Bankruptcy court proceedings are handled in the United State Bankruptcy Court. Article 2 of the United States Constitution reserved the right to Congress to make laws involving bankruptcy. Federal proceedings differ from state court proceedings in a variety of ways. The following are a list of some of the terms which are applicable to bankruptcy proceeding in the United States Bankruptcy court.
- Debtor – The individual who files bankruptcy.
- Automatic Stay – This is an injunction given by a bankruptcy Judge. It automatically stops foreclosures, garnishments, collection activity and lawsuits against the individual filing bankruptcy. It goes into effect when the bankruptcy petition is filed.
- Claim – A claim is something a creditor alleges regarding a right to payment from the debtor or from property maintained by the debtor.
- Consumer related debts – These are financial obligations the consumer has related to personal items.
- Monthly income – This is the income the debtor receives on the average over a six month period before the commencement of the matter.
- Dischargable debt – These are debts that under the bankruptcy code that can be eliminated.
- No asset case – This is a Chapter 7 case under the bankruptcy code where the debtor has no assets available to pay back creditors. This is true in most Chapter 7 bankruptcy filings.
- Plan – This is the detailed description in a Chapter 13 bankruptcy of how a debtor expects to repay creditors a portion or all of their debts over three to five years. The plan is monitored by a Chapter 13 Bankruptcy Trustee.
- Reaffirmation agreement – This is an agreement in a Chapter 7 bankruptcy for a debtor to continue to pay a debt such as a car loan or a mortgage loan, even after the bankruptcy is filed.
- Unsecured claims – This is a debt where the creditor has no security such as a lien on a car or a mortgage on a home. These debts are usually discharged in Chapter 7 bankruptcies.
Elliot S. Schlissel, Esq. has been practicing bankruptcy law for over 35 years. He is the managing partner of Schlissel DeCorpo LLP. The law firm represents debtors in foreclosure defense and helps debtors file bankruptcy cases and obtain mortgage modifications. They can be reached for a free consultation at 800-344-6431 or by e-mail at Elliot@sdnylaw.com.