Bankruptcy is a lengthy process filled with words that the average individual will be unfamiliar with. To better understand and communicate with your attorney, it would be helpful to familiarize yourself with Oklahoma bankruptcy terms you will need to know.
As soon as you file for bankruptcy, an “automatic stay” goes into effect. Arguably the single most important feature of a bankruptcy proceeding, an automatic stay suspends all collection procedures against you. This includes wage garnishments, foreclosures and phone calls from creditors. It also insures that creditors cannot seize your assets until it your financial situation has been reviewed by the court.
When you file for bankruptcy, the court will appoint an official called a “trustee” who will be responsible for managing your bankruptcy estate and deciding how you will satisfy your creditors. For each chapter of bankruptcy, except Chapter 11, the trustee is responsible for determining the value of all of your assets, arranging the Meeting of Creditors, liquidating your assets (if necessary) and distributing the proceeds. The trustee is also responsible for making sure that there is no fraud involved in your bankruptcy filing, so it is important that you cooperate fully with your trustee or risk having your case dismissed.
During bankruptcy, all of your assets and properties are kept in a virtual trust called your “bankruptcy estate”, which is to be managed by the court appointed trustee. For the most part, this includes everything that you own or that you are entitled to at the time of your filing. In Chapter 7, only assets that you have acquired up to filing for bankruptcy are included in your bankruptcy estate. With Chapter 13 bankruptcy, which will lasts for three to five years, your bankruptcy estate includes everything you have acquired before filing and anything you acquire during your bankruptcy.
After filing bankruptcy, the court will have “avoidance powers” to void any transaction you may have made just prior to filing bankruptcy. This is to prevent you from making transactions to shield your assets or making payments to creditors that may compromise the satisfaction of other debts that have priority.
Most often when you file for bankruptcy, you are already under long-standing contracts, such as residential leases or business agreements that are still in force. You may also have just signed a contract that was agreed to just prior to your decision to file bankruptcy. A contact under which’s you still have obligations at the time when bankruptcy proceeding begin is referred to as an “executory contract”. The trustee has the right to terminate or assume (continue) certain executory contracts within 60 days of your filing. In addition you may also request the trustee’s approval to walk away from certain executory contracts under Chapter 7 bankruptcy.
Unsecured and Secured Debt
Most people file bankruptcy because they have debt that has become unmanageable. This debt can be broken down into two different categories: secured debt or unsecured debt
A debt is “secured” when it is guaranteed by some form of collateral. For example in a home loan, the house would secure the loan. If you fail to pay your house note, the lender will take the house. Similarly, the items themselves may secure loans for furniture or appliances. If you don’t repay, the creditor may come to repossess these items.
“Unsecured” debt is debt that is not secured by collateral of any sort. This includes, medical bills, utility bills, back rent etc. It is important to know that under bankruptcy proceedings, secured debt is non-dischargeable and has priority over unsecured debt. Under bankruptcy proceedings, no unsecured debt will be satisfied until all secured debt has been paid off.
Free Consultation: Oklahoma City Oklahoma Bankruptcy Attorney
Bankruptcy law is filled with words and phrases that are not commonly used in everyday conversations. So to avoid being bewildered by the terminology, familiarize yourself with these bankruptcy terms you need to know and feel more at ease when discussing your case with your bankruptcy attorney.
To find out more about bankruptcy in Oklahoma, contact a Oklahoma City bankruptcy attorney. For a free confidential consultation about your rights in bankruptcy court and the potential benefits of filing bankruptcy, contact the Debt Line Law Office at (918) 878-0010. If you prefer e-mail, send us your question using the form at the top right of this page and we’ll answer your question as soon as possible.