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(with apologies to Black’s Law Dictionary and any really picky lawyers)

341 Hearing – the meeting of creditors over which the trustee presides which all debtors must attend approximately 30 days after they file bankruptcy.

362 Motion or Motion to Lift the Stay – this is a motion that a creditor files in the bankruptcy court asking the bankruptcy judge to lift the stay so that the creditor can go after the debtor’s assets which are the creditor’s collateral, such as the debtor’s car, house, etc. Creditors file these when the debtor has not made his payments to the creditor after the bankruptcy was filed, didn’t pay his insurance for that collateral, or for some other reason.

Asset Case – when a debtor files a chapter 7 bankruptcy and the chapter 7 trustee decides that the debtor has non-exempt assets (unprotected ones) which the trustee can sell in order to get funds to pay the debtor’s creditors. Most cases are NOT Asset Cases.

Bankruptcy – bankruptcy law is set out in Title 11 of the U.S. Code of Laws. Filing bankruptcy is when a person called a Debtor files paperwork in the Bankruptcy Court asking for protection from his creditors.

Bankruptcy Administrator or BA – the federal (United States) bureaucratic entity that overseas the bankruptcy system in NC and Alabama.

Bankruptcy Case Number – the number the bankruptcy court assigns to your file when your case is filed and which creditors want to know for their files.

Bankruptcy Code -Title 11 of the United States Code. This is the law passed by the US Congress where you will find the law about bankruptcy.

Bankruptcy Discharge – this is the bankruptcy court order signed by a bankruptcy judge at the END of a bankrupty case which shows that a debtor has done all he is required to do in his bankruptcy case and that his debts which can be discharged, or wiped out, are discharged. Your attorney can explain the effect of an order of discharge on your debts, as it has a different effect on different types of debts.

Bankruptcy Dismissal – this is when a bankruptcy case is not completed and is thrown out of the bankruptcy court. This can happen for any number of reasons, including when a debtor asks for it to happen.

Bankruptcy Judge – the person who decides disputes in a bankruptcy case.

Bankruptcy Rules – this is law passed by the Judicial Conference that also covers other bankruptcy issues and your lawyer must follow these, too. Normally, they are procedural in nature in that they tell lawyers how to do things that the Bankruptcy Code says they can or should do in a Bankruptcy case.

Bankruptcy Trustee – the person appointed by the bankruptcy court to administer the bankruptcy estate of a debtor who files bankruptcy according to the rules of the type of bankruptcy the debtor filed.

Chapter 7 Bankruptcy – the type of bankruptcy the debtor files where his goal is to discharge, or wipe out, all of his unsecured debts, such as credit cards, doctor bills and the like. He does not make payments to the court. He usually just keeps paying his mortgage and car payments, if he wants to keep them.

Chapter 9 Bankruptcy – a reorganization bankruptcy for cities.

Chapter 11 Bankruptcy – the type of bankruptcy that a corporation files when it wants to reorganize its debts or when a person who does not qualify for chapter 13 files when he wants to reorganize his debts. It usually is the most expensive type of bankruptcy.

Chapter 11 Disclosure Statement – this is a form which tells the creditors the background on the debtor, such as what it or he is, how he ended up in bankruptcy, what his plan of reorganization is and how he is going to get out of bankruptcy. There are complicated rules concerning exactly what language it must contain. The court must approve its language. An analogy would be to compare it to a prospectus in a securities offering.

Chapter 11 Plan – this tells creditors and the bankruptcy court how the debtor is going to pay his bills now that he is in bankruptcy. The creditors have to vote on it. It can be very complicated.

Chapter 12 Bankruptcy – a reorganization bankruptcy for family farmers and family fishermen.

Chapter 12 Plan – this tells creditors and the bankruptcy court how the debtor is going to pay his bills now that he is in bankruptcy. The creditors and chapter 12 trustee can object to it. It can be very complicated.

Chapter 13 Bankruptcy – the type of bankruptcy a debtor files to save his house or car from foreclosure or repossession, or for some other reason which requires him to make payments to his creditors in a chapter 13 plan payment he makes to a chapter 13 trustee, who pays the creditors. It is a reorganization of the debts. Chapter 13 debtors still have to pay their house payments if they want to keep their houses.

Chapter 13 Plan – this tells creditors and the bankruptcy court how the debtor is going to pay his bills now that he is in bankruptcy. The creditors and chapter 13 trustee can object to it. It can be very complicated. In the Western District of North Carolina (Charlotte) you must pay your mortgages through the bankruptcy court.

Chapter 13 Self-Employment Worksheet – this is a form that the chapter 13 trustees in SC require and can be obtained on the website. It answers a lot of questions about your finances, how you run your business, whether you will be borrowing money to run it, and requires you to attach the last 2 months’ accounting records.

Claim and Delivery – a claim and delivery action is a lawsuit a creditor files against someone who owes him money and who has given the creditor collateral that is personal property (usually cars, furniture or mobile homes, but NOT land). Simply put, the creditor is suing for the money and for possession of the collateral: he is claiming there is a debt and collateral and asking for delivery of the collateral to the creditor until the court can have a hearing to give the creditor a judgment. If you do not respond to the lawsuit in time, then the creditor can get the right to take your property without a hearing. See a lawyer to determine your deadline, as it could be as short as 5 days.

Confirmation Hearing – the hearing at which the trustee asks the bankruptcy judge to approve chapter 13 payment plans filed by debtors, if the trustee accepts the plan, or at which the debtor must convince the judge that the plan should be approved over the objection of the trustee or a creditor. The same thing is held in a chapter 11 and chapter 12 bankruptcy. The Western District of NC usually does not have these, as it all is handled at the 341 hearing, based on the chapter 13 trustee’s recommendations.

