ pass, the fine is the major part of the bill. Nevertheless, the automatic stay protection of bankruptcy is one of the ways to resolve tolls and government fines, and also, allow for the renewal of registration and tags.

Furthermore, if it is found that a debtor intentionally performed certain acts with the intent to defraud, a Chapter 7 discharge may be denied by the Court. See 11 U.S.C. §727(a).

Sample Chapter 7 Discharge Order issued by the Bankruptcy Court after at least 60 days have passed since the conclusion of the Meeting of Creditors/§341 Meeting. This is not the closing of the case. A Final Decree is subsequently issued by the court to close the case.

Taxes

Neither the Internal Revenue Service nor the NYS Department of Taxation and Finance needs to get a judgment to collect taxes. Both have a wide range of enforcement methods. Yet there are time limitations.

For federal income taxes, the government has three years from the time a tax return is filed to assess a deficiency, though if a return is filed before the due date (usually April 15th), it is treated as filed on the due date. The period of limitations never runs if the taxpayer fails to file a tax return, files a false return, or willfully attempts to evade taxes. The limitations period is extended from three to six years if the return contains a substantial omission of income. Moreover, the limitations period is extended for 60 days plus the period during which the government is prohibited from making an assessment, after the government mails a statutory notice of deficiency. Finally the limitations period can be extended by agreement between the government and the taxpayer. Internal Revenue Code (IRC) §6501. Once the tax is assessed, the government has ten years to collect the tax by levy or judicial process (longer if the taxpayer enters into a long-term installment agreement). IRC §6502.

In any chapter of the Bankruptcy Code, many taxes are classified as "priority" debts, and as such, they must get paid before any unsecured debt. Thus, in a Chapter 7, if there are any non-exempt assets for a Trustee to sell, the tax claims will be paid as a priority from the sale proceeds. In Chapter 13s, these priority debts must be paid in full. On top of that, many tax debts are non-dischargeable. The age of the tax debt is decisive for both a determination of priority and dischargeability.

For individuals in chapter 7 cases, the following federal and NYS tax debts (including interest) are not subject to discharge: taxes entitled to eighth priority, taxes for which no return was filed, taxes for which a return was filed late after two years before the bankruptcy petition was filed, taxes for which a fraudulent return was filed, and taxes that the debtor willfully attempted to evade or defeat. Penalties in a chapter 7 case are dischargeable unless the event that gave rise to the penalty occurred within three years of the bankruptcy and the penalty relates to a tax that is not discharged. (Only individuals may receive a discharge in chapter 7 cases; corporations and other entities don't.)

Thus, the following federal and NYS income taxes are dischargeable: The taxes are due on a tax return that was due to be filed at least three years before filing for bankruptcy ("three year rule"); the tax return was filed at least two years before filing for bankruptcy ("two year rule"); the federal or NYS tax authority assessed the tax against the Debtor at least 240 days before the filing of the bankruptcy ("240 day rule") (A tax is considered assessed when the liability is recorded on the authorities records. This time period may be prolonged if there is an offer to compromise between the debtor and the tax authority); and there is no evidence of fraud or willful evasion.

In cases in which there are income taxes that are not discharged, the statute of limitations is extended. On the federal level, the period of limitations for collection of tax is suspended for the period during which the IRS is prohibited from collecting, plus six months thereafter.

Does the discharge itself cause a tax liability? Generally, when a debt owed to another person or entity is cancelled (other than as a gift, bequest, devise or inheritance), the amount cancelled or forgiven is considered income that may be taxed to the person owing the debt. If the amount is $600 or more, the creditor should issue a 1099-C to the debtor for the tax year. However, if a debt is discharged (cancelled) under a bankruptcy proceeding, the amount cancelled isn't income even if the creditor has issued a 1099-C for that year. Instead (if applicable), certain losses, credits, and basis of non-exempt property must be reduced by the amount of excluded income (but not below zero). These losses, credits, and basis in property are called "tax attributes". By reducing the tax attributes, the tax on the discharged debt is partially postponed instead of being entirely forgiven. This prevents an excessive tax benefit from the debt cancellation. See IRS Publication 908 for further information.

Student Loans

Student loans are general, unsecured debts that enjoy a presumption of nondischargeability in bankruptcy. 11 U.S.C. §523(a)(8). Absent limited exceptions that require a successful adversary proceeding, individuals do not obtain a discharge of their student loans. This is so because neither Congress nor the courts view student loans like other unsecured common consumer loans, primarily because student loans serve a broad societal purpose, and the lender or guarantor is unable to behave like ordinary commerical lenders. Brunner v. New York State Higher Educ. Services (In re Brunner), 46 B.R. 752, 756 (S.D.N.Y. 1985), aff'd 831 F.2d 395 (2d Cir. 1987), Educ. Credit Mgmt. Corp. v. Frushour (In re Frushour), 433 F.3d 393, 400 (4th Cir. 2005). Student loans are granted without regard to creditworthiness. They are eligible for unique repayment plans, as well as deferments, forbearances, consolidation, and rehabilitation. See definitions in the Glossary.

But there is a history of student loans being treated differently prior to amendments to the U.S. Bankruptcy Code. The most recent amendment was the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which Congress enacted on April 20, 2005 and became effective on October 17, 2005. BAPCPA amended §523(a)(8) to broaden the types of educational ("student") loans that cannot be discharged in bankruptcy absent proof of "undue hardship." The nature of the lender is no longer relevant. Thus, even loans from "for-profit" or "non-governmental" entities are not dischargeable. In other words, prior to BAPCPA, debtors could discharge their student loans which were from for-profit or non-governmental entities. They just could not discharge ones from the government or charities. Yet, go back further in history. Prior to 1978, debtors could discharge all student loans in bankruptcy. In 1976, Congress adopted the commission's recommendations, which resulted in the Bankruptcy Reform Act of 1978, known as the U.S. Bankruptcy Code. The Bankruptcy Code replaced the preexisting Bankruptcy Act and limited the dischargeability of student loans. The new law excluded student loans made by the government, colleges and universities from discharge; however, other student loans remained dischargeable as long as you were repaying for five years or they represented undue hardship.

Again, absent a successful adversary proceeding which discharges the student loan(s) in full, payments on a student loan is suspended during the duration of a Chapter 7 bankruptcy (from date of filing to date of discharge). In a Chapter 13 case, payments are also suspended, but the lender receives what is provided in the bankruptcy plan (the unsecured dividend on its claim) in the interim. Interest continues to accrue no matter the chapter.

Adversary Proceeding to have Student Loans Discharged: To overcome the presumption of nondischargeability, a debtor must initiate an adversary proceeding and prove that "excepting such debt from discharge ... would impose an undue hardship on the debtor and the debtor's dependents." 11 U.S.C. §523(a)(8)
An adversary proceeding is initiated by a Summons and Complaint pursuant to Federal Rule of Bankruptcy Procedure 7001(6). Tenn. Student Assistance Corp. v. Hood, 124 S.Ct. 1905, 1912-13 (2004). The Cover Sheet form, which must be completed and filed with the Summons and Complaint with the court, is posted at the website of each bankruptcy court.

The United States Department of Education maintains a national repository, the National Student Loan Data System (NSLDS), containing borrowers' student loan histories, including which entities hold the student loan debt. Avoid the mistake of bringing an adversary proceeding against the wrong party or failing to name every student loan creditor involved. Under the FFELP, if a loan is non-defaulted, a borrower must name both the lender and the guarantor. Naming a servicer or obtaining a default judgment against a servicer wil not bind a lender or a guarantor. See Garmhausen v. Sallie Mae Serv. Corp. (In re Garmhausen), 262 B.R. 217 (Bankr. EDNY 2001).

