There is an entire glossary of terms that relate to bankruptcy. The list below covers some of the most common words and phrases you may hear, and what they mean.
The automatic stay is an injunction that prevents creditors from further pursuit of collection activities against a debtor. This includes debts that may result in repossession, foreclosure and wage garnishments. For debtors, the automatic stay is one of the most attractive aspects of filing for bankruptcy. The breathing room alone can often allow debtors to bring payments up-to-date or relief from collection action while entering into a payment plan. The automatic stay, in most cases, takes effect at the time of filing a case, although there are exceptions. A creditor may ask for the stay to be terminated in certain circumstances.
A bankruptcy trustee is typically an individual appointed to handle or have oversight on cases. How the bankruptcy estate is handled by the trustee will depend on the Chapter of bankruptcy. For instance, the trustee is responsible for the sale of non-exempt assets in a Chapter 7 bankruptcy, whereas in a Chapter 13 bankruptcy the trustee’s duties relate to the provision and implementation of the terms of the Chapter 13 plan. The Chapter 13 Trustee is responsible for handling and disbursing the plan payments. The United States Trustee also has oversight of cases but is not usually involved in handling the normal duties of the Chapter 7 or Chapter 13 Trustee.
There are a number of Chapters of bankruptcy you may file for depending on the amount and type of debt and your individual circumstances, including:
A Chapter 7 bankruptcy involves the liquidation of nonexempt property. The proceeds from sale of property are distributed to creditors to repay debts. This process is overseen by the Chapter 7 Trustee.
If you are filing for bankruptcy as a corporation or partnership, Chapter 11 bankruptcy is a typical option. In most cases, the business continues to operate after the debtor proposes a plan of reorganization that allows the repayment of debts over time. Individuals also may file a Chapter 11.
A “family farmer” or a “family fisherman” may file under Chapter 12 bankruptcy. This is a special type of bankruptcy that only applies to certain types of individuals and/or businesses that have debt and income due to farming or fishing operations.
If you are an individual and have regular income, you may file for a Chapter 13 reorganization bankruptcy. You get to keep your property, in most cases, while repaying creditors through an agreed repayment plan for 3 to 5 years so long as you can afford the payment plan.
A creditor is an individual or business to which you owe money or who claims you owe money. Such creditors are involved at various stages of a process in all Chapters of bankruptcy.
Individuals are required to complete credit counseling prior to filing for bankruptcy. Credit counseling is delivered by a nonprofit budget and credit counseling agency.. You receive a certificate upon completion of the credit counseling course, which must be filed with the court at the time of filing the bankruptcy case.
The bankruptcy code allows for certain types of debt to be eliminated. These types of debt are referred to in bankruptcy as “dischargeable.” Dischargeable debts often include unsecured debts such as medical expenses and credit card debt. Many other types of debts are dischargeable. The most common type of debts that typically are not dischargeable are child support, student loans, and certain types of taxes.
For a full glossary of bankruptcy terms from A-Z, you can refer to the United States Courts website. Alternatively, H. Lehman Franklin P.C. can provide an individualized consultation where you can discuss your specific financial circumstances in Georgia. Call our offices today at 912-764-9616 or email at firstname.lastname@example.org.