Bankruptcy Terms Explained
Below is a list of bankruptcy terms and definitions
1. 341 meeting ( creditors meeting): After filing for bankruptcy you receive notice of the meeting of creditors known as the 341 meeting. The trustee runs the meetings and you are sworn in. The trustee may ask several questions regarding the bankruptcy and the filed documents. Creditors may also attend the meeting to discuss information regarding secured property however, they rarely do. The 341 meeting is usually the only personal appearance you will have to make in a Chapter 7 bankruptcy. The meeting is will last only several minutes.
2. Automatic Stay: After we file the bankruptcy petition the federal court will instantly create an order of relief or known as the automatic stay that will stop all collection efforts. Most creditors cannot call you, contact you by mail, garnish your wages, empty your bank account, or go after your home and car. Some creditors will not be affected by the stay and others creditors can lift the stay after they receive permission from the court.
3. Assets: Anything tangible or intangible that is capable of being owned or controlled to produce value. Examples include ownership interests in property such as a car or house. Your assets will become part of the bankruptcy estate and will be subject to the court’s authority. However many assets can be exempt and will not be subject to liquidation and you will be able to retain the item.
4. Bankruptcy Estate: When you file for Chapter 7 bankruptcy almost everything you own will become subject to the court’s authority unless it falls under one of the exceptions. Property you acquire after filing usually is not part of the bankruptcy estate.
5. Discharge: Release of personal liability for the debtor for certain debts. The discharge will prevent any collection actions on debts. After a discharge you will not be responsible for paying many of your debts.
6. Disposable Income: The income left over after paying all necessary expenses.
7. Exemptions: Property that is legally out of the reach of the creditors and bankruptcy trustee. The debtor is allowed to keep exempt property. Each state has different exemption rules and procedures.
8. Mandatory Credit Counseling: Before you file for bankruptcy you must complete a credit counseling session with a nonprofit federally approved credit counseling agency. The counseling will determine if you can handle your debt load outside of bankruptcy. The credit counseling can be done online or over the phone. At the end of you counseling you will receive a certificate that must be filed with your bankruptcy petition.
9. Means Test: Is a test used to determine your eligibility to file for Chapter 7 Bankruptcy. If your income is above the median household income for your area, you will have to pass the means test to be eligible for Chapter 7 Bankruptcy. If you do not qualify for Chapter 7 Bankruptcy you still may be able to qualify for Chapter 13 Repayment Plan.
10. Secured Debt: Property pledged as collateral for a loan is considered secured debt. Examples of collateral include houses and motor vehicles. Another example of secured debt occurs when a lien has been recorded against you because of a money judgment.
11. Trustee: A trustee will be assigned to manage your case. The trustees duties include making sure your paper work are complete and examining your property to sell for the benefit of your creditors. The trustee will also look at financial transfers made during the previous year. The trustee receives a percentage of funds that he or she disburses to the debtors and receives a percentage on payments made through a Chapter 13 repayment plan.
12. Unsecured Debt: refers to a type of debt obligation that is not secured by an underlying asset or 12. Unsecured Debt: refers to a type of debt obligation that is not secured by an underlying asset or collateral. Examples include most credit card debts.