The Cassidy Law Firm Blog

Friday, March 7, 2014

Ocean County Bankruptcy: Common Terms Explained

The bankruptcy process can be an intimidating process for the average debtor. As is the case with most legal procedures, bankruptcy is full of legal jargon and legal terms with which most people are unfamiliar. If you are considering bankruptcy as a solution to your financial problems, or have already begun the bankruptcy process in Ocean County, the following list of common Ocean County bankruptcy terms may be helpful.

Ocean County Bankruptcy Terms

  • Automatic stay – order issued by the Bankruptcy Court after the petition is filed. Prohibits creditors from further actions to collect on a debt.
  • Bankruptcy Code –the name given to the statutory body of bankruptcy laws after the Bankruptcy Reform Act of 1978.
  • Chapter – the Bankruptcy Code is organized into chapters. Many of the chapters cover specific types of bankruptcy.
  • Chapter 7 – known as a “liquidation” bankruptcy. Used by low-income debtors who have no valuable non-exempt assets they wish to protect. Most debts are discharged, or eliminated.
  • Chapter 13—known as a “wage-earners” bankruptcy. Used by moderate to high income debtors or those with valuable non-exempt assets. Requires debtor to repay portion of debts over an extended period of time.
  • Confirmation hearing –hearing in a chapter 13 bankruptcywhere the judge rules on the acceptability of the debtor’s proposed repayment plan.
  • Credit counseling –mandatory class required prior to filing a bankruptcy petition.
  • Debtor education –mandatory class required prior to discharge of bankruptcy.
  • Discharge – the satisfaction or elimination of the debts of the debtor by the bankruptcy court.
  • Dischargeable debt –a debt that can be discharged through bankruptcy.
  • Exemptions – this refers to assets or properties owned by the debtor that cannot be recovered by creditors.
  • Filing fee – fee paid to the Bankruptcy Court when a petition is filed. May be paid in installments in some cases.
  • First meeting of creditors – a mandatory meeting between creditors and the debtor usually held within a month of the filing of bankruptcy. Trustee presides over this meeting. Also referred to as a “341 hearing”.
  • Means Test – refers to calculations performed to determine if a debtor may file a chapter 7 bankruptcy. Compares debtor’s income to other similar households to determine if debtor’s income is below the median income in the geographical area.
  • Priority claim – administrative expenses and salaries, wages, employee benefits, customer deposits and taxes which occurred pre-petition.
  • Schedules – list submitted by the debtor along with the petition (or shortly thereafter) showing the debtor’s assets, liabilities, and other financial information.
  • Secured debt – debt backed by a mortgage, auto loan, pledge of collateral or other lien. It is debt for which the creditor has the right to pursue specific pledged property upon default.
  • U.S. Trustee – an agent of the U.S. Department of Justice appointed to assist in bankruptcy cases. The U.S. Trustee administers many of the duties of the court including appointing committees, appointing trustees and examiners, scrutinizing bankruptcy documents, etc.

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