BANKRUPTCY TERMS & DEFINITIONS

Bankruptcy terms and definitions might sometimes be difficult to get your head around at first, especially when you are in a stressful personal situation and do not feel like you have the energy to get through reading a lot of complicated paperwork. Knowing the terms frequently used in bankruptcy proceedings will make your discussions with attorneys and other parties in the case more effective and more comfortable as well. These are some of the most common terms you might come across during preparation and filing of your bancrupsycase:

Account Reaffirmation
An agreement between you and a given creditor that you will repay all or a portion of your account with that creditor, even though you have filed bankruptcy. In return the creditor agrees not to reposes property (in the case of a mortgage) or to suspend privileges (in the case of a credit card).

Automatic Stay
Filing under any chapter of the Bankruptcy Code prevents any further collection attempts, wage garnishment, or other damaging measures that might otherwise be taken against you. The purpose of a stay in Chapter 13 is to allow for extra “breathing room” while the repayment plan is drafted and approved. In Chapter 7 the stay allows the trustee the protection and time necessary to begin liquidation. There are some, but not many, exceptions to the stay.

Bankruptcy Code
Official legislation found at 11 U.S.C. §101 et. seq. (“Title 11″) containing the laws for bankruptcy liquidation and rehabilitation cases. Since its passage in 1978 the Code had been modified several times.

Bankruptcy Court Clerk
The official at the Bankruptcy Court who receives all documents pertaining to your case. The clerk is sometimes responsible for scheduling hearing for bankruptcy cases as well.

Bankruptcy Judge
The Bankruptcy Judge presides over the administration of your bankruptcy case, and makes rulings about any parts of the case that come into question. The judge moderates between debtors, appointed trustees, and creditors.

Chapter 11
Chapter of the Bankruptcy Code addressing financial reorganization and protection for businesses. Chapter 11 is designed to give businesses the chance to continue operations and gain relief from unmanageable debt.

Chapter 13
Chapter of the Bankruptcy Code addressing financial rehabilitation for an individual with a proven income who can eventually repay at least most owed debts. Chapter 13 is designed to give individuals a fresh start and allow a reorganized payment plan suitable to all parties.

Chapter 7
Chapter of the Bankruptcy Code addressing liquidation of an individual’s personal assets. Chapter 7 is designed to discharge all of an individuals unsecured debts and offer creditors a partial compensation by liquidation of the debtor’s non-exempt property.

Claim
Any right to payment put forth by a creditor.

Creditor
Any institution that has rights to payments from a creditor, for example, a credit card company.

Debtor
Any person, especially when involved in a bankruptcy case, who has payments due to a creditor, for example, a consumer who uses a credit card.

Discharge
An order that terminates the debtor’s obligation to make payments owed to creditors. A discharge “erases” your nonsecured debts permanently.

Exemption
A ruling over certain assets of a debtor that says they are not subject to repossession or liquidation in a bankruptcy case, for example, a car that is necessary for the debtor to get to a place of employment.

Federal Rules of Bankruptcy Procedure
Puts forth all the procedures of bankruptcy law. Besides the Federal Rules of Bankruptcy Procedure, each local district as well as each individual Bankruptcy Judge may also have distinct additional rules.

Foreclosure
The loss of the right to the property that is being paid for by a mortgage. A mortgage represents security/collateral for the money that is borrowed in the form of real estate. A foreclosure is put into effect when payments are not made on a timely basis or as outlined in the mortgage agreement.

Involuntary Petition
When creditors file to place a debtor into bankruptcy. Since the movement is one that is being forced onto the debtor, the option to file under Chapter 13 is usually not granted.

Lien
A monetary claim against a property that has to be met before full ownership of the property is granted. For example, in a home loan, the mortgage company technically owns the house until you have satisfied the lien- in other words, until you pay them the amount owed for the mortgage.

Proof of Claim
Documentation filed by a creditor to “prove” the amounts owed by the debtor. This is essentially a detailed account history of your activity with the creditor.

Secured Claim
A claim that has collateral of equal or greater value than the amount of the claim, for example a mortgage.

Secured Debt
Debts that have collateral attached to them in the form of a lien on property, for example mortgage, car loan, or sometimes IRS tax liens.

