No one likes legal terminology, but when it’s time to file for bankruptcy you can depend upon the fact that there will be a lot of documentation and it will all be full of legal terms. If you feel overwhelmed by the prospect of reading your own bankruptcy paperwork, take a second to brush up on your terminology. It will increase your understanding of the process and decrease the amount of stress associated with the bankruptcy. Knowing what’s going on is far less stressful than living in a constant state of flux until you receive the final notice that your debts have been discharged and following up with your bankruptcy attorney to ensure you’ve interpreted the document correctly.
Bankruptcy Dictionary: A Quick Overview of Terms, A-D
341 Meeting: This is a mandatory meeting between the debtor and their creditors. It will usually take place within a month of filing for bankruptcy, but can occur later when the debtor files schedules of financial information.
Absolute Priority: The order of payment to different classes of creditors that is mandated by the Bankruptcy Code and upheld by the trustee.
Automatic Stay: The immediate suspension of all actions (debt collection, foreclosure, etc.) against the individual filing bankruptcy. The automatic stay goes effect immediately and automatically when a bankruptcy petition is filed. It is a protection for the debtor from creditors seeking to seize assets, etc. It can also be seen as a protection for creditors as well as it can prevent one creditor from obtaining an inordinate share of the available assets to the exclusion of the other creditors awaiting payment on debts.
Bankruptcy Petition: The document that is filed with the court in order to initiate a bankruptcy proceeding.
Bar Date: The last date that creditors can file a claim against a debtor.
Contingent Claim: A claim that may be owed by the debtor due to specific circumstance, i.e. the debtor cosigned another individual’s loan and that individual fails to pay
Discharge: The elimination of debts of the filer by the bankruptcy court.
Dismissal: The termination of a bankruptcy proceeding. Bankruptcy proceedings can be dismissed if the court deems that the debtor or three creditors should not have filed or if they decide that a plan cannot be formulated.
At Westgate Law, we know how important it is to feel comfortable when you approach your bankruptcy filing. Watch for more bankruptcy terminology in an upcoming article, or contact us for additional information today.