Like many areas of the law, bankruptcy has its own set of terms and vocabulary. The release of new laws and opinions by judges who interpret them add to the complexity of bankruptcy practice.
That is why is it critically important that those needing to stop creditor harassment hire an experienced Georgia lawyer.
The below list of bankruptcy-related words are provided only as a simple guide to help understand common terms used in bankruptcy cases. They are not intended to be, nor should be, construed as formal definitions or legal advice.
Bankruptcy: A legal process that helps individuals and businesses deal with debt problems.
Debtor (pronounced de-ter): A person that owes money.
Creditor: A person or entity owed money, or claims to be owed money by the Debtor.
Chapter 7: The chapter of the Bankruptcy Code that provides for the sale of the Debtor's assets to pay off debts. Also referred to as "straight" or "liquidation" bankruptcy.
Chapter 11: The chapter of the Bankruptcy Code, which permits reorganization and is available to any business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities.
Chapter 13: The chapter of the Bankruptcy Code that allows Debtors to keep their property and pay Creditors based on their ability to pay.
Preference: A transfer to a creditor in payment of an existing debt made within certain time periods before the commencement of the bankruptcy case.
Dismissal: The termination of the bankruptcy case without either the entry of a discharge or a denial of discharge.
Chapter 12: A simplified reorganization plan for family farmers whose debts fall within certain limits.
341 Hearing: A meeting where the Debtor and his or her lawyer answers questions about their bankruptcy filing. The Trustee assigned to the Debtor's case will attend this meeting. Creditors may or may not be present.
Automatic Stay: An injunction that automatically stops Creditors from collecting debts owed by the Debtor. This protection starts when a bankruptcy petition is filed, and it works to stop lawsuits, foreclosures, garnishments, repossessions, and all other collection activity.
Means Test: A formula applied to the Debtor's financial situation that must be met, with some exceptions, in order to file for Bankruptcy protection. The test is very complex, and includes such considerations as aggregate current monthly income, allowed expenses and nonpriority unsecured debt. Accurate application of this test is one of the most important reasons to hire an experienced Bankruptcy attorney.
Petition: The document filed with the court that starts the Debtor's bankruptcy case.
Schedules: Documents completed by a Debtor and his or her attorney that list assets, liabilities, and other important financial information.
Bankruptcy Estate: All interests that a Debtor may have in property at the time of the bankruptcy filing.
Trustee: A person appointed by the government that oversees the bankruptcy estate.
Dischargeable Debt: A debt that can be eliminated pursuant to the Bankruptcy Code.
Exempt Property (a.k.a Exemptions): Property owned by a Debtor that he or she may keep. The law regarding Exempt Property is complex, and may vary from state to state. Common examples of Exempt Property often include the primary residence and tools used by the Debtor to make a living.
Fraudulent Transfer: A transfer of property by the Debtor that is made with the intent to defraud a Creditor.