Trustee
The court-appointed representative who sees over your assets in a bankruptcy case. In Chapter 7 the trustee is in charge of liquidating your assets. In Chapter 13, the trustee participates in the formation of your new payment plan.

Unsecured Claim
A claim that has no collateral to secure its value or that has collateral of lesser value than the amount of the claim.

Unsecured Debt
Debts that have no claim on personal property or any other physical item you own, such as credit cards, student loans, medical bills, or utility bills for services that have been shut off or disconnected.

Voluntary Petition
When a debtor voluntarily files for debt relief under one of the chapters of the Bankruptcy Code. The filing of the voluntary petition puts the automatic stay into operation.

HOW TO FIND A BANKRUPTCY ATTORNEY?

If you have made the decision to file for personal bankruptcy, it will be to your best advantage to hire a bankruptcy attorney to help you with your case. Finding the right attorney for your needs can be a challenge, especially when you are facing severe financial restrictions. However, most bankruptcy attorneys recognize the situations and needs of their clients and can be more modest in their service charges. Getting in touch with a bankruptcy attorney is just like finding any other business or service. The following are some ways for you to go about finding a bankruptcy attorney:

Ask someone you know
If you happen to know anyone who has had to file bankruptcy, ask if they used an attorney and what their experiences were like. Hearing a client’s testimonial is always the best way to get an inside view on a particular attorney.

Phone directory
Look under “attorneys,” “legal services,” or “bankruptcy.” The yellow pages will doubtlessly list dozens of attorneys to choose from, you should make a point of contacting several and comparing their services and fees. Before you call, write down a list of questions you want to ask and be sure to keep track of the answers each firm gives you.

Referrals from the internet and organizations
There are several sources on the internet that will help you find a bankruptcy attorney. Many people have found valuable advice and information on sites such as www.lawyers.com, which lists the particular qualifications of each attorney in its database. In addition, local bar associations often have referral services to help connect attorneys with clients in search of a particular type of representation.

Once you have found one or more attorneys that seem suitable for you, arrange for an initial consultation. Keep in mind that a reputable bankruptcy attorney will not charge you for this first meeting. A bankruptcy case involves revealing a lot of personal information at a time that is by nature usually very stressful and difficult. So it’s important to see how you feel just talking to the attorney you’re meeting with. Ask a lot of questions upfront, because you’re sure to have more down the line. An attorney’s job is to represent your personal interests, and having the right bankruptcy attorney is perhaps the most valuable asset during your filing. So don’t feel pressured into anything- make sure you’re happy with what you see before you hire an attorney.

WHAT TO KNOW ABOUT BANKRUPTCY LAWS

Bankruptcy laws are often intimidating because you come in contact with them just when you have very little in the way of resources on your own behalf and when it is very likely that you’ve already faced a good deal of stressful confrontation with your creditors. You should keep in mind, though, that bankruptcy laws exist not only to account for your personal responsibility, but also to ensure protection of your personal rights and security.

There are certain regional differences that determine the particulars in how your bankruptcy case will be handled. There are 94 federal judicial districts throughout the country that handle bankruptcy cases. It’s very important to remember that even while you are working with local legal authorities that manage your case according to state or district regulations, bankruptcy is a federal case. Federal United States bankruptcy courts have exclusive jurisdiction in all bankruptcy cases. This means a few key things, most notably that bankruptcy cases cannot be filed in state courts, and also that any crime associated with a bankruptcy filing is therefore considered a federal crime and punishable by extremely serious measures.

Bankruptcy laws are founded on two principles. In the event of the financial impossibility of meeting existing debts, bankruptcy provides a way to:

• Grant a debtor with non-criminal debts the chance to establish a “new start” through total or partial relief of debts
• Provide creditors with repayment per property value that is available through the debtor

Bankruptcy laws can be complicated and loaded with difficult “legalese” terminology, so remember that when you are filing bankruptcy, you are acknowledging your own responsibility and therefore have the right to receive a sensible explanation of exactly what bankruptcy laws will come into effect in your case and what they will mean for you. There are several informative sources that offer in-depth presentations and down-to-earth explanations of these laws, so after you have been given official notification of what bankruptcy laws will apply in your case, you will probably benefit enormously from consulting one of these guides.