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341 Meeting
The informal meeting of debtor’s creditors that is scheduled approximately 30-45 days after the bankruptcy is filed. This meeting is called a “341 Meeting” after the section in the bankruptcy code that requires it. 11 U.S.C. 341. For most simple consumer cases, the actual creditors usually do not attend the meeting personally and the court appointed trustee will conduct the meeting. Typically, the trustee asks the debtor a few questions regarding their bankruptcy schedules and makes sure that the debtor is eligible for the Chapter that they are filing.
Adversary Proceeding
A lawsuit filed in the bankruptcy court which is related to the debtor’s bankruptcy case, such as a complaint to determine the dischargeablitly of a debt or a complaint to determine the extent and validity of liens.
Assets
Personal possessions of value, including real estate, vehicles, cash, investments, and jewelry.
Automatic Stay
An injunction that prohibits any further collection activity against the debtor once the bankruptcy petition is filed with the court. It stops lawsuits, foreclosures, garnishments, utility cut-offs, repossessions, collection calls, and some drivers license suspensions.
Bankrupt
The entity that files a bankruptcy. An individual who files for bankruptcy protection is considered to be “bankrupt”.
Bankruptcy
An individual or entity that files for “bankruptcy” has legally declared their inability to satisfy one’s debts as they become due.
Bankruptcy Attorney
A lawyer who is licensed to practice in Federal Bankruptcy Court. Typically, individuals or entities hire a bankruptcy attorney to assist them in preparing their bankruptcy schedules and representing them for matters arising from the filing of the bankruptcy petition.
Bankruptcy Code
The informal name given for the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the statutory body that makes up the bankruptcy laws.
Bankruptcy Court
The informal name given for the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the statutory body that makes up the bankruptcy laws.
Bankruptcy Estate
All legal or equitable interests that a debtor has at the commencement of a bankruptcy case.
Bankruptcy Judge
The “Bankruptcy Judge” is a judicial officer of the United States district court who presides over the administration of bankruptcy cases and rules on contested aspects of a bankruptcy case.
Bankruptcy Lawyer
See “Bankruptcy Attorney”
Bankruptcy Petition
The document filed with the court to initiate a bankruptcy proceeding.
Chapter 11
The Chapter in the Bankruptcy Code generally permitting a business entity to file for reorganization proceedings and enter into a court ordered repayment plan while still maintaining the ability to continue running the business.
Chapter 13
The Chapter in the Bankruptcy Code generally permitting a debtor to enter into a court ordered repayment plan for a period of three to five years while still keeping any property that would be otherwise liquidated in a Chapter 7 bankruptcy.
Chapter 7
The Chapter in the Bankruptcy Code generally permitting a debtor to eliminate all dischargeable debts without making any payments to creditors. There are several requirements that a debtor must meet to be eligible to file a Chapter 7 bankruptcy.
Claim
Any asserted right to repayment made by a creditor against a debtor.
Collateral
The property that is subject to a lien. A creditor will have a secured claim if they hold property as “Collateral”, and the debtor must surrender the collateral if they no longer wish to pay for the property, but most debtors choose to keep the property listed as collateral and continue to pay for the property even after the bankruptcy.
Confirmation
The bankruptcy judge’s final approval of a plan of reorganization filed by a debtor in either a Chapter 7 or Chapter 11 bankruptcy.
Consumer Debts
Debts incurred for personal needs.
Conversion
The process in which a debtor changes chapters in a bankruptcy proceeding. Typically, a debtor would not choose to convert from a Chapter 13 bankruptcy to a Chapter 7 bankruptcy, or vice-versa, unless they had a significant change in their financial circumstances.
Cramdown
The ability of the Bankruptcy court to confirm a plan of reorganization over the objections of some classes of its creditors.
Credit Counseling
Debtors are required to complete a credit counseling course with an agency approved by the United States Trustee’s office before filing either a Chapter 7 or Chapter 13 bankruptcy. The counseling can take place either online, in person, or on the phone and is intended to make sure that a debtor has reviewed other options before filing bankruptcy.
Credit Report
A report containing a record of an individual’s credit history, including identifying information, credit accounts and loans, public records, late payments, and recent inquiries.
Creditor
The person or business to whom money is owed by the debtor.
Creditors Meeting
See “341 hearing”
Debtor
A person or entity who has either voluntarily filed a petition for relief under the Bankruptcy Code or against whom an involuntary petition is filed.
Debtor Education
Debtors are required to complete a debtor education course to obtain their bankruptcy discharge. This course is separate than the credit counseling requirement and, unlike the credit counseling portion, it takes place after the case filed. The counseling can take place either online, in person, or on the phone and is intended educate the debtor on personal financial management.
Default
The failure by an entity to make payments that are contractually due under an agreement to which it is a party.
Discharge
An order from the Bankruptcy judge that releases a debtor from certain dischargeable debts set forth in the Bankruptcy Code.
Dischargeable Debts
Financial obligations that a debtor is able to eliminate in a bankruptcy proceeding. Generally, credit cards, medical bills, repossessions, and unsecured loans are all “Dischargeable Debts”.
Dismissal
A court ordered termination of a bankruptcy proceeding without the entry of a discharge. Once the case is discharged, the automatic stay is lifted and the debtor no longer receives the protection of the bankruptcy court. Creditors may recommence all collection activities and the debtor is responsible for all of their debts once again.
Equity
A homeowner’s financial interest in a property. “Equity” is determined by subtracting the amount of mortgages and other liens from the fair market value of the property.
Exempt Property
Property that is protected from the reach of creditors or the bankruptcy trustee. Each state has its own statutory list of what property can be exempted.
Exemptions
Exemptions are the lists of the kinds and values of property that is protected from the reach of creditors or the bankruptcy trustee. The exemptions can significantly differ depending on which state you are required to file bankruptcy in.
