Common Bankruptcy Terms
We often get questions from clients about terms they come across in bankruptcy petitions filed on their behalf.
While there is a complete list of terms here, we thought it would be helpful to provide you with a list of commonly used terms and their definitions in case you need to decipher some of the legalese you’ve encountered:
- Secured debt – This is debt backed up with collateral. Common examples include home mortgages and automobile loans.
- Unsecured debt – Conversely, this is debt not backed up with collateral. Examples of unsecured debt are hospital bills, credit card debt, student loans, etc.
- Proof of claim – This is a document sometimes filed by creditors that lists your debt to them, what it’s worth, and whether or not it is secured. If you disagree with their proof of claim, you will be required to file an objection in court. In Chapter 13 and Chapter 7 cases where there are unprotected assets, creditors must file a proof of claim in order to be paid from available funds.
- Bankruptcy Estate – The bankruptcy estate is all of your property, with the exception of educational trusts and most pensions. It includes items you’ve loaned to others, property you’ve recently given away, property you’re entitled to but haven’t received, and certain assets you receive within 180 days of filing.
- Discharge of Debtor – This is a court order stating you no longer owe money for the debts listed in your bankruptcy petition, except for certain debts that are not eligible for discharge.
- Exemption – Based on the Bankruptcy Code or applicable state law, you may be able to keep certain assets from unsecured creditors. Some examples of possible exemptions include homes, cars, income (in some cases), and IRAs.
- Automatic Stay – Barring special permission from the bankruptcy court, all creditors must cease solicitation of payment for debt incurred after the bankruptcy filing for a predetermined amount of time.
- Surrender – This refers to property you agree to give up to secured creditors.
- Plan Payment – In Chapter 13 you will need to propose a plan to pay a portion or all of your debts. This monthly payment is made to the Chapter 13 Trustee over 36 to 60 months, and is calculated based on a number of factors, including your income, any unprotected assets, if there are any priority claims like child support or certain tax debt, and what your goal is in the bankruptcy.
While there are many terms and legal definitions you may encounter, this should be a helpful list of major terms in a bankruptcy petition.
If you have any further questions about terms you’ve come across or bankruptcy in general, please do not hesitate to give the office a call. We are here to help you throughout this process.
For all of the ways to contact us, please visit us today at ravosalawoffices.com, or call us today at 508-655-3013 or 413-734-4147.