Most first time bankruptcy filers know very little about the bankruptcy process. So, here are eleven common bankruptcy definitions you may want to know before you look into filing for bankruptcy protection:
Bankrupt- The state of financial affairs where an individual, partnership, or business entity, under general circumstances, will not have enough sustainable income plus cash reserves to pay all living or business expenses, pay interest on outstanding loans, and reduce some of the principal on those loans while paying on them for five years. Every bankrupt situation is a unique situation and bankruptcy laws are complex enough that the circumstances often requires the services of a bankruptcy lawyer to help determine whether or not an individual, partnership, or business entity is bankrupt enough to file for bankruptcy protection.
Bankruptcy Protection- the Constitutional right for any U.S. Individual, partnership, or business entity to seek protection of their assets by filing bankruptcy under the jurisdiction of the U.S. Bankruptcy Code.
U.S. Bankruptcy Court– courts created under Article I of the United States Constitution. They function as units of district courts in 94 federal districts and have exclusive jurisdiction over all cases arising under the bankruptcy code.
U.S. Bankruptcy Court Trustee- a person appointed by the US Department of Justice assigned to administer the bankruptcy estate. The Bankruptcy Trustee will act on behalf of the bankruptcy estate to guarantee that both the creditors’ and the debtor’s interests are maintained in accordance with bankruptcy laws.
Bankruptcy Court Automatic Stay- a bankruptcy court order, applicable to all types of bankruptcy filings, that stops and brings to a cessation certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment.
Bankruptcy Estate- the full extent of both exempt and non-exempt assets owned by the debtor filing for bankruptcy protection.
Bankruptcy Exemption- assets that have been exempted from being used in the bankruptcy process as part of a pay back for creditors. Exemptions are designated by either state or federal exemption lists as stated in bankruptcy law.
Bankruptcy Discharge- the ultimate forgiveness of all or a portion of debt finalizing the bankruptcy process.
Bankruptcy Dismissal- is the temporary or permanent ending of a bankruptcy case for a variety of reasons. Depending on the reason for a dismissal, a filing debtor may or may not be allowed to renew the bankruptcy.
Creditor- is any individual, partnership, or business entity that any other individual, partnership, or business entity owes money to. In regards to a bankruptcy, the creditor is the one or ones listed on various creditor’s schedules.
Debtor- an individual, partnership, or business who owes money to another individual, partnership, or business entity. In regards to a bankruptcy, the debtor is the individual, partnership, or business that files for bankruptcy protection and owns the bankruptcy estate.
This list of definitions is not conclusive. If you intend on filing for bankruptcy protection, it is strongly advised you consult with a professional to help provide a better understanding on how complex bankruptcy laws might apply in your particular situation. Contact us here today at www.betterbankruptcy.com , and we will help you find a bankruptcy attorney in your area.
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