In Chapter 13 cases, the adversary proceeding must be made at or near the time the general bankruptcy discharged is received. If brought too soon, the proceeding may face a Rule 12(b)(1) motion to dismiss for lack of jurisdiction on ripeness grounds. This is because the courts want to preserve resources. They need to see that the Debtor has succeeded in paying his/her Chapter 13 Plan. If the Plan fails and the case is dismissed, a judgment discharging the loans would become moot and the trial would have been unnecessary.

Sample Complaint - Student Loans.

Grounds for Discharge of Student Loans Outside Bankruptcy. Note that administrative remedies, which these are, require administrative determinations and must be exhausted before they can be the basis for claim objections or adversary proceedings in a bankruptcy case. Student loan creditors have successfully dismissed debtor's claim objections that seek relief from student loans on these grounds by arguing that the debtors must exhaust available administrative remedies before turning to the bankruptcy court for relief. See Scholl v. NSLP (In re Scholl), 259 B.R. 345 (Bankr. N.D. Iowa 2001); Barton v. Educ. Credit Mgmt. Corp., 266 B.R. 922 (Bankr. S.D. Ga. 2001).

The most widely adopted test to determine "undue hardship" is the Brunner test. Brunner requires proof that (1) the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans; (2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period; and (3) a good faith effort to repay the loans. The debtor bears the burden of proof on each prong. If the debtor fails to meet any prong, the analysis fails. Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir. 1987).

But see Law grad wins discharge of his student debt in opinion criticizing 'punitive standards', by Debra Cassens Weiss, ABA Journal, January 9, 2020.

***As of November 2022, see the U.S. Department of Justice's New Process for Student Loan Bankruptcy Discharge Cases.***
Unfair Billing and Collection Practices After Bankruptcy Discharge (Consumer Financial Protection Bureau)

NOTE: A discharge of student loan indebtedness in bankruptcy has been and continues to be non-taxable, that is, not includible in federal gross income. 26 U.S.C. §108(a). Outside of bankruptcy, students loans can be cancelled due to total disability without tax liability. Non-taxable cancellation is also available under the income contingent Public Service Loan Forgiveness plan, after ten years of qualifying payments. The American Rescue Plan now extends gross income exclusion to the cancellation/forgiveness/discharge of any student loan, public or private, outside of bankruptcy, provided the cancellation occurs after December 31, 2020 and before January 1, 2026. H.R. 1319 §9675 (signed into law on March 11, 2021), 26 U.S.C. §108(f). Congress may or may not extend that period in the future. Thus, taxes remain a factor to consider when evaluating the avenues available to cancel student loans.

Glossary

.

