Are you filing for bankruptcy and hearing a lot of legal terms that you are unfamiliar with? Here are some common terms that you should know before you move forward.
The debtor will likely be yourself in a personal bankruptcy case since it is referring to the person that the bankruptcy case is about. When a business is filing for bankruptcy, then the business is the entity that is referred to as the debtor.
The formal request for relief from your debts is known as a petition. When you initially go through the legal process of filing for bankruptcy, you will be filing a petition with the court.
Creditors are those people that the debtor owes money to. Secured creditors are those entities that have some sort of collateral to secure the debt, such as a vehicle for an auto loan debt. Unsecured creditors are those that do not have collateral, like a hospital that is trying to get back unpaid medical bills.
Your bankruptcy case will be assigned a trustee by the court, who is the lawyer that will oversee your bankruptcy case from start to finish. This is the person that reviews the statement of affairs that are filed, conduct meetings with creditors, look for fraud, and things of that nature.
Schedules contain a list of all real estate, personal property, secured debts, and unsecured debts that you have. It states what you want to do about specific property you own, who else has a stake in that property, and the remaining money that you owe on it.
Debtors are issued an automatic stay when a bankruptcy petition is filed. This order prevents any enforcement actions from being taken against the debtor, such as reach out to you to collect debts. If a creditor does this, they can potentially face fines as a result. If a creditor feels like the automatic stay should not apply to them, such as from a debt being taken on right before the bankruptcy filing, they can apply for relief from stay.
Any debt that the debtor has that is wiped away is considered discharged. This is a court order at the end of a bankruptcy case that allows the debt to legally go away so that the debtor is not responsible to pay it anymore. The obligation to pay the debt will no longer apply. If a creditor feels like their debt was discharged unfairly, they can file an objection to discharge.
For more information, reach out to a bankruptcy law firm, or visit a website like https://www.taylorcrockett.com/.