Bankruptcy Lingo To Know

: Chris Lee Law Firm

  Filed under: Filing Bankruptcy

termsIf you are considering filing for bankruptcy in Dallas it is important to know the basics of the process before you file your petition. For many people, the best place to start is understanding of the more common terms in bankruptcy.

Petition — this is the document that is used to submit your case to the court. The petition outlines your financial history in detail from the specifics about your creditors, how much debt you owe, your income and bank statements, to information about your assets and their value.

Automatic Stay — this is the court order that halts all debt  collections. Your creditors will be served with this notice, which prohibits them from collecting on debts while you are in an active bankruptcy case. The automatic stay is the order that can prevent and stop repossessions, wage garnishments, and even a foreclosure.

Chapter 7 — this is a type of bankruptcy that is also known as liquidation bankruptcy. In a Chapter 7 case, any non-exempt property is liquidated to satisfy debts to creditors and the remaining portions are erased.

Means Test — this is the test that determines your eligibility to file for Chapter 7. This test compares your income against the median income of the state, whereby incomes lower than the median typically qualify for a Chapter 7 case.

Chapter 13 — this is a type of bankruptcy that is also known as reorganization bankruptcy. In a Chapter 13 case, your debt payments are rolled into a single payment based on your gross monthly income and creditors are paid from this payment.

Trustee — this is the court appointed person overseeing your bankruptcy case. The Trustee pays creditors and monitors any sale or liquidation of assets.

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