Term	Meaning
Abandon an Asset of the Estate	A determination by a Chapter 7 Trustee that there is little or no equity in the asset being abandoned and, after consideration of liens, exemptions, and/or costs of sale, the asset is of inconsequential value or is burdensome to the bankruptcy estate.
Account Receivable	The right to receive payment from someone .
Adequate Protection	Payments that the debtor must make to a secured creditor before the debtor's Chapter 13 Plan can be confirmed. For a mortgage, that means that the debtor must make post-petition mortgage payments on time. The debtor must also maintain insurance on all leased and secured property.
Adversary proceeding	A lawsuit arising in or related to a bankruptcy case that is commenced by filing a Summons and Complaint, as well as a Cover Sheet, with the bankruptcy court. The Summons and Complaint can then be served on the parties. Default Judgment Flow Chart
Annuity Contract	Includes any obligation to pay certain sums at stated times, during life or lives, or for a specified term or terms, issued for a valuable consideration, regardless of whether such sums are payable to one or more persons, jointly or otherwise, but does not include payments under a life insurance policy at stated times during life or lives, or for a specified term or terms. NY Insurance Law §3212 (2).
Appeal	A case brought before the Federal District Court by a party to reverse (overturn) or modify a decision of the bankruptcy court. Federal Rule of Bankruptcy Procedure 8002 sets forth the time limits for filing a Notice of Appeal. The time limit is jurisdictional.
Assume	An agreement to continue performing duties under a contract or lease. Assumption is an option debtors have in chapter 7 bankruptcy and trustees have in chapter 13 cases. It works with leases and not debts. Debtors wishing to do so must sign an assumption agreement within sixty (60) days of the Meeting of Creditors, and cure any missed payments or convince the bankruptcy court that curing the payments in the future is possible. The Debtor cannot rescind an assumption agreement after it is signed, except that where court approval is required and not given, the assumption is disallowed.
Automatic Stay	An injunction that automatically stops lawsuits, foreclosure, garnishments, and other collection activity against the debtor the moment a bankruptcy petition is filed. The stay and its exceptions are set forth in 11 U.S.C. §362. The stay ceases at the time the discharge order is issued in a Chapter 7, 11 U.S.C. §362(c); nevertheless any action on a discharged debt is prohibited.
Avoidance of Liens	Liens may, in some circumstances, be released or avoided by the court. Generally, liens may be avoided that are (1) preferential, (2) unsupported by value after prior liens, or (3) interfering with an individual debtor’s exemptions.
Avoidance of Judgment Lien	A judgment lien may be avoided if it (a) was entered within ninety (90) days of the bankruptcy filing, 11 U.S.C. §547; or (b) obtained at any time, even by confession of judgment, if it impairs the debtor's homestead exemption, 11 U.S.C. §522(f). To avoid the judgment lien, a debtor must bring an application in bankruptcy court under 11 U.S.C. §522(f) and establish that the lien impairs his/her exemption. The bankruptcy court order avoiding the judgment lien is then recorded by the debtor with the county clerk in which the property is located. NYS Debtor & Creditor Law §150(1) also provides the means to discharge the lien.
Avoidance Powers	Rights given to the trustee or the debtor in possession to recover select transfers of property made prior to the filing of the bankruptcy case. If the recovered assets are not liquid, the assets will then be sold at a public auction and the funds from the sale may be used to pay creditors. These powers include the ability to recover property that was the subject of a fraudulent transfer or preferential transfer by the debtor prior to the filing. A lien may also be avoided to the extent it interferes with a debtor’s exemptions.
Bankruptcy Code	The federal bankruptcy statute contained in Title 11 of the United States Code.
Bankruptcy Court	A unit of the United States District Court (federal court) specializing in the handling of bankruptcy cases.
Bankruptcy Estate	The “bankruptcy estate” is a fundamental concept in bankruptcy law. The commencement of a bankruptcy case creates an “estate.” 11 U.S.C. §541 defines what property is included in the bankruptcy estate. The definition is very broad and includes almost every imaginable kind of property that the debtor owns at the time the bankruptcy case is filed, with a few exceptions. If any property is subject to liens, the estate takes the property subject to these liens, except to the extent they may be avoided by the debtor or the bankruptcy trustee. The estate becomes the temporary legal owner of all the property. Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate when there is no sustained challenge to an exemption or when the trustee abandons interest. Excluded property is never included in the estate. Assets that are part of the estate are subject to exclusive control and the protection of the bankruptcy court.
Bankruptcy Information Sheet	Information Sheet prepared by the U.S. Trustee's Office. It is required reading for the Meeting of Creditors.
Bankruptcy Rules	Also known as the Federal Rules of Bankruptcy Procedure. These rules govern the procedures in bankruptcy and adversary cases. In addition to these rules, each court normally is governed by its own local rules that supplement the Bankruptcy Rules.
BAPCPA	Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 – Signed into law on April 20, 2005, which generally became effective on October 17, 2005. BAPCPA is incorporated into the Bankruptcy Code.
Case Administrator	Court clerk assigned to manage and supervise a bankruptcy case. Case administrators oversee the docket, maintain the claims register, monitor deadlines, prepare and serve discharges, and issue final decrees.
Case Number	The number assigned to a bankruptcy petition when it is filed. The first two digits of the number are the year of filing.
Cash Collateral	Cash, bank accounts or cash equivalents subject to a security interest.
Chapter 7	The most common bankruptcy. The chapter of the Bankruptcy Code that provides for "liquidation," i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors, should such be applicable.
Chapter 9	The chapter of the Bankruptcy Code providing for reorganization of municipalities (which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts).
Chapter 11	The chapter of the Bankruptcy Code providing (generally) for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.
Chapter 12	The chapter of the Bankruptcy Code providing for adjustment of debts of a "family farmer," or a "family fisherman" as those terms are defined in the Bankruptcy Code.
Chapter 13	The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years. Can be used to stop foreclosures and repossessions with the arrears being paid by the Debtor through the bankruptcy plan. Can also be used to keep property that would otherwise be liquidated in a Chapter 7, provided the bankruptcy plan gives the creditors approximately the same amount they would receive in a Chapter 7.
Chapter 15	The chapter of the Bankruptcy Code dealing with cases of cross-border insolvency.
Charge Off Date	The charge off date is an accounting term, in which the account is reported as a loss due to nonpayment of a debt. This accounting event may occur before or after a bankruptcy filing.
Claim	A creditor's assertion of a right to payment from the debtor or the debtor's property. See Proof of Claim.
Claims Register	The chronological record kept by the case administrator of claims filed in a case.
Co-Debtor Stay	In Chapter 13, there is an automatic stay that prevents actions against guarantors or co-signers of consumer obligations of the debtor. There is no co-debtor stay in Chapter 7s.
Commencement of Case	The filing of a petition with the Bankruptcy Court Clerk "commences" a case. Usually, this is a "voluntary" petition and constitutes the "Order for Relief."
Commitment Period	Pertains to Chapter 13 cases. Formula which determines whether the Chapter 13 Plan can be a three year or must be a five year plan. 11 U.S.C. §§1322(d), 1325(b).
Complaint	The first or initiatory document in a lawsuit that notifies the court and the defendant of the grounds claimed by the plaintiff for an award of money or other relief against the defendant.
Concealment of Asset	Fraudulent failure to reveal an asset which the Debtor knows and is aware that in good faith has to be listed on the bankruptcy schedules.
Concurrent Ownership of Real Property	When two or more people own real property together, either as tenancy by the entireties (married couple), tenancy in common, or joint tenancy with right of survivorship. These forms of concurrent ownership give individuals a choice in the way that co-ownership of property will be carried out. Each type of tenancy is distinguishable from the others by the rights of the co-owners. Tenants in common may hold unequal interests. By contrast, joint tenants and tenants by the entirety own equal shares of the property. Furthermore, tenants in common may acquire their interests from different instruments: joint tenants and tenants by the entirety must obtain their interests at the same time and in the same document. Usually, the term tenant is understood to describe a person who rents or leases a piece of property. In the context of title to real property, however, a tenant is a co-owner of real property.
Confirmation	Approval by the bankruptcy judge of a plan of reorganization or liquidation in chapter 11, or payment plan in chapter 12 or 13.
Consolidation (Student Loans)	A process through which the borrower takes out a new loan, which is then used to pay off other existing student loans. There is no minimum amount for combining debt under the federal Direct Consolidation Loan program, but private lenders and loan companies tend to demand a minimum loan balance. Private student loans cannot be consolidated with federal student loans. Only loans in the borrower's name can be consolidated; they cannot be consolidated with a spouse's loans or with loans the borrower's may have taken out to finance the borrower's college education.
Consumer Debt	Debt incurred by an individual primarily for a personal, family, or household purpose. Not incurred for business needs.
Contingent Claim	A claim that may be owed by the debtor under certain circumstances, for example, where the debtor is a cosigner on another person's loan and that person fails to pay.
