Filing for bankruptcy is a common legal process. Like many other legal matters, there are many words used during a bankruptcy case that you may not be familiar with. But instead of missing something important while you’re talking to your bankruptcy attorney, listening in court, or taking part in a meeting, learn these few terms to stay ahead of your case.
- Assets: Assets are any of your belongings that can be assigned a value. They include cash, possessions of any type, and real estate.
- Trustee: A trustee is a private, non-related person or corporation put in charge of every Ch. 7 or Ch. 13 bankruptcy case. This person’s job is to objectively represent your case as well as that of your creditors while determining liquidation of assets, paying back debts, and the validity of your bankruptcy claim.
- Ch. 7: This is the traditional bankruptcy model in which you turn over any assets that aren’t exempt to your creditors and reset your debt to zero.
- Ch. 13: This type of bankruptcy allows you to create a payment plan in which you schedule to repay your debt over three to five years. Your bankruptcy trustee determines the percentage of the debt that will be paid back and whether there will be any interest.
- Meeting of Creditors: At this meeting, your trustee meets with you to ensure your case is truthful, valid, and complete. Your bankruptcy attorney will work with you to prepare the right answers in order to have your case accepted.
- Liquidation: When you file for bankruptcy, any nonexempt assets you have are sold, or liquidated, in order to pay back creditors.