Filing for bankruptcy can be an intimidating process. All you want is to keep your assets, like your home or business, but you must first go through this complex and involved process before you can move on with your life. What’s more, the legal jargon associated with bankruptcy can make it feel even more daunting and complicated. This is why below, we have compiled a list of some of the most common bankruptcy terms with their corresponding definitions. They are as follows:
- Bankruptcy court: A part of the United States federal court that deals with bankruptcy cases
- Appeal: An appeal is a request made to the U.S. District Court or bankruptcy appellate panel to review a decision made by the bankruptcy court
- Automatic stay: When a bankruptcy petition is filed, an automatic stay is issued, prohibiting any collection and enforcement actions by creditors
- Lien: A charge against a property to secure payment of a debt. Liens prevent the sale of an encumbered item without the consent of or payment to the lienholder
- Trustee: A trustee in bankruptcy is an entity, generally an individual, who is responsible for administering a bankruptcy estate.
- Chapter 7: Trustees are appointed to collect and liquidate assets and turn the proceeds over to creditors
- Chapter 11: Those filing for Chapter 7 bankruptcy seek to reorganize the financial structure of their debt by proposing a payment plan to be voted on by creditors or approved by a judge
- Chapter 13: The debtor proposes a plan at the beginning of the case in a Chapter 13 bankruptcy, and seeks to establish a 3 or 5-year repayment structure
- Collateral: Property or assets pledged to ensure debt is paid
- Debtor in possession: This is exclusive to Chapter 11 cases. The debtor continues possessing its assets and business operations and has most of the powers and responsibilities of a trustee
- Discharge: This is the hopeful end result when filing for bankruptcy, and it essentially means that you are no longer responsible for paying off certain debts
- Means test: In a Chapter 7 bankruptcy, if the debtor’s income exceeds permitted expenses by a certain amount per month, the debtor’s Chapter 7 will be dismissed
- Meeting of creditors: The meeting of creditors is where the trustee questions the debtor who must answer under oath
Contact our experienced New York firm
Bankruptcy, for many people, is a frightening endeavor. Fortunately, with the help of an experienced attorney, it does not have to be. If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options. We will have your back every step of the way.