Convert	To move a bankruptcy case from one Chapter of the Bankruptcy Code to another. See 11 U.S.C. §§ 706, 1307(c). A Debtor's application to convert may be denied due to the Debtor's fradulent conduct, Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365, 127 S.Ct. 1105 (2007). A Chapter 13 case may be dismissed or converted if the Debtor fails to make any domestic support payment coming due post-petition and/or fails to file a tax return as required by §1308. In a conversion from Chapter 13 to Chapter 7, a secured creditor retains the security interest until the full amount of the claim as determined under nonbankruptcy law, is paid in full; and unless a prepetition default has been fully cured through the plan at the time of conversion, the default has the effect given under applicable nonbankruptcy law. 11 U.S.C. §348(f)(1)(C).
Contested Matter	Those matters, other than objections to claims, that are disputed but are not within the definition of adversary proceeding contained in Rule 7001.
Core Proceeding	A proceeding is core if it invokes a substantive right provided by the Bankruptcy Code or by nature could arise only in the context of a bankruptcy case. See U.S. Supreme Court decision in Stern v. Marshall.
Cram Down	The Chapter 13 provision that allows a debtor to retain collateral as long as he/she offer repayment of the “secured portion” or fair market value of the collateral in his/her repayment plan. Contrast with Redemption of Property in Chapter 7s. For vehicles, there is test as to whether a vehicle is eligible for a cram down: (1) Is the debt a purchase money security interest? If no, cram down is allowed under 11 U.S.C. §506. If yes, (2) Is the vehicle a "motor vehicle" per 49 U.S.C. §30102(a)(6)? If no, and the collateral is not "any other thing of value," cram down is allowed. If no, but the collateral is "any other thing of value" and the debt was incurred within one year preceding the filing of the petition, then cram down is not allowed. If yes, (3) was the motor vehicle acquired for the personal use of the debtor? If yes, (4) was the debt incurred within 910 days preceding the filing of the petition? If yes, the vehicle is not eligible for cram down. If no, it is eligible for cram down.
Creditor	(A) An entity that has a claim against the debtor that arose at the time of or before the order for relief (notice of bankruptcy filing) concerning the debtor; (B) an entity that has a claim against the estate of a kind specified in sections 348(d), 502(f), 502(g), 502(h) or 502(i) of the Bankruptcy Code, 11 U.S.C. Sections 348(d), 502(f-i); or (C) an entity that has a community claim. Put simply, one to whom the debtor owes money or who claims to be owed money by the debtor.
Credit Counseling	Generally refers to two events in individual bankruptcy cases: (1) the "individual or group briefing" from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing under any chapter of the Bankruptcy Code; and (2) the "instructional course in personal financial management" in chapters 7 and 13 that an individual debtor must complete before a discharge is entered. There are exceptions to both requirements for certain categories of debtors and exigent circumstances.
Creditors' Meeting	See Meeting of Creditors.
Current Monthly Income	The average monthly income received by the debtor over the six calendar months before commencement of the bankruptcy case, including regular contributions to household expenses from nondebtors and income from the debtor's spouse if the petition is a joint petition, but not including social security income and certain other payments made because the debtor is the victim of certain crimes. 11 U.S.C. §101(10A).
Debt	Liability on a claim.
Debtor	Person, business or municipality concerning which a case under the Bankruptcy Code has been commenced.
Debtor Education	See Credit Counseling.
Debtor's Principal Residence	(A) a residential structure, including incidental property, without regard to whether that structure is attached to real property; and (B) includes an individual condominium or cooperative unit; a mobile or manufactured home; or trailer.
Defendant	An individual, business, or other entity against whom a lawsuit is filed.
Deferments (Student Loans)	An agreement between the student and lender that the student may reduce or postpone repayment of a student loan for a designated period. Pursuant to 34 C.F.R. §682.210, students are entitled to deferments under certain specified situations, including full or half-time study; conscientiously seeking, but unable to find, full-time employment for up to two years; on active duty in the armed forces; full-time volunteer for a tax-exempt organization for up to three years; temporarily totaly disabled or unable to secure employment because the borrower is caring for a spouse or other dependent who is disabled and requires continuous nursing or similar services for up to three years; and being full-time volunteer under the Peace Corps Act for up to three years; economic hardship. During periods of deferments, the government pays interest on subsidized loans. Students who default on their student loans lose their eligibility for deferments unless the borrower has made payment arrangements acceptable to the lender prior to the payment of a default claim by a guaranty agency.
Discharge	A release of a debtor from personal liability for certain dischargeable debts. A discharge releases a debtor from personal liability for certain debts known as dischargeable debts (defined below) and prevents the creditors owed those debts from taking any action against the debtor or the debtor's property to collect the debts. The discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and personal contact. Standard Chapter 7 Discharge Order. Corporations do not receive discharges.
Dischargeable Debt	A debt for which the Bankruptcy Code allows the debtor's personal liability to be eliminated.
Disinterested Person	(A) is not a creditor, an equity security holder, or an insider; (B) is not and was not, within 2 years before the date of the filing of the petition, a director, officer, or employee of the debtor; and (C) does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor, or for any other reason.
Dismissal Without Prejudice	Case dismissed with no rights or privileges to be considered as waived or lost, such as the ability to file again.
Dismissal With Prejudice	Case(or action) dismissed, which bars the right to bring or maintain an action on the same case or action.
Docket	The list of documents and actions within a bankruptcy case or adversary proceeding that is kept by clerk of the Bankruptcy Court. The docket also generally lists the time by which responses to pleadings are required by the Court, as well as the time and place for hearings.
Ejectment	A lawsuit brought to remove a party who is occupying real property.
Equity	The value of a debtor's interest in property that remains after liens and other creditors' interests are considered. Example: If a house valued at $160,000 is subject to a $100,000 mortgage, there is $60,000 of equity.
Estate	See Bankruptcy Estate.
Executory Contract or Lease	Contract under which obligation of debtor and other party to contract are so far unperformed and failure of either to complete performance would constitute a material breach excusing performance of the other. In regards to an executory contract or unexpired lease, a debtor may assume it or reject it. In some cases, the debtor may also assign the contract regardless of whether the contract prohibits assignments. 11 U.S.C. §365(a), (d). The conditions of assumption are that the defaults must be cured and the assuming part must provide adequate assurance of future performance. 11 U.S.C. §(b). See 11 U.S.C. §365 as well for Trustee's rights in relation to same..
Exemption	Certain property owned by an individual debtor that the Bankruptcy Code or applicable state law permits the debtor to keep from unsecured creditors. For example, in some states the debtor may be able to exempt all or a portion of the equity in the debtor's primary residence (homestead exemption), or some or all "tools of the trade" used by the debtor to make a living (i.e., auto tools for an auto mechanic or dental tools for a dentist). The availability and amount of property the debtor may exempt depends on the state the debtor lives in. In New York, the exemptions that may be applied to protect assets in a bankruptcy case are those provided by New York State law or, as begun in 2011 and opted by the Debtor, the federal exemptions provided in the Bankruptcy Code. Claiming an exemption on property removes it from the bankruptcy estate, provided that the trustee or a creditor does not prevail on any objection to that exemption. Exemptions are claimed on Schedule C.
Family Farmer with regular annual income	Family farmer whose annual income is sufficiently stable and regular to enable such family farmer to make payments under a plan under Chapter 12 of the Bankruptcy Code.
Fee Simple	A fee simple represents absolute title (ownership) of real property, and therefore the owner may do whatever he or she chooses with the property. There may be a mortgage or other lien against the property, but the title is in that person alone. The owner has the right to use the property, exclusively possess it, commit waste upon it, transfer it to another by deed or Last Will & Testament, and take its fruits (use its resources, be they agricultural, mineral, water, etc.).
Final Decree	The last document filed in a bankruptcy case. It indicates that the case is closed and any trustee appointed is released. A copy is not mailed to any party.
Forbearance (Student Loans)	An agreement between the lender and the borrower/endorser permitting the temporary cessation of payments, allowing an extension of time for making payments, or temporarily accepting smaller payments than previously were scheduled, as set forth in 34 C.F.R. §682.211. The lender is encouraged to grant forbearance for the benefit of the borrower or endorser in order to prevent the borrower or endorser from defaulting on the repayment obligation, or permit the resumption of honoring the obligation after default. Generally, unlike a deferment, the decision whether to grant a deferment is discretionary. Interest continues to accrue during any period of forbearance and is capitalized if it is not paid. Once a borrower has defaulted and the loans have been transferred to a guaranty agency, the borrower and endorser is no longer eligible for forbearances.
Foreclosure	The process by which a creditor can compel the application of the value of the collateral for payment of the debt. Foreclose and taking possession are not the same.
