The bankruptcy process uses terminology not found in other financial markets or conversations.
A lawsuit filed in the bankruptcy court which is related to the debtor's bankruptcy case. Examples are complaints to determine the dischargeability of a debt & validity of liens.
The amount that is unpaid & overdue as of the date the bankruptcy case is filed. A Chapter 13 bankruptcy filing can "cure" arrearages such as mortgage, automobile, child support, and alimony.
The personal possessions belonging to the debtor including cash, real estate, bank accounts, retirement accounts, vehicles, household furnishings, jewelry, etc.
An injunction that stops lawsuits, foreclosures, garnishments, and collection activity against a debtor the moment a bankruptcy petition is filed.
Elimination (avoid) some kinds of liens that interfere with (or impair) an exemption claimed in the bankruptcy. Most judgment liens that are attached to a debtor's home can be avoided if the total of the liens is greater than the value of the property in which the exemption is claimed.
Rights given to the bankruptcy trustee or debtor in possession to recover certain transfers of property such as preferences or fraudulent transfers or avoid liens created before the beginning of the bankruptcy.
Title 11 of the US Code that governs bankruptcy proceedings. Bankruptcy is a matter of federal law and is, with the exception of exemptions, and is the same in every state.
The estate is all of the legal and equitable interests of the debtor as of the beginning of the case. From the estate, an individual debtor can claim certain property exempt; the balance of the estate is liquidated in a Chapter 7 to pay administrative costs and claims of creditors according to priority.
Chapter 7 Bankruptcy
It is a process provided under federal law by which you are entitled a fresh start. Chapter 7 eliminates most kinds of unsecured debt and is usually designed for someone with no assets.
Chapter 13 Bankruptcy
Is an interest-free 5 year debt repayment plan whereby the trustee consolidates your debt and pays your creditors. It can save your house from foreclosure or save a car from repossession.
The property that is subject to a lien for payment of a debt or performance of a contract. A creditor with rights in collateral is a secured creditor because the claim secured by collateral.
A chapter 7 case may be converted to a Chapter 13 if the debtor is eligible.
Any person or business that a debtor owes money to.
Denial of Discharge
A penalty for debtor misconduct. Debts that could have been discharged cannot be discharged in any subsequent bankruptcy. The administration of the case (the liquidation of assets and the recovery of avoidable transfers) continues for the benefit of the creditors.
The legal term for the order eliminating a debt in a bankruptcy case. The debt is no longer legally enforceable against the debtor, but a lien that secures debt may survive the bankruptcy such as a mortgage.
A homeowner's financial interest in a property. Equity is the difference between the value of the property, what is owed, and other liens.
Property that is removed from the bankruptcy estate and not available to pay to the claims of creditors. The debtor gets to keep exempt property to make a fresh start after bankruptcy.
A list of the kinds and values of property that each state allows debtors to keep that is beyond the reach of the trustee and creditors.
Fair Credit Reporting Act
Fair Debt Collections Practices Act
A court ordered method of debt collection after a judgment is entered against the debtor.
No Asset Case
A Chapter 7 case in which the trustee determines that there is no significant assets to liquidate. The debtor retains all real and personal property.
A debt that cannot be eliminated in bankruptcy.
Property that is not real property or affixed to real property, such as cars, furniture, stocks, bonds, and bank accounts.
A transfer to a creditor in payment of an existing debt made with certain time periods before the bankruptcy was filed. Preferences may be recovered by the trustee for redistribution among the creditors.
Claims or events that occurred before the beginning of the bankruptcy was filed. Generally, only pre-petition debts may be discharged in a bankruptcy proceeding.
Certain debts, such as unpaid wages, spousal or child support, and taxes are elevated in the payment hierarchy under the Bankruptcy Code. Priority claims must be paid in full before unsecured debts.
Proof of Claim
Document a creditor files showing how much money is owed to them by the debtor, together with all supporting evidence of the claim.
Property of the Estate
The property that is not exempt and belongs to the bankruptcy estate. Property of the estate is usually sold by the trustee and the claims of creditors paid from the proceeds.
The debtor can choose to reaffirm debts that would otherwise be discharged by the bankruptcy. Generally, when a debt is reaffirmed a hearing is required and all parties must agree--the debtor, creditor, and bankruptcy court. The debtor is obligated to pay the debt in full and the creditor can sue or repossess the property if the debtor does not pay.
Relief of Stay
A creditor can ask the judge to lift the automatic stay and permit some action against the debtor or the property of the estate. If the motion is granted, the moving party (but no one else) is free to take whatever action the court permits. Relief can be absolute, for example permitting the creditor to foreclose on property, or limited allowing the recordation of a notice of default.
A secured debt is one where the creditor takes personal or real property as collateral. A creditor whose debt is secured has a right to take property to satisfy a debt in default.
A private individual or corporation appointed in bankruptcy filings who represents the interests of both the debtor and creditors. Trustees are usually lawyers.
A debt is unsecured if there is no collateral that is security for the debt. Most consumer debts are unsecured debts.
A debt is unsecured if you have simply promised to pay a creditor a sum of money at a particular time and have not pledged any real or personal property as collateral for that debt. Generally, credit cards, utility bills, and medical bills are unsecured.