Like with any area of legal practice, bankruptcy has its own vocabulary. Fortunately, the most commonly used bankruptcy terms are not particularly numerous. In order to help you fully understand bankruptcy and the associated process, Michigan Bankruptcy Attorney Nancy Neal Joyce has compiled the following list of commonly used bankruptcy terms along with brief explanations of each. When you file for bankruptcy, it is critical to be able to understand the terminology as well as the process, as it will make a huge difference when it comes time to attend a court hearing in your case. For further information, or if you have any questions related to the below, contact Ms. Joyce today to learn more about your debt relief options.
- Assets
This refers to all of the property that you own. This may include real estate and personal property such as automobiles. It may also include intangible assets such as business goodwill or copyrights. - Automatic Stay
An order issued by the bankruptcy court that prevents creditors from foreclosing on your property, filing lawsuits, garnishing wages and pursuing other collection activities during a bankruptcy proceeding. - Bankruptcy Sale
The sale of a debtor’s assets by a trustee appointed by the bankruptcy court to obtain proceeds to pay creditors. Such sales are common in Chapter 7 bankruptcy proceedings. - Chapter 7 Bankruptcy
A legal proceeding in which a debtor’s non-exempt assets are sold to pay creditors. After creditors are satisfied, the debtor receives a complete debt discharge even if they have not been fully repaid. - Chapter 13 Bankruptcy
A legal proceeding in which the debtor pays some or all of his debts under a three to five year repayment plan approved by the bankruptcy court. Once the plan has been completed, the debtor receives a discharge of their debt. - Credit Counseling Agency
An agency approved by the U.S. Trustee’s Office to provide credit counseling to debtors. Individuals who file for bankruptcy must complete credit counseling before they are allowed to file a bankruptcy petition. - Debt Relief Agency
An agency that provides bankruptcy assistance to debtors in exchange for a fee. Nonprofit organizations are not considered debt relief agencies. - Deficiency Judgment
Personal financial liability assessed against a debtor if foreclosure or repossession of property that secures a debt fails to bring in enough money to fully repay what is owed. - Discharge
The legal cancellation of a debtor’s debt obligations by a bankruptcy court. Discharges are granted at the conclusion of Chapter 7 and Chapter 13 bankruptcy proceedings. - Dischargeable Debt
Debt that can be legally discharged by a bankruptcy court. Some forms of debt cannot be discharged in bankruptcy. - Domestic Support Obligations
Child support, alimony or maintenance obligations owed to a child, spouse, ex-spouse or government entity for support of the debtor’s child, spouse or ex-spouse. These debts are not dischargeable in bankruptcy. - Exemptions
Property that cannot be seized or liquidated in bankruptcy to pay bankruptcy debts. For example, exemption rules allow a bankruptcy debtor to keep a certain amount of home equity. - Joint Petition
A bankruptcy petition filed together by a husband and wife. - Liquidation
The sale of the bankruptcy debtor’s property (i.e., assets) to pay creditors. - Means Test
A way to determine if a Chapter 7 bankruptcy debtor can repay some of his debts. If the debtor fails the Means Test, the Chapter 7 petition will be dismissed. - Non-Dischargeable Debt
Debt that cannot be discharged in bankruptcy, such as federally guaranteed student loans and domestic support obligations. - Reaffirmation Agreement
An agreement between a creditor and a bankruptcy debtor to abandon the bankruptcy discharge with respect to a particular debt. This might prevent property that secures the debt from being sold. - Secured Debt
A debt subject to a lien on certain debtor’s property, such that the creditor can sell the property if the debtor defaults on the debt. - Trustee
This is a person who is appointed by either the U.S. Department of Justice or a debtor’s creditors to administer the bankruptcy estate. - Unsecured Debt
A debt that is not subject to a lien on the debtor’s property. Meaning, it is debt that is not secured by property, such as a financed vehicle or a home.
Contact Attorney Nancy Neal Joyce Today to Start your Journey to Financial Freedom
If you are considering filing for bankruptcy or need more information on how you should handle your debts, the assistance of an experienced attorney can be critical. Call (734) 427-7772 for a free initial consultation with Attorney Nancy Neal Joyce to learn more about your debt relief options. Nancy Neal Joyce proudly serves Livonia, Michigan and surrounding areas.
