BANKRUPTCY TERMS

Following is a list of words and phrases you will often hear during your bankruptcy procedure. Please use this list throughout your bankruptcy whenever you hear an unfamiliar term.

341 – a.k.a. “Trustee Meeting” or “Meeting of the Creditors”. This is when you and one of our seasoned attorneys meet with the Trustee. Creditors are invited to join you at this meeting and voice any objections they may have to your plan. However, Boleman Law has usually dealt with creditor objections before this meeting. Rarely does a surprise creditor with a complaint surface at a 341.

Administrator – A non-attorney staff person at Boleman Law.

Automatic Stay – At the time of the bankruptcy filing, an automatic stay is usually placed into effect over the bankruptcy estate. This means that the Debtor can not dispose of any assets of the Bankruptcy Estate without the Bankruptcy Court’s approval. This also means that creditors are forbidden from removing items from the Bankruptcy Estate without the Court’s approval. It also means that the creditor is forbidden to contact Debtors directly. If a creditor persists in harassing a Debtor, in a manner that most people would find unreasonable and harmful, Boleman Law may move for a stay violation action and recover damages for the client. [Damages recovered must be actual and infrequently punitive may be available. Your creditor could also be required to pay our attorney’s fees]

Claims - Once creditors are notified that you are in a bankruptcy, and they file a claim, you and your attorney should review the claims to make sure you agree with the amount owed. If you do not, you must object to the claim. Otherwise, the claim will be valid and the Court will determine that you owe that much to the creditor.

If you forget to list a creditor and the credit report does not uncover a particular creditor, that creditor may not be affected by your bankruptcy discharge. You could still owe that creditor after you finish your bankruptcy.

Chapter 13 – Is a type of bankruptcy, designed for people with regular income who are temporarily unable to pay their debts but would like to pay them back over time. This process involves filing a Plan with the Court and paying the Trustee, Mr. Robert E. Hyman.

Chapter 7- Is a type of bankruptcy, designed for debtors in financial difficulty who do not have the ability to pay their existing debts. The Chapter 7 Trustee will examine the Debtor's estate and determine which items are exempt or of no interest to the Trustee. These items are not sold in order to pay off creditors. Generally, most Chapter 7 debtors do not have property that the Chapter 7 trustee will sell.

Creditor (generally) – Visa, Providian, Capital One, Hecht’s, your mortgage company.... All are creditors. The party lending the money, with the expectation of being paid back, most always with interest, is the creditor.

Creditor, Government Unit – The United States, the Commonwealth, a municipality, or foreign state.

Creditor, Secured - A secured creditor retains an interest in the property purchased through the credit extended. Examples are mortgage loans, car dealerships, furniture and computer retailers.

Creditor, Unsecured - An unsecured creditor lends money but has no right to claim whatever property is purchased by the credit extended. Examples are Visa, MasterCard, banks lending personal loans with no collateral.

Debt, Post-petition - Debt the Debtor incurs after filing for bankruptcy.

Debt, Pre-petition – Debt the Debtor incurred before filing for bankruptcy.

Debtor's Estate (Bankruptcy Estate) - Real and personal property belonging to the Debtor. The Trustee has an interest in the Debtor's Estate.

Discharge – When the bankruptcy is finished, all debts provided for in the Plan and satisfied by the Plan are discharged which means the creditor has received all it is entitled to and cannot attempt to collect on the included debt. Some federal and state taxes, student loans and other debts can be nondischargeable. Debts not included in the bankruptcy can be nondischargeable.

Exemption - Some things, like wedding rings and 401K accounts, can be worth a million dollars, but the Trustee will have no interest in this property because it is in an exempt category.

Fraud - Some actions present the suspicion of fraud. Fraud involves "concealment of assets; false oaths and claims; bribery." For example, if a Debtor has a motorcycle when filing a bankruptcy, but then sells it "to his sister" for less than fair value before the 341 meeting, the Trustee could suspect fraud on the part of the Debtor.

