Defining Bankruptcy Terms
In today’s world there is no limit to the specialized terminology of specific subject areas. The practice of law is certainly no exception. Of course now with the power of the internet people no longer need to be so confused, the definition of a term is but a click away. This article is intended to help unlock the mystery of the most common words and phrases used in the practice of bankruptcy law. Whether a person lives in Chattanooga Tennessee, or anywhere else in the United States. Bankruptcy terms are commonly and frequently used because as part of the federal bankruptcy code.
What is Bankruptcy?
Bankruptcy is the area of federal law that allows a person or entity that is insolvent to petition the court for relief of the obligation to pay the debts owed. This can be total relief or partial, or even just relief from the payment schedule.[pullquote]Chapter[/pullquote] the bankruptcy term chapter comes from the United States Code which is set forth in Title, Chapter and Section Format. Bankruptcy law is set forth in Title 11 of the United States Code and encompasses 15 chapters. . The two most relevant chapters for a consumer are 7 and 13. [pullquote]Chapter 7[/pullquote] is the chapter of Title 11 of the U. S. Code (USCS OR USC) that provides an individual, married couple, or entity such as a corporation to request a complete discharge of debt. This is officially known as liquidation bankruptcy because certain assets can be sold by the Trustee in order to pay something to the creditors. [pullquote]Chapter 13[/pullquote] is the chapter of Title 11 of the U. S. Code designed for consumer debtors or small businesses to enter into a court ordered court supervised repayment plan. The Chapter 13 Plan is proposed by the debtor and his/her bankruptcy attorney and is intended to provide for the repayment of all or some of the total debts owed over a period of time ranging between 36 and 60 months.
Bankruptcy Terms to Know[pullquote] Automatic Stay [/pullquote]upon the filing of a petition for any chapter of bankruptcy the debtor obtains automatic instant relief from a creditor’s efforts to collect a debt. All creditors are stayed – temporarily stopped – from taking any action against the debtor or the debtor’s property. A creditor must ask the court to lift the stay. [pullquote]Debtor [/pullquote] this bankruptcy term indicates a person or entity that owes money to a creditor. A debtor can be a person, a corporation, a government, and can include a married couple filing together, or a married person filing bankruptcy without his/her spouse. [pullquote]Creditor[/pullquote] the bankruptcy term creditor means a person or entity that is owed money or property from a debtor. This can include a claim of an undetermined amount of financial liability, such a a litigant in an ongoing lawsuit with undetermined damages. [pullquote ]Discharge[/pullquote] the legal bankruptcy term which means that the obligation to pay a debt is eliminated forever. Even though the debt has not been repaid, the debtor is relieved of the legal responsibility to pay. The creditor can no longer communicate with the debtor in any way about the debt. [pullquote]Petition[/pullquote] in any court proceeding a petition must be filed with the court in order to begin the case. In bankruptcy the petition includes all of the debtor’s financial information and is the formal request for debt relief. [pullquote] Reaffirmation[/pullquote] in a Chapter 7 bankruptcy to reaffirm a debt means that the debtor and the creditors agree to maintain the loan contract as of the bankruptcy never invited. The bankruptcy court must approve any reaffirmation agreement. [pullquote]Surrender[/pullquote] in bankruptcy the debtor can surrender or give a secured asset back to the creditor and ask the court to discharge any difference between the sale of the asset and the balance owed – the deficiency. [pullquote]Redeem[/pullquote] the bankruptcy term redeem is when a secured asset like an automobile is repossessed prior to filing bankruptcy. The debtor can ask the Court to require the return of that item.
[pullquote]Trustee [/pullquote] in bankruptcy a Trustee is appointed to administer the bankruptcy case and protect the unsecured creditors. The Trustee conducts the required meeting of creditors. There is a “local” trustee and the United States Trustee involved in most consumer bankruptcy cases.[pullquote]Meeting of Creditors [/pullquote] in every bankruptcy case the debtor or debtors are required to attend a meeting of creditors, which is an informal proceeding conducted by the Trustee which allows the trustee and creditors to ask questions of the debtor under oath and on the record
Classification of Debt in Bankruptcy[pullquote]Priority[/pullquote] the bankruptcy term priority debt means a debt that can not typically be discharged and must be paid before other creditors. This includes tax debts, fines, Criminal fees, and other specified debts. [pullquote ]Secured[/pullquote] the bankruptcy term secured debt means one in which the creditor holds an interest in collateral whether it is the item purchased or another item pledged as collateral. Secured creditors are treated differently in bankruptcy than unsecured. [pullquote]Unsecured[/pullquote] this bankruptcy term means debts like credit cards medical bills, personal loans, judgments, etc. The unsecured creditor has no collateral or guarantee of payment. The bankruptcy trustee represents the interests of the unsecured creditors.
Bankruptcy Attorney and Legal Advice
The above-listed bankruptcy terms are commonly used in bankruptcy proceedings, and are listed here to help facilitate a basic understanding of the process of filing for bankruptcy. In order to receive legal advice and the professional assistance that is necessary, one should contact a bankruptcy attorney and schedule a consultation appointment. In Hamilton, Rhea, Bradley, Bledsoe, and Sequatchie Counties in Tennessee, contact the experienced Chattanooga bankruptcy attorneys of Purple Law Firm, to learn more about bankruptcy terms and what it all means to you.