Category Archives:Bankruptcy

Bankruptcy Terms Defined

Filing for bankruptcy is a complicated process that can be especially overwhelming for first-time filers, as they will likely not be familiar with the unique terms that are associated with the process. If you are considering filing for bankruptcy, it will be extremely helpful for you to familiarize yourself with the following terms:

  • Automatic stay: a court order to immediately prevent creditors from seizing a debtor’s assets, filing lawsuits against the debt, garnishing a debtor’s wages or otherwise taking collections actions against the debtor
  • Bankruptcy estate: all assets or debts that a debtor has at the time (s)he files for bankruptcy. A bankruptcy estate includes any assets in which the debtor has interest, including assets that may be jointly owned or possessed by another person.
  • Chapter 7 bankruptcy: This type of bankruptcy, which is also referred to as liquidation bankruptcy, involves a debtor having specific debts (for example, credit card debts, medical bills, etc.) discharged in exchange for selling off what assets the debtor has to pay off creditors to the extent possible. Some of the debtors assets will be exempt from liquidation, and bankruptcy lawyers can help advise debtors about what types of property will be exempt from the bankruptcy estate.
  • Chapter 13 bankruptcy: This type of bankruptcy involves a scheduled repayment of a debtor’s debts over a 5 or 7 year period. Chapter 13 bankruptcy will be more appropriate for individuals who have a steady income.
  • Discharge of debt: The process of a debtor being no longer being legally obligated to pay back certain debts in accordance with federal Bankruptcy Code. This means that creditors will no longer be able to pursue a debt that a debtor once owed.
  • Exempt property: This refers to property that a debtor will be allowed to keep, specifically property that will not be liquidated to pay off creditors. Exempt property will have maximum amounts for which a debtor can claim that his home, car, clothing, jewelry, etc. should not be included in the bankruptcy estate.
  • Joint bankruptcy petition: A single bankruptcy case that represents both a husband and a wife filing for bankruptcy.
  • Liquidation: The process of selling off a debtor’s non-exempt property in order to pay off his creditors (to the extent possible).

For more information about bankruptcy, as well as expert advice regarding how to best handle your debts, consult our experienced bankruptcy lawyers.

How to Prepare For Filing For Bankruptcy

If you are overwhelmed by debt and considering filing for bankruptcy, this may be the best option for you to regain a financial fresh start if you are endanger of losing your home and/or your car, you are facing the possibility of your wages of being garnished and/or you are facing the possibility of being sued by your creditors. However, before pulling the trigger and filing for bankruptcy, there are some things you can do to ensure that your debts are able to be discharged and that your bankruptcy case will not be dismissed by the courts.

The Following is an overview of steps you should take before filing for bankruptcy:

1. Get a handle on your monthly expenditures: When filing for bankruptcy, you must be able to account for what you spend per month on housing, food, clothing and other necessary bills. The amount of your monthly expenses, when compared to your household income, will determine whether filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy is most appropriate for your situation. Failing to properly assess your income versus your debts – including credit card debts, student loan payments, medical bills, etc. – can result in your bankruptcy case being dismissed.

2. Avoid doing anything that would be viewed as committing bankruptcy fraud: Attempting to hide your assets or spending a massive amount of money with your credit cards immediately before you know you will be filing for bankruptcy can be viewed as committing bankruptcy fraud, which will result in your case being dismissed (even worse, you could face criminal charges for committing such acts of fraud). Other actions that courts view as bankruptcy fraud include transferring or “gifting” your assets to relatives or intentionally ruining property, such as cars, that creditors intend to seize.

3. Complete the mandatory Credit Counseling Course: Courts require that people who are planning to file for bankruptcy take this required course, which can be completed online or over the phone. Additionally, before your bankruptcy case is completed, you will also have to complete a Debtor Education Course, which is typically offered by the same organizations that offer Credit Counseling Courses. Documentation that you have completed both courses will need to be submitted to the court handling your case.

4. Speak with an experienced bankruptcy lawyer: Skilled bankruptcy attorneys know the ins and outs of complex bankruptcy laws, and they can help guide you though this complicated process in order to help you resolve your case as efficiently and favorably as possible. By working with a bankruptcy lawyer, you can be sure to avoid common pitfalls that cause others to have their cases dismissed, that lead them to committing bankruptcy fraud or that cause their cases to take an excessive amount of time to be resolved.