If you’re thinking about filing for bankruptcy, you might sometimes think your attorneys or trustees are speaking a different language. Familiarize yourself with some of the more common bankruptcy terms. Remember – knowledge is power!
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Arrears: When you’re behind on making payments. If your monthly mortgage payment is $1,000 and you’re three months behind, you’re in arrears $3,000.
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Automatic stay: As soon as you file your bankruptcy, the court enters an order that stops all collection actions against you. This means all foreclosures, garnishments, collection calls, etc. are stopped.
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Claim: Someone you owe money to, a creditor, files a Proof of Claim to show the court how much you owe them.
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Creditor: Someone you owe money to.
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Debtor: Someone who owes money.
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Discharge: The term for wiping clean your debt via bankruptcy. Once a debt is discharged, it cannot be collected upon again.
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Equity: If you could sell an asset for more than it would cost to pay any liens, it has equity. If your car would sell for $8,000 and you have a car loan for $5,000, you have $3,000 in equity.
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Exemptions: These are assets you can keep in bankruptcy. Exemptions differ from state to state.
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Meeting of Creditors: Debtors are required to attend this hearing, usually scheduled four to six weeks after a case is filed. This is also called the “341 meeting,” and consists of the Trustee verifying your identity and asking a set of standard questions.
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Schedules: The documents filed with your bankruptcy petition that list all your assets, debts, income, and expenses.
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Trustee: The Trustee is the person who conducts the Meeting of Creditors and recovers any non-exempt assets. In Chapter 13, the Trustee also receives payments and pays your creditors.
If you find yourself in financial distress and need a solution, an experienced debt relief law firm such as Harold Shepley & Associates would be able to answer your questions with a free consultation.
Contact us today at 1-866-284-7062 or visit us at www.shepleylaw.comto find out more information on your debt relief options.
