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Seven Basic Bankruptcy Terms Defined

Seven Basic Bankruptcy Terms Defined

The bankruptcy process offers consumers who are overwhelmed with personal debt the option to either liquidate their debt to make a financial fresh start or reorganize their debt and repay their creditors over a period of time. The Bankruptcy laws can be complicated and confusing to anyone. To help you better understand how the bankruptcy process works, we defined some important and frequently used bankruptcy terms.

  • Bankruptcy Estate – Includes all the real and personal property that you own at the time you file for bankruptcy. This can also include property that another person is holding for you.
  • Automatic Stay – An order from the court that automatically stops your creditors from pursuing debt collection activity against you at the moment you file a bankruptcy petition. These activities may include, but are not unlimited to lawsuits, garnishments and foreclosure.
  • Trustee – A representative appointed by the court who, among other things, is responsible for reviewing the debtor’s bankruptcy petition, administering the case, liquidating nonexempt debtor assets and initiating any legal actions against the debtor or others to recover bankruptcy estate property.
  • 341 Creditor’s Meeting- The court appointed trustee presides over a hearing where debtors give sworn testimony about their financial affairs. It is also known as the “meeting of creditors.”
  • Credit counseling – In individual bankruptcy cases, credit counseling relates to two events: the “individual or group briefing” from a credit counseling  or nonprofit budget agency that debtors must complete prior to filing; and the “instructional course in personal financial management” that debtors filing under chapters 7 and 13 must attend before receiving a discharge. The Bankruptcy Rules provide exceptions to both requirements.
  • Exemptions- Certain property that the Bankruptcy Code or state law permits debtors to keep from unsecured creditors. Examples include the homestead exemption, which allows debtors to exempt all, or a portion of the equity in the debtor’s primary residence.
  • Discharge – Debtors are released from personal liability for qualified dischargeable debts. The discharge prevents creditors listed on the petition from taking further collection actions against the debtor.

Our experienced law firm provides trusted bankruptcy legal service and financial advice to Dayton clients during stressful times.

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