Bankruptcy Terms & Definitions
Chapter 7 Bankruptcy- Liquidation bankrutpcy case in which the trustee sells all unexempt assets and distribute the proceeds to the creditors. The debtor is dicharged of all dischargeable debts in a Chapter 7 bankruptcy.
Chapter 13 Bankruptcy- Debt repayment plan for individuals with a regular and consistent source of income. Unsecured creditors are paid form 0% to 100%.
Automatic Stay-a provision in the bankruptcy code that pevents creditors from moving forward with collection actions. Creditors are prevented from continuing with lawsuits to collect, calling you, or attempting to collect from your property or property of the estate.
Trustee - a person appointed by the court to review the bankruptcy case, sell and distribute assets to creditors that are unexempt, review the documents your filed with the court, and represent creditors.
Exemptions - Statutory laws that defines what assets a debtor may protect from being liquidated or used to pay off creditors in the bankruptcy case. Each state contains a list of exemptions that are available for a debtor to use to protect his assets.
Discharge - A permanent injunction preventing creditors from ever seeking collecting for the debt. Discharge removes the debtors personal liabilty for the debt.
341 Meeting of Creditors - Meeting in which debtor appears before a trustee and is examined by the trustee about the schedules, documents filed with the court and his/her assets.
Property of the Estate - Assets and property of the debtor that are not exempt and therefore are entitled to be sold by the trustee.
Relief from Stay - Request to have the automatic stay no longer apply. A creditor will generally request that the automatic stay not apply in order to proceed with an action against the debtors property.
Reaffirmation- An agreement between the debtor and creditor which makes the debtor personal liable for the debt. The debtor chooses to become legally responsible for repaying the debt and waives his right to discharging the debt in bankruptcy.
Non-dischargeable Debts - Debts that are specified in the bankruptcy code that cannot be eliminated by filing for bankruptcy. The debtor remains personally liable for repaying these debts after the discharge.
Consumer Debt- debt that was incurred primarily for personal or family related expenses.