New Jersey Bankruptcy Attorney Defines Common Terms Found in Bankruptcy Cases
To understand bankruptcy, you need to understand the terminology that is commonly used in its context. Many people are unsure about the bankruptcy process and its details. Here is a list of words you may encounter when dealing with Chapter 7, 11, or 13 bankruptcies in New Jersey.
Adversary Proceeding – When complaint is filed with the bankruptcy court, an adversary proceeding will be held. An adversary proceeding often involves complaints about liens.
Assets – Assets are anything and everything that have financial value. This includes vehicles, homes, artwork, jewelry, business goodwill and stock options. Anything that is owned by someone filing for bankruptcy can be considered an asset.
Automatic Stay – This is an injunction that prohibits collection actions. This allows the debtor to retain their property during the bankruptcy filing. An automatic stay goes into effect once a bankruptcy petition is filed.
Bankruptcy – Bankruptcy is when a person or a business cannot pay their debts. Filing for bankruptcy allows a debtor to remove their substantial debts by paying down a fraction of the amount that is due.
Bankruptcy Code – Bankruptcy falls under the purview of federal law. All proceedings must adhere to Title 11 of the United States Code. Some states have special laws they practice but for the most part, the rules and regulations of bankruptcy are the same across the country.
Bankruptcy Judge – Bankruptcy cases require federal United States district court judicial officers to oversee the proceedings.
Bankruptcy Petition – This is when someone formally requests the protection of federal bankruptcy laws.
Bankruptcy Trustee – An individual or corporation who is appointed to speak for creditors and the bankruptcy estate.
Chapter 7 – This is when someone in debt has their assets liquidated to pay off creditors.
Chapter 11 – When a corporation needs time to reorganize their debts before making payments, they may file for Chapter 11 bankruptcy.
Chapter 13 – Chapter 13 exists for individuals to repay some of their debts over a period of time as decided by a judge.
Claim – Claims are made by creditors to show what they are owed.
Collateral – All property subject to a lien.
Complaint – This is a document that states what a creditor believes they are owed by the debtor.
Conversion – A conversion is when someone who has filed one form of bankruptcy decides to change to another. For example, you can file for Chapter 7 and then change your mind to a chapter 13 filing.
Creditor – This is who is owed money by the debtor.
Debtor – This is whoever filed for bankruptcy protection that cannot pay off their debts.
Discharge – When debt is removed so that the debtor does not have to make further payments, the debt has been discharged. Once discharged, creditors cannot pursue payment. Some debts like tax payments and child support cannot be discharged.
Disclosure Statement – This is what a debtor creates for the creditor to review.
Dismissal – A bankruptcy case can be dismissed at any time which means that all debts are due just as they were before the filing.
Equity – The value that is left of the debtor’s property after creditors are paid and liens are enforced is considered the debtor’s equity.
Exemption – Exemptions are what is protected from the creditors. In some cases, a debtor may be able to have their home or vehicle exempt from being taken away from them.
Lien – A lien represents what a debtor must pay to cover their debts.
Liquidated Claim – This is an amount of money a creditor may ask for from a debtor.
Liquidation – This is when a debtor’s assets are sold off to pay creditors.
Non-Dischargeable Debt – Not all debt can be eliminated in bankruptcy. The debt that remains is called non-dischargeable debt.
Relief From Stay – A creditor may be awarded a relief of stay that will eliminate the automatic stay and allow the creditor to pursue payments.
Schedules – When beginning bankruptcy filings you will need to provide a list of assets and liabilities, which is called a schedule.
If you or someone you know have questions about bankruptcy, please call the Law Offices of Robert Manchel today at (866) 503-5655 to discuss your options for seeking bankruptcy protection.