Fraudulent Transfer	A transfer of a debtor's property made with intent to defraud or for which the debtor receives less than the transferred property's value.
Fresh Start	The characterization of a debtor's status after bankruptcy,i.e., free of most debts. Giving debtors a fresh start is one purpose of the Bankruptcy Code.
Governmental Unit	United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency or instrumentality of the United States (but not a United States trustee while serving as a trustee in a case under the Bankruptcy Code), a State, a Commonwealth, a District, a Territory, a mnucipality, or a foreign state; or other foreign or domestic government.
Hardship Discharge (Chapter 13s)	Under 11 USC §1328(b), a debtor may seek a discharge without completing payments under the plan, but only if the failure to complete the payments is due to circumstances for which the debtor should not be held accountable; unsecured creditors have received as much as or more than they would have received in a Chapter 7 liquidation; and modification of the plan is not practicable. As set forth in 11 USC § 1328(c), a hardship discharge is narrower than a regular Chapter 13 discharge.
Home Affordable Modification Program ("HAMP")	Mortgage modification program administered by the U.S. Treasury, offered both in and outside of bankruptcy. If a borrower is eligible for Tier 1 of HAMP, his/her interest rate could be reduced, resulting in a monthly payment targeted to be 31 percent of gross monthly income. At the Tier 2 level, the mortgage is adjusted to between 25 and 42 percent of the debtor’s gross monthly income. Tax returns and credit reports are obtained, employment and permanent income are verified, an appraisal is conducted, and the net present value (NPV) test is performed. The NPV test determines whether the lender benefits more by modifying the loan than by denying the modification and going forward with foreclosure. If modification results in a more favorable NPV, the debtor is offered a three-month trial modification. When all payments are made in full and on time, a permanent modification is then offered to the debtor. See also Second Lien Modification Program (2MP), below.
Homestead Exexmption	Exemption that an individual may take for his or her residence.
Income Tax Assessment	The procedure by which the Internal Revenue Service, or other government department of taxation, declares that a taxpayer owes additional tax because, for example, the individual has understated personal gross income or has taken deductions to which he/she is not entitled. This process is also known as a deficiency assessment.
Individual with regular income	Individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under Chapter 13 of the Bankruptcy Code, other than a stockbroker or a commodity broker.
Insider (of individual debtor)	Any relative of the debtor or of a general partner of the debtor; partnership in which the debtor is a general partner; general partner of the debtor; or a corporation of which the debtor is a director, officer, or person in control.
Insider (of corporate debtor)	A director, officer, or person in control of the debtor; a partnership in which the debtor is a general partner; a general partner of the debtor; or a relative of a general partner, director, officer, or person in control of the debtor.
Intellectual Property	Under 11 U.S.C. §101, it is a (A) trade secret; (B) invention, process, design, or plant protected under title 35; (C) patent application; (D) plant variety; (E) work of authorship protected under title 17; or (F) mask work protected under chapter 9 of title 17; to the extent protected by applicalbe nonbankruptcy law. The statutory definition does not include trademarks/trade names; service marks; and overseas intellectural property not covered by treaties that provide reciprocity or are otherwise protected under 35 U.S.C. or 17 U.S.C.
Joint Petition	One bankruptcy petition filed by a husband and wife together.
Joint Tenancy with Right of Survivorship	Joint tenants own equal shares of real property, and also have a right of survivorship. A joint tenant may alienate his property, but if that occurs, the tenancy is changed to a tenancy in common and no tenant has a right of survivorship. See also Concurrent ownership of real property.
Judgment Creditor	An unsecured creditor that has obtained a court judgment to establish liability. See Avoidance of Judgment Lien.
Judicial Lien	Lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding.
Lease	A lease is an executory contract, meaning both parties have not completely performed their obligations to each other. There are leases for cars, retail space, or services like cell phone agreements. The lessee promises to pay on a continuous basis for something the lessor promises to provide, like space or a car.
Lien	Charge against or interest in property to secure payment of a debt or performance of an obligation. The right to take and hold or sell the property of a debtor as security or payment for a debt or duty. It is a relationship between particular property (the collateral) and a particular debt or obligation. There are three types of liens: security interest (contractual lien); statutory lien (unconsensual); and judicial lien (unconsensual).
Life Estate	The right to use or occupy real property for one's life.
Liquidation	A sale of a debtor's property with the proceeds to be used for the benefit of creditors.
Liquidated Claim	A creditor's claim for a fixed amount of money.
Local Rules	Special procedures issued by a Bankruptcy Court covering practice before that Court. These Local Rules are in addition to the Federal Rules of Bankruptcy Procedure and Federal Rules of Civil Procedure that must be followed.
Loss Mitigation Program	A program available in Chapters 7, 11, 12 and 13, intended to facilitate dialogue between Debtors, Lenders, and Loan Servicers, averting loss of a Debtor's principal residence to foreclosure, costs to the lender, or both. Loss Mitigation consists of the following general types of agreements, or a combination of them: loan modification, loan refinance, forbearance, short sale, or surrender of the property in full satisfaction of the mortgage. Mediation is available upon request. See also Home Affordable Modification Program.
Mailing Matrix	Mailing list for all creditors, co-debtors, and other necessary parties, that a Debtor must provide when filing a petition. The last four digits of the account number, if there is one, must be included with a creditor's name and address. The case administrator (i.e., the clerk assigned to the case) will add to this list the chapter trustee appointed, the U.S. Trustee, and any other parties filing a notice of appearance. When there is an error, can send a corrected address by letter to the case administrator instead of doing amended matrix. This allows the administrator to turn off the bad address.
Means Test	Section 707(b)(2) of the Bankruptcy Code applies a "means test" to determine whether an individual debtor's chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to chapter 13). Abuse is presumed if the debtor's aggregate current monthly income (see definition above) over 5 years, net of certain statutorily allowed expenses is more than (i) $12,850, or (ii) 25% of the debtor's nonpriority unsecured debt, as long as that amount is at least $7,700. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income.
Mechanic's Lien	A claim, created by state law, granted to suppliers of labor and/or material to building projects, to secure priority of payment of the price of work performed or materials supplied in erecting, constructing, altering, or repairing a building or other structure; the claim encumbers the land and the building and improvements thereon. The lien arises when the work is done, but there is a short time period for the lien to be perfected with its filing in the county clerk's office. The automatic stay does not apply to the filing of mechanic's liens and serving of notices as required under NYS Lien Law. Mechanic's liens are statutory liens that may be protected under 11 U.S.C. §545, although subject to cramdown or avoidance in Chapter 13 cases.
Meeting of Creditors (a/k/a 341 Meeting)	A meeting at which the debtor is questioned under oath by the trustee about his/her financial affairs. Every debtor must appear at his/her Meeting of Creditors with official evidence of his/her Social Security number and photograph.  Acceptable evidence of Social Security number:  non-laminated original Social Security card; original Medicaid, Medicare, medical insurance, or public assistance card that contains full Social Security number; employment payment advice (paystub) that contains full Social Security number; print-out of Social Security number from the Social Security Administration; original W-2 or 1099 form. Acceptable photographic evidence:  Original drivers’ license; passport (and current U.S. visa, if not a U.S. citizen); military ID; state picture ID; government ID; resident alien card; student ID. Documents Required:  At least seven days before the Meeting of Creditors, the Chapter 7 Trustee must receive a copy of the debtor’s last filed federal tax return.  Other documents required by the date of the Meeting:  copy of deed(s) to any real property; copy of any recorded mortgage(s); copy of the latest school or property tax bill showing value of real property as determined by tax assessor; copy of any vehicle title(s); statements of any mortgage or vehicle note balances; statements showing the current value of pension plans, IRA accounts, annuities and other retirement plans. Additional documents may be required. Typically, the Meeting of Creditors is adjourned (continued) until all documents are supplied. Creditors May Appear at Meeting of Creditors:: The representation of a Creditor at a Chapter 7 or 13 Meeting of Creditors need not be by counsel, and may be by an employee or agent, without limitation as to any state or local rule governing the unauthorized practice of law, 11 U.S.C. §341(c). Any Creditor of the Debtor(s) who appears at the Meeting of Creditors is permitted to ask questions of the Debtor(s). Questions may be asked about the Debtor's assets, income and liabilities, and may also include questions pertaining to reaffirmation of debts. However, should a creditor have detailed and comprehensive questions, it should move for a Rule 2004 examination, due to time limitations at the Meeting of Creditors. When a Meeting is adjourned for the submission of additional documentation, the Debtor(s) may or may not be required to attend the adjourned Meeting. An examiner or the United States trustee may also appear and question the debtor. Waiver of Appearance at the Meeting of Creditors:  A waiver may be granted in limited situations, such as when a debtor is hospitalized or housebound.  To have an appearance waived, a motion must be made before the Bankruptcy Court.
