Important Bankruptcy Terms
The bankruptcy process is full of rules and guidelines that are important to your bankruptcy. While it is common for people to feel confused by the process, it doesn't have to be. In fact, just getting to know a few simple terms can help you understand how the process works and make your experience with bankruptcy an easier one.
Automatic Stay- is a legal order issued by the court upon the initial filing of a case. This order prohibits creditors from collecting on a debt in bankruptcy. Once the order is issued creditors are not allowed to make any further collection attempts on the debts that are listed in the bankruptcy proceeding and must, instead, adhere to the guidelines set by the court.
Bankruptcy petition- is the intake document that outlines the details about your debts, assets, income and gives an overview of your financial history. Filing this document with the court is what initiates your bankruptcy case.
Discharge- is the action of the court when debts are resolved and the case is closed. Having a debt discharged refers to the satisfaction or elimination of the debts, as approved by the bankruptcy court. A discharge releases the debtor from liability of those debts and the creditors may not attempt to collect on debts further.
Exemption- refers to the legal protection of an asset from liquidation in bankruptcy. There are federal and state-level exemption laws that offer protection of certain assets from being used to satisfy debts in bankruptcy.
Means Test-is a test of financial eligibility for Chapter 7 bankruptcy. It compares the debtor's income to the median income level of the state. If the income is less than or equal to this amount, the debtor may qualify; if the income level is above this amount the debtor is likely ineligible for Chapter 7.
Secured debt- is a type of debt that is secured against collateral. In other words, the debt is secured against an asset, which can be repossessed in the event of default on payment. Mortgage loans, car loans, payday loans and some personal loans are examples of secured debts.
Trustee- is the court appointed representative over a bankruptcy case. They are responsible for paying creditors, collecting and distributing assets and monitoring repayment plans.
Unsecured debt- is a type of debt that is not secured against collateral. There is no tie to assets in an unsecured debt and creditors have no repossession rights in the event of default. Credit cards, medical bills, some personal loans, and utility bills are examples of unsecured debts.
Automatic Stay- is a legal order issued by the court upon the initial filing of a case. This order prohibits creditors from collecting on a debt in bankruptcy. Once the order is issued creditors are not allowed to make any further collection attempts on the debts that are listed in the bankruptcy proceeding and must, instead, adhere to the guidelines set by the court.
Bankruptcy petition- is the intake document that outlines the details about your debts, assets, income and gives an overview of your financial history. Filing this document with the court is what initiates your bankruptcy case.
Discharge- is the action of the court when debts are resolved and the case is closed. Having a debt discharged refers to the satisfaction or elimination of the debts, as approved by the bankruptcy court. A discharge releases the debtor from liability of those debts and the creditors may not attempt to collect on debts further.
Exemption- refers to the legal protection of an asset from liquidation in bankruptcy. There are federal and state-level exemption laws that offer protection of certain assets from being used to satisfy debts in bankruptcy.
Means Test-is a test of financial eligibility for Chapter 7 bankruptcy. It compares the debtor's income to the median income level of the state. If the income is less than or equal to this amount, the debtor may qualify; if the income level is above this amount the debtor is likely ineligible for Chapter 7.
Secured debt- is a type of debt that is secured against collateral. In other words, the debt is secured against an asset, which can be repossessed in the event of default on payment. Mortgage loans, car loans, payday loans and some personal loans are examples of secured debts.
Trustee- is the court appointed representative over a bankruptcy case. They are responsible for paying creditors, collecting and distributing assets and monitoring repayment plans.
Unsecured debt- is a type of debt that is not secured against collateral. There is no tie to assets in an unsecured debt and creditors have no repossession rights in the event of default. Credit cards, medical bills, some personal loans, and utility bills are examples of unsecured debts.
Source...