Filing Fees
As of April, 9th, 2006 the filing fee for Chapter 7 is $299, and the filing fee for a Chapter 13 is $274. The filings fee is the fee charged by the Bankruptcy court to administer each bankruptcy. Generally, this fee is paid by the debtor in addition to any attorney fees.
Foreclosure
The legal process by which a mortgagor of real property attempts to repossess the homeowner’s property, usually due to a failure to comply with the terms and conditions of the mortgage.
Fraudulent Transfer
A transfer of a debtor’s property which was made within two years prior to the filing of the bankruptcy petition that was made in order to delay or defraud creditors, or for which the debtor receives less than the transferred property’s value. A common example of a “Fraudulent Transfer” in a bankruptcy case is when a debtor has recently transferred their interest in real estate to a relative. This can be considered a “Fraudulent Transfer” even if the debtor had no actual intent to defraud the court or his creditors.
Fresh Start
An informal term typically used to refer to the period immediately following a discharge where the debtor is able to restart their financial goals without the burden of the debts that were discharged in the bankruptcy.
Garnishment
A court-ordered wage deduction that directly takes a portion of a debtors earnings to satisfy a debt which the creditor has already obtained a judgment for. Garnishments typically are between 15-25% of an individuals wages. The filing of a bankruptcy case immediately stops any non child-support garnishments.
Joint Petition
A bankruptcy petition that is jointly filed by both spouses.
Lien
An interest in real or personal property which secures a debt. Examples of liens include voluntary liens, such as mortgages or most auto loans, and involuntary liens, such as a judgment or tax lien.
Liquidation
The dissolution of a company (or individual) where the proceeds from the sale of the company’s or individual’s assets are sold by auction. Although Chapter 7 is technically a liquidation bankruptcy, the vast majority of cases are considered to be “no-asset” cases and no property of the debtor is sold.
Liquidation Bankruptcy
Chapter 7 is also known as a “Liquidation Bankruptcy” because the trustee has a right to sell any assets that are not protected by the bankruptcy exemptions. However, most Chapter 7’s are relatively simple and don’t involve any sort of liquidation.
Means Test
The “Means Test” is a major provision in the new bankruptcy laws and is an objective income-based determination of whether an individual is presumed to be eligible for relief through a Chapter 7 bankruptcy.
Meeting of the Creditors
See 341 Hearing.
No-Asset Case
A chapter 7 case where the bankruptcy court determines that there are no assets available to satisfy any portion of the unsecured creditors’ claims. The vast majority of cases are “No-Asset Cases” because debtors are usually able to protect all of their assets with the applicable exemptions.
Non-Dischargeable Debts
Financial obligations that a debtor is not able to eliminate in a bankruptcy proceeding. Generally, student loans (unless the debtor can prove an undue hardship), most taxes (some older taxes are dischargeable), criminal fines and traffic tickets, alimony and child support, and debts for personal injury caused while intoxicated are all “Non-Dischargeable-Debts”. Additionally, some fraudulent debts may be determined to be non-dischargeable.
Personal Bankruptcy
A bankruptcy filed by an individual.
Personal Property
All property other than real property and buildings attached to real property. Examples are cars, stocks, bank accounts, furniture, clothing, etc.
Petition
The document that is filed to commence a bankruptcy filing.
Post-Petition
Occurring after the filing a bankruptcy petition. Any debts that are incurred “Post-petition” cannot be discharged in the bankruptcy proceeding.
Pre-Petition
Occurring before the filing of a bankruptcy petition. Debtors do not have any protection of the bankruptcy laws during this period.
Priority Claims
Certain debts, such as recent taxes, unpaid wages, and child support are paid back first in a Chapter 13 bankruptcy, ahead of other non-priority-unsecured claims.
Proof of Claim
A written statement that the creditor files with the bankruptcy court indicating the type of debt and amount owed to them. If an unsecured creditor does not file a “Proof of Claim” in a Chapter 13 bankruptcy, the debt will be discharged with the other unsecured debts at the conclusion of the repayment plan.
Property of the Estate
All legal and equitable interests of the debtor. Technically, even the exempted assets of the debtor and “Property of the Estate” until the exemptions are finalized.
Reaffirmation Agreement
An agreement by a chapter 7 debtor to keep the terms and conditions of a contract that otherwise would have been eliminated in the bankruptcy proceeding. Many debtors decide to reaffirm their house and cars, thus continuing with payments while keeping the property.
Relief from Stay
When a bankruptcy judge permits a creditor to take some action against the debtor’s property that would otherwise be prohibited under the provisions of the “automatic stay”.
Repossession
The action of taking back property that was pledged as collateral for a loan.
Schedules
Detailed lists of assets, liabilities, and other personal and financial information required to commence a bankruptcy case.
Secured Creditor
A creditor who was pledged collateral in the event of default on the terms of a loan.
Secured Debt
A debt where the creditor holds personal or real property as collateral. A debtor must choose to reaffirm, redeem, or surrender the property listed as collateral.
Straight Bankruptcy
See “Chapter 7 Bankruptcy.”
Trustee
A court appointed position responsible for representing the interests of creditors in the bankruptcy estate and administering any assets of the estate.
U.S. Trustee
An officer of the Department of Justice appointed by the Attorney General to perform administrative tasks in the bankruptcy proceeding.
Unsecured Creditor
A creditor who does not hold any collateral.
Unsecured Debt
A debt that is not backed by any collateral. Typically, credit card debts, medical bills, repossessions, and payday loans are unsecured debts and can be eliminated in a bankruptcy.
Wage-Earner Bankruptcy
Informal term typically referring to a Chapter 13 bankruptcy where the debtor is required to have a source of income to show that plan payments are feasible.
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