Motion	A request filed with the Court for a specific action to be taken.
Motion To Lift The Automatic Stay	A request by a creditor to allow the creditor to take action against the debtor or the debtor's property that would otherwise be prohibited by the automatic stay. 11 U.S.C. §362(d).
National Archives	Depository of bankruptcy records; pre-dates PACER. Form to Obtain Copies.
Negotiable Instrument	A signed writing containing an unconditional promise or order, by the signer or maker of the instrument to pay a sum certain in money, either on demand or at a definite time, and it must be payable to the bearer or to order. Includes promissory notes and checks.
No-Asset Case	A chapter 7 case where there are no assets available to satisfy any portion of the creditors' unsecured claims.
Nondischargeable Debt	A debt that cannot be eliminated in bankruptcy. Examples include debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime. Secured debts, such as mortgages, are not dischargeable, but must be reaffirmed if the debtor intends to keep the property. If the debtor does not intend to keep the property, the secured debt is personally discharged against the debtor, but remains secured against the property, resulting in a foreclosure or repossession. Some debts, such as debts for money or property obtained by false pretenses and debts for fraud or defalcation while acting in a fiduciary capacity may be declared nondischargeable only if a creditor timely files and prevails in a nondischargeability action. This nondischargeability action is an adversary proceeding in which the creditor is the plaintiff and the debtor is the defendant. 11 USC $523(a)(2)(C) provides two exceptions to discharge, but the creditor must file an adversary proceeding: (1)-in paragraph (i)(I)-consumer debts for luxury goods or services incurred < 90 days before filing owed to a single creditor in the aggregate $675 or more; and (2)-in paragraph (i)(II)-cash advances incurred < 70 days before filing in the aggregate $950 or more.
Objection to Claim	Any party may object to any claim by filing an objection with the court. The motion is heard before the court, and if warranted, a hearing is scheduled and the claimant must prove its claim.
Objection to Discharge	A trustee's or creditor's objection to the debtor's being released from personal liability for certain dischargeable debts. Common reasons include allegations that the debt to be discharged was incurred by false pretenses or that debt arose because of the debtor's fraud while acting as a fiduciary.
Objection to Exemptions	A trustee's or creditor's objection to a debtor claim of certain property as exempt, i.e., not liable for any prepetition debt of the debtor.
Order of Disbursement	The order in which a Chapter 13 Trustee disburses funds to creditors. Unless otherwise specified in a confirmed Chapter 13 Plan, funds are paid out as follows: first, to secured claims requiring monthly payments (i.e. value/payoff claims); second, to the debtor attorney's fees until paid in full; third, to secured claims pro rata until paid in full (i.e. arrears owed by debtor at time of filing the case); fourth, to priority claims until paid in full; and fifth, to unsecured claims based on dividend set forth in confirmed plan.
PACER	Public Access to Court Electronic Records. These electronic records include general case information, the docket, documents filed with the court, and claims register. These electronic records are accessible via the Internet.
Party In Interest	A party who has standing to be heard by the court in a matter to be decided in the bankruptcy case. The debtor, the U.S. trustee or bankruptcy administrator, the case trustee and creditors are parties in interest for most matters.
Pension Plan Loans	A Chapter 13 Plan may not materially alter the repayment terms of a loan made by a plan established by the employer under certain sections of the Internal Revenue Code. 11 U.S.C. §1322(f).
Person	Includes individual, partnership, and corporation, but does not include governmental unit, except that a governmental unit that (A) acquires an asset from a person (i) as a result of the operation of a loan guarantee agreement; or (ii) as a receiver or liquidating agent of a person; (B) is a guarantor of a pension benefit payable by or on behalf of the debtor or an affiliate of the debtor; or (C) is the legal or beneficial owner of an asset of (i) an employee pension benefit plan that is a governmental plan, as defined in section 414(d) of the Internal Revenue Code of 1986; or (ii) an eligible deferred compensation plan, as defined in section 457(b) of the Internal Revenue Code of 1986; shall be considered, for purposes of section 1102 of the Bankruptcy Code, to be a person with respect to such asset or such benefit.
Petition	Petition filed under section 301, 302, 303 or 304 of the Bankruptcy Code, as the case may be, commencing a case under the Bankruptcy Code.
Plaintiff	A person or business that files a formal complaint with the court.
Plan	A debtor's detailed description of how the debtor proposes to pay creditors' claims over a fixed period of time, filed in any reorganization chapter (11, 12, or 13).
Postpetition Transfer	A transfer of the debtor's property made after the commencement of the case.
Prebankruptcy Planning	The arrangement (or rearrangement) of a debtor's property to allow the debtor to take maximum advantage of exemptions. Prebankruptcy planning typically includes converting nonexempt assets into exempt assets. It may also be an issue simply of timing the filing of the bankruptcy case, such as delaying the filing until a tax assessment is old enough to be discharged.
Preference or Preferential Debt Payment	A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy (or within one year if the creditor was an insider) that gives the creditor more than the creditor would receive in the debtor's chapter 7 case. Judgments, which become liens on a debtor's property, are avoidable preferences.
Prepetition Arrears	Under Chapter 13, proceeds due a creditor before debtor’s bankruptcy filing that are to be paid back through the Chapter 13 plan.
Presumption Of Abuse	A finding of “presumption of abuse” in the Means Test calculation alerts the bankruptcy court to the probability that a debtor filing a Chapter 7 case has sufficient income to pay into a Chapter 13 repayment plan. (By definition, a Chapter 7 debtor’s income is too low to repay creditors.) See Means Test
Priority	The Bankruptcy Code's statutory ranking of unsecured claims that determines the order in which unsecured claims will be paid if there is not enough money to pay all unsecured claims in full. For example, under the Bankruptcy Code's priority scheme, money owed to the case trustee or for prepetition alimony and/or child support must be paid in full before any general unsecured debt (i.e. trade debt or credit card debt) is paid.
Priority Claim	An unsecured claim that is entitled to be paid ahead of other unsecured claims that are not entitled to priority status. Priority refers to the order in which these unsecured claims are to be paid. Priority claims include child support, alimony, and certain taxes.
Proof of Claim	A written statement, filed by a creditor, describing the reason a debtor owes the creditor money. There is an official form for this purpose, and there are rules on what documentation must be attached. See Federal Rule Bankruptcy Procedure 3001. Claims are unsecured, secured, or priority.
Property of the Estate	All legal or equitable interests of the debtor in property as of the commencement of the case. When a debtor has been injured prior to the commencement of the case, the proceeds of any lawsuit or settlement may be property of the estate. Cases: Mendelsohn v. Ross, 251 F. Supp. 3d 518 (NYED 2017); In re Borchert (NYNB 2010)
Reaffirmation Agreement	An agreement by a chapter 7 debtor to continue paying a dischargeable debt (such as an auto loan) after the bankruptcy, usually for the purpose of keeping collateral (i.e. the car) that would otherwise be subject to repossession. Bankruptcy: Understanding Reaffirmation Agreements (The City Bar Justice Center, NYC Bar Association).
Redemption of Property	11 U.S.C. §722 allows the debtor in a chapter 7 case to pay a lump sum payment to redeem personal property from a secured lien holder. The retail value of the item must be paid in one lump sum and not over a period of time. Redemption is most commonly used for vehicles, but can be used for jewelry, furniture, and electronics. Some debtors redeem with funds from a new loan for the lower redemption amount.
Rehabilitation (Student Loans)	An agreement between the lender and the borrower to get federal student loans out of default. Private student loans are not eligible for rehabilitation. The agreement requires nine on-time payments — within 20 days of the due date — over a 10-month period. Payments must also be voluntary. For example, money seized from a tax refund would not count as a payment.
Relative	Individual related by affinity or consanguinity within the third degree as determined by the common law, or individual in a step or adoptive relationship within such third degree.
Relief from the Automatic Stay	A motion brought by a secured creditor. 11 U.S.C. §362(d)(2) allows for the automatic stay to be liefted when the debtor does not have equity in the property in question and when the property is not necessary for an effective reorganization. Generally, a debtor needs his/her residence for an effective reorganization. However, the secured creditor is entitled to not be put in a worse position due to the bankruptcy filing. Equity in property --- is there a cushion? Is there a sufficient payment stream to the creditor? If an equity cushion exists, relief from the stay is often not granted. When relief from the stay is granted, the creditor must then follow New York State law as to its rights, such as the initiation or continuation of a mortgage foreclosure proceeding.
Removal	Where a party is in bankruptcy, removal is the act of moving a piece of litigation from another court to the bankruptcy court or the U.S. District Court.
Replacement Value	In individual Chapter 7 and 13 cases, the value of personal property securing an allowed claim without deduction for sale or marketing costs. For household goods, replacement value means the price a retail merchant woudl charge for property of that kind given its age and condition. 11 U.S.C. §506(a)(2).
