It is an uncertain time for many people. Have you lost your job? Are you falling behind on your bills? Have you missed a month or several months of payments? Are you unsure of your options? Bankruptcy may be an option. If you are considering bankruptcy, there are a lot of legal words that may not make sense. In this article, we will discuss common bankruptcy terms.
Please note that some of this information may change during the COVID-19 health crisis.
If you are contemplating or preparing to file for bankruptcy, contact the trusted Nevada attorneys at Anthem Bankruptcy Lawyers for a free consultation. Contact us online or by telephone at (702) 857-6000.
Who Files for Bankruptcy?
The person who files for bankruptcy is the debtor.
The debtor is a person in debt who has financial obligations to one or multiple creditors. If you file for bankruptcy, you are the debtor. Debt is the money owed to creditors.
What are Bankruptcy Chapters?
The different chapters of the Bankruptcy Code govern bankruptcy. Your individual situation will determine the type of bankruptcy case you file. If you are an individual, you will most likely file under either Chapter 7 or Chapter 13.
The bankruptcy process is complex and has lasting legal and financial consequences. You should consult with an experienced bankruptcy attorney if you are considering bankruptcy. An experienced bankruptcy attorney can advise you of which chapter and protections will apply to your specific situation. Anthem Bankruptcy Lawyers are an experienced team and provide free consultations. Contact us today by phone at (702) 857-6000 or online.
What is a Creditor?
A creditor is anyone or anything to which the debtor owes money. If you file for bankruptcy, you will need to list all of your creditors. Creditors can include the following.
- Mortgage lenders
- Credit unions
- Credit card companies
- Utility companies
- State or federal government
- Family members
- Medical facilities
If you are behind on your payments, creditors may be trying to contact you and collect on the debts. Filing bankruptcy triggers an “automatic stay.” The moment the debtor files the bankruptcy petition, the automatic stay stops creditors from collecting debts (without the court’s permission).
Filing bankruptcy will do the following:
- Stop bill collectors from calling.
- Temporarily stop foreclosures.
- Stop wage garnishment.
- Stop most pending civil court proceedings.
- Possibly delay evictions.
What is the Bankruptcy Term Trustee?
A Trustee is an officer appointed by the court who oversees a bankruptcy case, including the meeting of the creditors. A bankruptcy Trustee may collect and sell the debtor’s nonexempt money and assets. The Trustee uses the sales proceeds to pay the creditors.
Meeting of Creditors
The meeting of creditors gives the Trustee an opportunity to ask the debtor about their bankruptcy documents. The Trustee may ask the debtor about their assets, debts, and other financial matters. Creditors are allowed to attend and ask the debtor questions.
The Trustee will look for any preference payments or fraudulent transfers. A preference payment refers to a substantial payment made to any one creditor shortly before filing bankruptcy. An experienced attorney can advise you if you have any questions regarding payments or transfers you have made prior to filing for bankruptcy.
COVID-19 may affect how and when the Trustee will conduct your meeting. Some are conducting meetings telephonically or postponing meetings for health and safety reasons.
What is Debt?
Debt is money the debtor owes to the creditors. There are different types of debt in bankruptcy. When deciding whether or not to file, it is important to understand how the type of debt affects your rights.
Secured debt is attached to an asset. If you don’t make the loan payments for the asset then the creditor has the right to seize the asset. Secured debts include the following.
- Home equity loans
- Car loans
- Pawn shop loans
If you file for bankruptcy, you will have to continue to make payments on your secured debts or risk losing the asset. If you cannot afford to make payments on your secured debts, then you will have to surrender those assets when you file for bankruptcy. Filing for bankruptcy may discharge (erase) some or all of your debts. Erasing some or all of your debts may free up some of your income. You can use that income to make payments on those secured assets.
Unsecured debt is any debt not attached to an asset. In bankruptcy, there are two types of unsecured debt: nonpriority and priority.
Unsecured nonpriority debt is not attached to any specific item. If the bankruptcy court grants a person (the debtor) a discharge then the discharge erases the nonpriority debt. Unsecured nonpriority debts include the following.
- Credit cards
- Medical bills
- Payday loans
- Past-due utility bills
- Personal loans
- Student loans (typically more difficult to discharge in a bankruptcy unless you can prove undue hardship)
Unsecured priority debt is not attached to a specific item. If the bankruptcy court grants the debtor a discharge, the debtor still has to pay the priority creditor. The Trustee pays priority debts before other financial obligations. Priority debts include the following.
- Child support
- Spousal support
- Certain state and federal taxes
Now that you’re familiar with many of the terms involved, and before we discuss exemptions, let’s recap our bankruptcy discussion. It’s important to familiarize yourself with some of the key terms regarding bankruptcy, so you can make informed decisions regarding your finances. If you are considering filing for bankruptcy, call our office for a free case analysis: (702) 857-6000. You can also reach us online.
What is an Exemption?
Most debtors are afraid of losing some or all of their assets and property if they file for bankruptcy. The Bankruptcy Code and Nevada law “exempts” certain assets. In bankruptcy, exemptions are certain amounts and types of property protected from creditors. Depending on your situation and the type of property, a Nevada exemption may be available to protect the item. This means that if you file for bankruptcy, you may be able to keep some or all of your property if an exemption applies.
If you have questions about Nevada bankruptcy exemptions, contact the experienced team at Anthem Bankruptcy Lawyers. Anthem Bankruptcy Lawyers have bankruptcy experience and can answer questions specific to your individual situation. Bankruptcy has long-term consequences and you should understand how the law applies to you. Reach us online or at (702) 857-6000.
What is a Discharge?
During a bankruptcy proceeding, a debtor declares that they are unable to pay their debts. If a debtor completes their bankruptcy, the bankruptcy court issues an order discharging certain debts.
A discharge releases a debtor from personal liability for certain debts. This means the debtor no longer has a legal responsibility to pay the discharged debts, providing the debtor with a fresh start. A discharge prevents creditors from taking action against the debtor to collect the debts.
Not all debts are dischargeable. Even if the bankruptcy court awards the debtor a discharge, the debtor still has to pay certain debts. Nondischargeable debts include the following.
- Spousal support
- Child support
- In most instances, student loans
- Court-ordered restitution
- Most tax debts
A creditor or the Trustee may object to the discharge of any one of the following types of debt. A bankruptcy judge may then decide that these debts are nondischargeable if they are debts
- incurred by fraud or willful and malicious injury,
- from larceny or embezzlement, or
- resulting from credit card charges/cash advances incurred close to filing.
Hire a Las Vegas Lawyer Before You File for Bankruptcy
Award-winning Las Vegas Anthem Bankruptcy Lawyers is a team of experienced, dedicated bankruptcy lawyers and case managers based in Henderson, Nevada. We serve clients in Henderson, Las Vegas, North Las Vegas, Summerlin, and Clark County. With over 25 years of experience, Anthem Bankruptcy Lawyers specialize in bankruptcy law cases. We understand that bankruptcy and all its associated terminology can be confusing. Let the experts at Anthem Bankruptcy Lawyers discuss your options with you at a free case review. Contact us today at (702) 857-6000 to make an appointment for your free consultation.