Bankruptcy is packed full of terms that you may never see outside of bankruptcy.
Someone new to the bankruptcy process might get really confused when trying to figure out how the bankruptcy process works. One of the reasons behind this confusion is that bankruptcy is full of terms that individuals may never see anywhere outside of bankruptcy. Here are ten terms to know about bankruptcy:
- 341 Meeting; this is the first meeting of the creditors. The meeting is attended by the debtor, a bankruptcy trustee, and any creditors that wants to attend. The meeting is usually very short, and the trustee and creditors ask the debtor any questions they may have. It's a fact-finding mission, and nothing is decided during the meeting. An attorney will attend this meeting with you, and they will make sure you are well prepared for it.
- Adversary Proceeding; this is a document used by a person that wants to file a complaint about a bankruptcy case. The debtor, a creditor, or a bankruptcy trustee can file it.
- Automatic Stay; this is a protection provided by the court to the debtor. It starts right after the debtor files for bankruptcy. It protects the debtor from collection attempts, foreclosure, lawsuits, and etc.
- Bankruptcy Petition; this is the form that begins the bankruptcy process. An attorney will file this form with the court, and your bankruptcy case will be started. Usually an automatic stay starts soon after the bankruptcy petition is filed.
- Bankruptcy Trustee; a person that oversees the bankruptcy case. The trustee will gather all of documentation regarding a bankruptcy case, and then will oversee the next steps in the case. Depending on what type of bankruptcy the case is, the trustee will distribute monthly payments to creditors, will make sure that everyone is following bankruptcy laws, and will distribute property that is not exempt.
- Chapter; the different types of bankruptcy are called chapters. Chapters 7 and 13 are commonly used for personal bankruptcies, and Chapter 11 is often used for businesses. There are several chapters of bankruptcy, and an individual needs to speak to an attorney about which type of bankruptcy they should file.
- Discharge; debts that are discharged are eliminated. Discharge can also be used to describe an exit from bankruptcy. A case will be discharged whenever all of the steps of bankruptcy have been completed.
- Exemptions; this is used to describe assets that aren't sold, or liquidated, during a bankruptcy case. In most cases, homes and vehicles are said to be exempt during a bankruptcy case. This means that the debtor will get to keep the asset.
- Means Test; this is a test to see who qualifies for Chapter 7 bankruptcy. It takes into account income, unsecured debts owned, and disposable income available. If you pass the means test, that means you qualify for Chapter 7 bankruptcy.
- Schedules; these are documents that state an individual's assets, income, and debt. A bankruptcy attorney will file these documents with the court, and the forms will allow the court to see all of your financial information.
Although this list can help you, don't rely on it too much. This list can help you understand the bankruptcy process, but there is no substitute for a good bankruptcy attorney. A good attorney has spent years dealing with bankruptcy on a daily basis, and they will help you gain the most out of your bankruptcy case. If you would like to find out more about the bankruptcy process and any of the terms mentioned above, contact a bankruptcy attorney today.