Homestead Deed - In Virginia, if certain non-exempt property, usually items necessary for basic living, has less than $5,000 worth of value, it is exempt. For example, a house with $2,000 worth of equity is exempt under the Homestead Deed.

Hyman Letter – Mr. Hyman is the Chapter 13 Trustee. If he notices a problem with the Plan, usually occurring because claims came in higher than expected, he writes a letter to Boleman Law and to the Debtor and Boleman Law takes action to correct the problem.

Lien – When a creditor places a lien on Debtor’s property, the creditor gains an interest in the property, until the Debtor completely pays back the creditor.

Lien, Judicial – When a judge or jury requires payment, a judicial lien is often placed on the property of the party required to pay the debt.

Lien, Statutory – Lien on property because of violation of a particular law, or statute.

Life insurance with cash value – Some life insurance policy holders can tap into the funds while alive. Sometimes, if funds are actually accessed, the entire life insurance policy value is part of the debtor’s estate and may be of interest to the Trustee.

Modification – An attorney may review your case and determine that it would be to your advantage to modify your case. This could result in an increase or decrease in your monthly payments. You will be notified when a modification is to your advantage and will review the final modification before it is filed with the court.

Motion to Dismiss – If you fall behind on payments to the Trustee, the Trustee will make a motion to dismiss your case. At this point, an attorney will review your case to determine the arrearage and whether your plan needs to be adjusted based on the claims that have been filed.

Motion for Relief - If you fall behind on car or mortgage payments, the creditor will file a Motion for Relief from Stay in order to get permission from the Court to either repossess or foreclose on the property in question. With your assistance, Boleman Law will attempt to negotiate a settlement with the creditor to allow you to keep your property.

Objection to the Plan - Creditors and/or the Trustee can object to the Plan. Usually this happens when a creditor is slated to receive much less than the original value of the claim. Often the settlements do not affect the Plan payments. Boleman Law keeps the client informed throughout the process.

Plan, Chapter 13 – Boleman Law attorneys and administrators create a Plan to pay your creditors what is required, and still stay within the client’s budget. This Plan is perfected by nearly 15 years of experience in the field of bankruptcy, hard work and high-tech engineering. We know the bankruptcy system well because we are the largest bankruptcy firm in Virginia and we have merged this experience with technology to efficiently design a thorough, predictably successful system.

Plan Confirmation – The Court says the Plan is acceptable.

Plan Payment/Payment to the Trustee – Thirty days after the petition is filed, the first Plan payment is due to the Trustee. This first payment is usually made by the debtor and takes the form of a money order. The debtor either mails the money order directly to the Trustee or hand delivers it at the Meeting of the Creditors. Regular monthly payments are usually automatically deducted from the debtor’s paycheck. The debtor must inspect each paycheck and make sure the correct amount of money is deducted. If the deduction is not accurately made automatically, the debtor is responsible for sending a money order to the Trustee in order to stay current.

Property, Real – Land and things permanently attached.

Property, Personal - Movable goods, including household items and clothing.

Reaffirmation of Debt – Debtor voluntarily promises to pay a debt that could be discharged in bankruptcy. A formal document is filed with the Court and the Debtor is legally responsible for that debt, a debt which would otherwise have been discharged by the bankruptcy.

Secured interest – When a creditor has an interest in a piece of property, and that creditor could repossess the property, or foreclose on it, if payments are not made regularly, the creditor likely has a secured interest in the property. Sometimes a secured interest looks like a lease, but at the end of the lease, the debtor can keep the property without paying fair market value at that time. This is really a secured interest disguised as a lease.

Trustee – The Trustee is a court representative who will administer your case. The Trustee looks out for the interest of the Bankruptcy Estate itself. It is the Trustee who will determine if there are any assets in the Bankruptcy Estate which can be sold for the benefit of the Estate’s creditors. The Trustee cannot give you legal advice.