Filing for bankruptcy can be a stressful time. You are deep in debt, have stacks of paperwork that need to be filled out, and you keep hearing terms thrown around that you’re not 100 percent sure what they mean.
Instead of being confused, get more familiar with a handful of the most common terms. Some terms you might hear throughout the process may include:
- 341 Meeting (or First Meeting of Creditors): This is a mandatory meeting between you, the debtor, and your creditors. Your attorney can attend as well. Typically, this is held within one month of filing for bankruptcy, but it can be later depending on specific details of the case and your financial situation.
- Automatic Stay: This goes into effect as soon as you file for bankruptcy. It suspends all collection attempts from the creditors. This protects you from creditor harassment and puts an end to phone calls, letters, wage garnishments, visits, and other attempts to try to get payment from you or seize your assets.
- Bankruptcy Estate: This refers to all legal or equitable interests of your property when you file for bankruptcy. It also refers to any property you have an interest in, even if you share ownership with another person.
- Chapter 7: This is one of the most common types of bankruptcy for individuals. During this form, your assets may be liquidated to repay some of the debt you owe your creditors. To qualify, you need to take a means test to prove your income is below a certain threshold and that you cannot afford to repay your debt. A company can also file for Chapter 7 bankruptcy.
- Chapter 13: This is another common form of bankruptcy for individuals. In this type, you create a repayment plan with the court to reschedule and repay some of your debt. This is sometimes referred to as Wage Earner Bankruptcy because to qualify you must show you have enough regular income to make the payments outlined in the payment plan. The plan is usually completed in about three to five years.
- Creditor: This is the person or company to which you owe money.
- Debtor: This is you, or your company – the party who is seeking protection from creditors through bankruptcy.
- Dischargeable Debt: This is debt that will be eliminated through your bankruptcy. Typically credit card bills, medical bills, and other bills (not including taxes or support payments) can be discharged.
- Exemptions: This refers to the property you can designate that cannot be seized by creditors. This is important in Chapter 7, as it refers to property that cannot be liquidated during your proceedings. Usually, the court will allow items for your daily life and work to be marked exempt.
- Liquidation: This refers to the dissolution of a company or individual. Assets are typically sold off at auction. This generally occurs during Chapter 7 proceedings.
This is not a complete list of terms you will hear during the proceedings. You will see many other terms on the paperwork you need to complete, and when communicating with your attorney and people of the court. If you encounter a term you’re not sure about, just ask your bankruptcy lawyer for help!
Contact a Bankruptcy Attorney
If you are considering filing for bankruptcy to cope with large amounts of debt, it’s crucial to hire an experienced attorney to help you through the process. Our experts can help you determine if you qualify, and what steps you need to take. We will also help clear up any confusion you might have before you file and during the process! Don’t let debt ruin your life. Call (405) 529-9377 for a free case review by our attorneys.