Filing bankruptcy is often stressful and confusing. You have to know which bankruptcy chapter to file, then deal with the legal proceedings that follow. It doesn’t have to all be bad, however—make things easier by learning some of the legal terms you’ll hear during your case. Here are 14 important terms heard during bankruptcy proceedings.
- Creditor. A person or company that you owe money.
- Debtor. The person who owes money to a creditor.
- Bankruptcy Court. The division of a federal court that oversees bankruptcy cases. The court is assisted by a trustee, judge, and administrator.
- Automatic Stay. A legal order that stops creditors and debt collectors from collecting debts or taking legal action against debtors in bankruptcy court.
- Assets. Items of value owned by the debtor filing bankruptcy. Assets include real estate, bank accounts, personal belongings, and money owed to the debtor.
- Exempt Property. Some assets are exempt from creditors during bankruptcy. Each state has its own exemption laws. In some states, a debtor filing bankruptcy can choose to follow either the federal exemptions or the state exemptions.
- Non-Dischargeable Debt. Debts that aren’t discharged during bankruptcy. Student loans, child support, and some taxes are examples of non-dischargeable debt.
- Chapter 13 Bankruptcy. A form of bankruptcy that allows the debtor to reorganize their personal debt. The bankruptcy court creates a monthly repayment plan that makes it possible for the debtor to repay all or some of the debt.
- Chapter 11 Bankruptcy. A form of bankruptcy that is usually filed by businesses. This chapter protects business assets while the company restructures operations to create a payoff plan.
- Chapter 7 Bankruptcy. A form of bankruptcy that discharges unsecured debts. Unsecured debts include medical bills and credit cards. Chapter 7 is the most common type of bankruptcy filed by individuals.
- Discharge. An order that states the debtor is no longer responsible for paying debts released in the bankruptcy case.
- Secured Debt. A type of loan that is secured by an asset. The creditor can repossess the asset if the debtor doesn’t pay the loan. A car loan is an example of secured debt.
- Unsecured Debt. A loan that isn’t secured by an asset. A credit card is an example of unsecured debt.
- Schedules. A list of your monthly budget, assets, and expenses.
Contact a bankruptcy lawyer to learn more about filing bankruptcy.