Rule 2004 Exam	Examination of the debtor under oath by a creditor, when detailed and comprehensive questioning is sought. Creditor must bring a motion for the examination.
Schedules	Lists submitted by the debtor along with the petition (or shortly thereafter) showing the debtor's assets, liabilities, and other financial information. There are official forms a debtor must use.
Second Lien Modification Program (2MP)	See Home Affordable Modification Program ("HAMP"), above. To be eligible for modification of the second mortgage, a debtor must have successfully modified his/her first mortgage under HAMP and not missed 3 housing payments on the modified loan. The debtor also must not have certain criminal convictions on his/her record. Under 2MP the lender must: offer to modify or extinguish its second mortgage, and dismiss pending foreclosure action on the second mortgage. 2MP permits reductions in mortgage interest rates and extends the length of time the debtor has to repay the loan. Amortizing second mortgages interest rates can be reduced to one percent. Interest-only mortgages can be converted to amortized payments at one percent or may remain as interest only at a two percent interest rate. Regardless of the option selected, after five years the second mortgage is reset to the terms of the HAMP-modified first mortgage.
Security Agreement	Agreement that creates or provides for a security interest.
Security Interest	The most common type of lien. This encompasses any lien created by contract between debtor and creditor. It is a right in property that is contingent on nonpayment of a debt.
Setoff	Where a creditor owes money to a debtor, a setoff may be appropriate against what the debtor owes the creditor, and vice-versa. 11 U.S.C. §553.
Statement of Financial Affairs	A series of questions the debtor must answer in writing concerning sources of income, transfers of property, lawsuits by creditors, etc. (There is an official form a debtor must use.)
Statement of Intention	A declaration made by a chapter 7 debtor concerning plans for dealing with consumer debts that are secured by property of the estate.
Statute	A legislative enactment.
Statute of Limitations for an Action in which Debtor is the Alleged Tortfeasor	If the Statute of Limitations had not expired at the time of the filing of the Debtor's bankruptcy case, the Statute of Limitations is extended until thirty (30) days after the automatic stay is lifted, 11 U.S.C. §108(c)(2). Discharge of a debt is not a bar to subsequent proceeding in state court, but recovery is limited to insurance, Insurance Law §3420(a)(1). If no proof of claim is filed by the Plaintiff in the bankruptcy case, the Plaintiff may not seek to satisfy any award out of estate assets but may collect insurance proceeds, if any. Many tort claims are not dischargeable in bankruptcy, and some are dischargeable if the Plaintiff does not file an adversary proceeding objecting to dischargeability within sixty (60) days of the first scheduled meeting of creditors, unless extended by the court, 11 U.S.C. §523(a).
Statute of Limitations for an Action in which Debtor Would be a Plaintiff/Petitioner	The Statute of Limitations is extended by two (2) years if the action is still alive on the date of the debtor's bankruptcy filing, provided the Trustee brings the action, 11 U.S.C. §108(a). The time to file pleadings, notice of appeal, etc. is extended by sixty (60) days, 11 U.S.C. §108(b). If the Debtor filed the action prior to filing for bankruptcy, the Debtor's attorney in that action needs to have his representation approved if expecting to be paid by the estate or the debtor, 11 U.S.C. §327.
Statute of Limitations for Concealment of Assets	The concealment of assets of a debtor is deemed to be a continuing offense until the debtor shall have been finally discharged or a discharge denied, and the period of limitations does not begin to run until such final discharge or denial of discharge, 18 U.S.C. §3284.
Statutory Lien	A lien arising under a statute, not including a security interest or judicial lien.
Stripping of Second Mortgage (as well as any additional junior mortgages)	An action available in Chapter 13s when the balance on the first mortgage on the Debtor's principal residence is greater than the value of the property. In other words, when the Debtor has no equity in the property; there is not even one dollar of value for the second mortgage to attach to. When a second mortgage is stripped, it becomes an unsecured claim. See Pond v. Farm Specialist Realty (In re Pond), 250 B.R. 8 (NDNY 2000).
Substantial Abuse	Pertains to Chapter 7 cases wherein the court, on its own motion or on a motion by the United States trustee, Chapter 7 trustee, or any party in interest, may dismiss a case filed by an individual debtor where the debts are primarily consumer debts, or, with the debtor's consent, convert such a case to a case under chapter 11 or 13 of this title, if the court finds that the granting of relief would be an abuse. 11 U.S.C. §707(b). Ties in with the Means Test for filing Chapter 7s. The court looks at the totality of circumstances. If the debts are primarily from a failed business, it is unlikely that a §707(b) motion will be made.
Superdischarge	A term used in Chapter 13s, referring to what debts are dischargeable in Chapter 13 but not in Chapter 7. Not so "super" since the Bankruptcy Code revisions in 2005. However, these are still dischargeable in 13s: tax "gap claims" specified in §507(a)(3); tax debts specified in §507(a)(8)(A, B, D, E, F, G); debts for willful and malicious injury by the debtor to another entity or to the property of another entity (other than as awarded in a civial action as a result of willful or malicious injury by the debtor that caused personal injury to or death of an individual); debtors for a fine, penalty of forfeiture to a governmental until not compensation for actual pecuniary loss, other than a tax penalty; debts that were or could have been listed or scheduled in a prior case in which the debtor waived discharge or was denied a discharge under §727(a)(2-7); debts in a judgment, order or decree issued by a federal depository institutions regulatory agency arising from fraud or defalcation; and others. §523(a)(1, 3, 6. 7, 10, 11, 12, 14, 14A, 15, 16, 17, 18).
Surrender of Property	A Debtor may choose to surrender secured property in bankruptcy. To surrender is to inform the court and the creditor that the debtor no longer wishes to retain the property. The liability for loans connected to surrendered property is discharged when the bankruptcy is completed and the judge signs the discharge order. However, real property still has to go through the foreclosure process to remove the debtor's name from the title, unless the parties shorten the process by entering into a short sale or deed in lieu of foreclosure.
Tax Returns	Debtors are required to file all tax returns applicable to them, including any pre-petition return that was not previously filed. 11 U.S.C. §1308.
Tenancy by the Entireties	In a tenancy by the entirety (a concurrent ownership of real property by a married couple), neither tenant has the right of alienation without the consent of the other. When a tenant by the entirety dies, the surviving spouse receives the deceased spouse's interest, thus acquiring full ownership of the property. This is called a right of survivorship. See also Concurrent Ownership of Real Property.
Tenancy in Common	All tenants in common hold an individual, undivided ownership interest in the real property. This means that each tenant has the right to alienate, or transfer the ownership of, his/her ownership interest. This can be done by deed, will, or other conveyance. See also Concurrent Ownership of Real Property.
Transfer	(A) the creation of a lien; (B) the retention of title as a security interest; (c) the foreclosure of a debtor's equity of redemption; or (D) each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with -- (i) property; or (ii) an interest in property.
Trustee	The representative of the bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the U.S. trustee or bankruptcy administrator. The trustee is a private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases and some chapter 11 cases. The trustee's responsibilities include reviewing the debtor's petition and schedules and bringing actions against creditors or the debtor to recover property of the bankruptcy estate. In chapter 7, the trustee liquidates property of the estate, and makes distributions to creditors. Trustees in chapter 12 and 13 have similar duties to a chapter 7 trustee and the additional responsibilities of overseeing the debtor's plan, receiving payments from debtors, and disbursing plan payments to creditors.
Unclaimed Funds	May arise in asset cases. Proceeds to creditors who were issued checks that did not clear, which are returned to the trustee. The trustee stops payment on the checks and writes checks to the clerk of the bankruptcy court. The clerk retains proceeds for five years and then escheats them to the U.S. Treasury, if unclaimed.
Undersecured Claim	A debt secured by property that is worth less than the full amount of the debt.
United States Trustee	Independent federal office in the Department of Justice which appoints and supervises the Chapter 7 Trustee panel and the standing trustees. The U.S. Trustee Office also monitors all bankruptcy cases filed in a District from start to finish. The Office plays a very active role in any Chapter 11 filings and a representative from that office conducts all Chapter 11 creditor meetings. Normally, the Chapter 11 Debtor operators as a debtor-in-possession under the supervision of the U.S. Trustee's Office and no separate trustee is appointed to administer the case.
Unliquidated Claim	A claim for which a specific value has not been determined.
Unscheduled Debt	A debt that should have been listed by a debtor in the schedules filed with the court but was not. (Depending on the circumstances, an unscheduled debt may or may not be discharged.)
Unsecured Claim	A claim or debt for which a creditor holds no special assurance of payment, unlike a mortgage or lien; a debt for which credit was extended based solely upon the creditor's assessment of the debtor's future ability to pay.
Voluntary Transfer	A transfer of a debtor's property with the debtor's consent.
Willful Violation of the Automatic Stay	Debtor must make a motion when there is willful violation of the automatic stay in order to be awarded any damages. 11 U.S.C. §362(h).