Creditor – a person who is owed money. In bankruptcy, it is the person to whom the debtor owes money.

Credit Counseling – in the bankruptcy context this is the meeting or internet/telephone conference that someone must attend before they can file bankruptcy. If you do not do it before you file a bankruptcy, obtain a certificate proving you did it and file the certificate with the bankruptcy court with your bankruptcy filing, your case will either be stricken or dismissed, depending on where you live (neither is good). In the non-bankruptcy context, this is usually where an organization may be able to help a debtor restructure his debts.

Debt Management Class – this is the meeting or internet/telephone conference that a debtor must attend before he will get his discharge order in a bankruptcy. If you do not attend the Debt Management Class before your deadline, your case will close and it will cost you more money to reopen your case to get the order of discharge after you have done your Debt Management Class. If you have not gotten your order of discharge, you probably wasted your time filing bankruptcy.

Debtor – one who owes money. In bankruptcy, it is a person or company who files bankruptcy.

Deficiency Judgment – this is when a creditor has sued to get possession of a car or of a house and it sells the collateral and does not get enough money from the sale to pay off the entire loan. The deficiency is what still is owed. If it is a judgment, it can be a lien on your land and can be used to collect other assets from you.

Estate – when someone files bankruptcy, it automatically creates an Estate. This consists of all of the assets and rights owned by the debtor.

Exemptions – these are a certain dollar amount of certain types of items which a debtor can protect from its creditors and from a bankruptcy trustee. What items you can protect and what dollar value of those particular items you can protect vary from state to state. The new bankruptcy law made deciding which state’s exemptions to claim more complicated. If you do not claim or ask for them in your bankruptcy, you do not get them. They can be objected to by the trustee.

Federal Court – a court of the United States of America (as opposed the the state courts such as North or South Carolina). The bankruptcy court is a federal court.

Foreclosure – the procedure creditors use in the court system to sell real estate on which they have a lien called a deed of trust, or mortgage.

Judgment – a judgment is a court order signed by a judge which says that someone has won a lawsuit and what they have to do as a result of it, whether it is to pay a certain amount of money, or something else like do something they did not want to do. Creditors use them to collect money. They are liens on the loser’s land in the county in which the judgment is filed and they can be moved from county to county, state to state, and country to country. In SC they are good for 10 years and in NC they are good for 10 years but can be renewed for 10 more. Creditors use them to take debtors other property that is not exempt (see the definition herein).

Lien – Liens may best be defined by giving examples of them. There are many kinds of liens, but several examples are: car and mobile home title liens, mortgages/deeds of trust on land, and judgments, which are liens on any real estate owned by a judgment debtor in the county in which the judgment is filed. If a creditor has a lien, then he has rights against the item which is the creditors collateral for its loan or judgment. The item against which the lien has been placed is still owned by the debtor, but the creditor has the right to take that item if it is not being paid by the debtor if there is enough equity in it and, in the case of a judgment, if the property is not exempt.

Local Rules – your lawyer must do your paperwork according the bankruptcy code and rules, which come from Washington, DC. He also must make sure that your work is done according to the Local Rules, which are rules that your local courts have also said you must follow, forms you must complete, or procedures you must follow.

No Asset Case – when you file chapter 7 bankruptcy, if the chapter 7 bankruptcy trustee does not feel that you own anything that is not exempt which he can sell to get money to pay the creditors, then your case will be called a No Asset Case.

Petition – the first few pages of the paperwork you file with the bankruptcy court, which put you in bankruptcy. The words on these pages ask the bankruptcy court to protect you from your creditors and when you file them at the court you get an order from the bankruptcy court which protects you. It is filed electronically which means that it is filed over the internet.

Priority of Liens – When someone gets a lien, it is obtained at a certain date and time. That marks its priority, or in what order it is a Lien against that particular item of property relative to all other liens. For example, when someone talks about having a First Mortgage, Second Mortgage, they are talking about the Priority of the mortgages. For example, you can have two mortgages on your house and then someone sues you and gets a judgment. The judgment would have Third priority if the two mortgages had been filed before the judgment was filed.

Proof of Claim – this is what a creditor has to file with the bankruptcy court to show what it is owed so that it can be paid its share of money recovered in a chapter 7 or its share of the debtors monthly payments in a chapter 13 or 11.

Property Tax Statement – this is what is on file at your county courthouse which shows what your taxes owed are, what the value of your property is, what the tax rate is, who the owners of record are, and what property we are talking about (i.e. cars, land, trailers, boats). Your attorney will need these.

Schedules – in bankruptcy, these are the pages on which all of your information you file with the bankruptcy court is written. All of the information provided is given under penalty of perjury and you may have to prove that what is in them is true. After 10/16/06 1 out of every 250 files will be audited by the government. They are filed electronically.

State Court – the courts of a particular state, such as NC and SC. Most of the courts with which most people deal are state courts, such as divorce court, traffic court, non-federal criminal court, workers compensation, probate court, etc.

Stay – this is the legal protection that a debtor gets when he files a bankruptcy and which makes it so it is illegal for creditors to come after the debtor and his property without getting permission from a bankruptcy judge. Think of it as a force field.

United States Trustee or UST – the federal bureaucratic entity that overseas the bankruptcy system in 48 states, including SC.

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  • Can I go to Jail for not Paying my Bills?

    No, not unless you committed a crime in the creation of the debt (for example, fraud). Simply borrowing money and not being able to pay it back is not a crime. Many creditors representatives will tell you lies on the telephone and say that they will have you put in jail. Perhaps they are too ignorant to know they are wrong or that it is illegal for them even to say that. See More Bankruptcy Q&A