- Lemberg Law
- Bankruptcy Law: Terms And Definitions
Bankruptcy law can be complicated, and understandably, most people are unfamiliar with these terms until they take steps to file bankruptcy. Information is power. That’s why we’ve taken key bankruptcy law terms, adapted from U.S. Courts, and defined them in a way that everyone can understand
Bankruptcy Code: United States Code (11 U.S.C. Sections 101-1330) is the federal bankruptcy law, often called the bankruptcy code
Bankruptcy Petition: Official forms by a consumer’s attorney in order to begin a bankruptcy proceeding.
Chapter 7: A bankruptcy law whereby the consumer’s assets are liquidated by a trustee, and the money distributed among eligible creditors. This is often known as the “wipe the slate clean” bankruptcy. In order to be eligible for Chapter 7, a consumer must meet an income test. Some debts, like back taxes, child support, and student loans, won’t be wiped out by Chapter 7.
Chapter 13: A bankruptcy law whereby the consumer can set up a three- to five-year payment plan to repay creditors while keeping his or her property. In order to be eligible for Chapter 13, a consumer must have a certain amount of disposable income.
Creditor: The person or entity to whom the consumer owes money.
Debtor: The consumer who owes money.
Discharge: When the debt is null and void, and the creditor can no longer try to collect money from the consumer.
Exempt Property: The property that the consumer gets to keep after a bankruptcy proceeding, such as a home or tools used to earn income. The type and amount of exempt property varies from state to state.
Means Test: The income threshold that must be met for filing Chapter 7 bankruptcy.
Non-dischargeable Debt: Debt that cannot be eliminated in bankruptcy, such as child support, taxes, student loans, and criminal fines.
Secured Debt: A loan backed by collateral, such as a home loan secured by the value of a home, a car loan secured by the value of a car, and so forth.
Statement of Financial Affairs: An official form that must be filed when opening a bankruptcy law proceeding, and which outlines sources of income and debt, information about property, lawsuits by creditors, and so forth.
Trustee: An individual or corporation appointed by the bankruptcy court that is responsible for liquidating assets and distributing money to creditors (Chapter 7) or reviewing repayment plans, and collecting and disbursing payments (Chapter 13).
Unsecured Debt: A debt that is not guaranteed by the pledge of any collateral. Most credit cards are unsecured debt.
If you’re thinking of filing bankruptcy, a bankruptcy attorney is vital to both preparing your bankruptcy schedule and making sure you are represented in the many various matters that arise from filing bankruptcy. The attorneys at Lemberg & Associates realize how emotionally difficult this process can be, and will stand by you throughout the process, ensuring that you will receive a fresh start so you can move on with your life.