Articles

Author	Title
James Surowiecki	Our Debt to Bankruptcy, The New Yorker, April 16, 2001
James Surowiecki	Leave No Parent Behind, The New Yorker, August 18 & 25, 2003
Jeffrey Yarbrough	Life After Bankruptcy, CNN Money, September 18, 2007
James Surowiecki	Going for Broke, The New Yorker, April 7, 2008
James Surowiecki	House of Cards, The New Yorker, March 16, 2009
Jill Lepore	I.O.U. How we used to treat debtors, The New Yorker, April 13, 2009
Craig D. Robins, Esq., Publisher	Long Island Bankruptcy Blog
Leslie E. Linfield, Institute for Financial Literacy	2010 Annual Consumer Bankruptcy Demographics Report: A Five Year Perspective of the American Debtor (Abstract)
Ylan Q. Mui	Study: College graduates driving increase in bankruptcy filings, The Washington Post, September 12, 2011
New York City Bankruptcy Assistance Program	Answers to Common Bankruptcy Questions rev. 1/3/17
Debra Cassens Weiss	Some Bankruptcy Judges Look for 'Wiggle Room' in Student Debt, ABA Journal, June 18, 2018
U.S. Securities & Exchange Commission	What Happens When Public Companies Go Bankrupt

Financial Discrimination

Bankruptcy cases are public records. Some newspapers publish the names of those who have recently filed bankruptcies. Though this could make one feel as if one were being equated with the defendants listed in a police blotter, the fact of the matter is that the filing of a bankruptcy case is not a crime. To the contrary, filing bankruptcy is an option available by law for those who need to discharge or restructure their debts.

Nevertheless, filing a bankruptcy does have consequences. Any creditor whose debt is discharged in a bankruptcy case can refuse to extend credit again to the debtor. Additionally, a bankruptcy is reported on the debtor's credit report, and will affect the credit rating. At times, though, a discharging of the debtor's debts in bankruptcy increases the credit rating more than the filing decreases it.

Accounts included in a bankruptcy remain on a debtor's personal credit report for seven years from the date of the filing of the bankruptcy case. The bankruptcy case itself remains on the personal credit report for seven years if it is a Chapter 13, or ten years if it is a Chapter 7, 11, or 12. Unpaid tax liens remain on a personal credit report for up to fifteen years, regardless of a bankruptcy. By comparison, positive information may remain on a report indefinitely. A paid tax lien will remain for seven years. Requests for a debtor's credit history remain on a personal credit report for two years. Further information on this and the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., is available from the Federal Trade Commission.

A secured creditor, even when the Debtor reaffirms the debt, may decide not to continue to extend the use of online and automatic payment systems. If the creditor decides to continue to offer such options, it may request that the debtor sign for such: Sample bank letter.

Federal law prevents financial discrimination against debtors in maintaining and obtaining employment, student loans, and utility service:

11 USC §525, Protection Against Discriminatory Treatment, prevents the federal and state governments from using your bankruptcy as a reason, for example, to: deny a job to or fire a debtor; deny or terminate public benefits; evict the debtor from public housing; deny or refuse to renew a state liquor license; withhold a college transcript; deny a driver’s license; or deny a contract, such as a contract for a construction project. 11 USC §525(a).

Private employers may not terminate the employment of, or discriminate againt, a debtor in respect to employment solely because such debtor filed bankruptcy. 11 USC §525(b).

In addition, lenders may not exclude you from government-guaranteed student loan programs. 11 USC §525(c).

It is important to note that 11 U.S.C. §525(a) and (c) apply to governmental units, and §525(b) applies to a private employer. A court decision explaining the difference.

In keeping with giving a debtor a fresh start, utilities must stop all collection activity on pre-filing account balances and delinquencies. In most cases, utilities must provide service as if the customer were signing up for the first time. Customers who enter bankruptcy must still pay for the service they use while in bankruptcy. 11 U.S.C. §366, Utility Service, also provides that "(b) Such utility may alter, refuse, or discontinue service if neither the trustee nor the debtor, within 20 days after the date of the order for relief, furnishes adequate assurance of payment, in the form of a deposit or other security, for service after such date.  On request of a party in interest, and after notice and a hearing, the court may order reasonable modification of the amount of the deposit or other security necessary to provide adequate assurance of payment." Additionally, "[n]otwithstanding any other provision of law, with respect to a case subject to this subsection, a utility may recover or set off against a security deposit provided to the utility by the debtor before the date of the filing of the petition without notice or order of court."

Apart from the Bankruptcy Code, New York State law provides protection against discrimination stemming from assignments and executions.

C.P.L.R. §5252. Discrimination against employees and prospective employees based upon wage assignment or income execution states that:

            1. No employer shall discharge, lay off, refuse to promote, or discipline an employee, or refuse to hire a prospective employee, because one or more wage assignments or income executions have been served upon such employer or a former employer against the employee's or prospective employee's wages or because of the pendency of any action or judgment against such employee or prospective employee for nonpayment of any alleged contractual obligation. In addition to being subject to the civil action authorized in subdivision two of this section, where any employer discharges, lays off, refuses to promote or disciplines an employee or refuses to hire a prospective employee because of the existence of one or more income executions and/or income deduction orders issued pursuant to section fifty-two hundred forty-one or fifty-two hundred forty-two of this article, the court may direct the payment of a civil penalty not to exceed five hundred dollars for the first instance and one thousand dollars per instance for the second and subsequent instances of employer or income payor discrimination. The penalty shall be paid to the creditor and may be enforced in the same manner as a civil judgment or in any other manner permitted by law.
            2. An employee or prospective employee may institute a civil action for damages for wages lost as a result of a violation of this section within ninety days after such violation. Damages recoverable shall not exceed lost wages for six weeks and in such action the court also may order the reinstatement of such discharged employee or the hiring of such prospective employee. Except as provided for in subdivision (g) of section fifty-two hundred forty-one, not more than ten per centum of the damages recovered in such action shall be subject to any claims, attachments or executions by any creditors, judgment creditors or assignees of such employee or prospective employee. A violation of this section may also be punished as a contempt of court pursuant to the provisions of section seven hundred fifty-three of the judiciary law.