Some Key Terms To Know When Considering Bankruptcy, Part Two

Some Key Terms To Know When Considering Bankruptcy, Part Two

There are some important, but confusing, terms that emerge over the course of a bankruptcy case. Here is a quick, non-exhaustive summary of these terms. Anyone considering bankruptcy will make the best ultimate decision that personally suits them if they know as much as possible about the bankruptcy process.

The definitions contained in this blog are not comprehensive. The purpose of this blog is to provide simple common definitions that laypersons can use and understand. As with the content of any blog, the information contained herein should not be treated as legal advice. Consult an attorney if you have specific questions and an immediate need for answers.

CHAPTER 13: A reorganization exclusively for natural persons with a regular source of income. Chapter 13 eligibility is limited to individuals with unsecured debts of less than $419,275 and secured debts of less than $1,257,850. Creditors are paid based on terms in the debtor’s court-approved plan in monthly payments over three to five years. Debtors pay an amount equal to the pro-rata share of their disposable income over the life of the plan. This must also satisfy the best interest of creditors test as creditors must receive no less than what they would have received in a chapter 7 bankruptcy case. A Chapter 13 case allows debtors to retain assets that they may have been required to liquidate in a Chapter 7 proceeding. The Chapter 13 Trustee oversees and administers the case.

CHAPTER 13 TRUSTEE. A person appointed to administer a chapter 13 case who receives plan payments, oversees and approves the plan, and disburses adequate protection and plan payments to creditors.

DISCHARGE. A discharge is the goal of any Chapter 7 or Chapter 13 bankruptcy filing. While the automatic stay is temporary and finite, lasting only for the duration of the case, a discharge is permanent and forever prohibits creditors from attempting to collect their debt from the discharged debtor. Some debts, such as child support, some taxes, and student loans, are nondischargeable. Thus, the debtor remains legally responsible for paying them after the conclusion of the case.

EXEMPTIONS. These are provided by state and federal law. Exemptions entitle debtors to “exempt,” or protect, property from creditors. It is the responsibility of bankruptcy debtors to claim exemptions. Property that is “exempt,” may not be liquidated for the benefit of creditors. It is important for debtors to consult with an experienced bankruptcy attorney who may help determine the applicable exemptions to protect their assets.

MEETING OF CREDITORS. More commonly known, at least to bankruptcy attorneys, as a “341 Meeting” because it is based on § 341 of the Bankruptcy Code. This meeting is one of the rare times, if not only time, that a debtor must appear before the trustee. The debtor must testify under oath about information provided to the trustee and filed with the court. This includes the accuracy of the petition, statements, and schedules. Debtors are permitted to be represented in person by an attorney. At this meeting, the trustee will provide an opportunity for any creditors who are present to examine the debtor or ask questions of the trustee – nevertheless, many 341 meetings last no longer than fifteen minutes.

SCHEDULES. The schedules are an attachment with the petition although they may be filed within two weeks of the petition. The schedules list the debtor’s assets, property, exemptions, debts, leases, executory contracts, income, and expenses.

SECURED DEBT. This is a debt that is secured by some collateral that a creditor may repossess and sell in the event of nonpayment. Mortgages and automobile loans are examples of “secured debts.”

STATEMENT OF FINANCIAL AFFAIRS. This is another attachment to the petition in which the debtor identifies the sale or transfer of property, payments to creditors, pending legal proceedings, and information about the operation of a business, if applicable.

STATEMENT OF INTENTION. On this statement, the debtor lists his or her intentions for any property that is securing a debt. For example, a debtor who wishes to retain a house or car, currently acting as collateral for a loan, would indicate this intention on this statement. The three available options on the statement of intention are to “reaffirm,” “surrender,” or “redeem” the collateral.

UNSECURED DEBT. This is a debt that does not have any underlying collateral, such as a credit card, medical bill, or personal loan.

The Morrison Law Group is a team of seasoned bankruptcy attorneys who have helped 8,000 Utah residents file bankruptcy and gain a fresh start. Bankruptcy helps good Americans escape financial hardship and start over again. Call the Morrison Law Group at 801.456.9933 today to schedule a FREE consultation. We are Utah’s only statewide bankruptcy law firm and have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.

Some Key Terms To Know When Considering Bankruptcy, Part Two

 

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