The San Diego Bankruptcy Attorneys serve the people of California on all issues pertaining to bankruptcy. Our team of attorneys practice and understand the bankruptcy code, using it to help honest debtors seek financial relief. In any bankruptcy case, the debtor will receive some form of financial relief that will allow the individual to build back their credit in 2 to 5 years. If you are considering bankruptcy, have a legal representative review your case and provide guidance so that you file for bankruptcy under the right chapter. Our attorneys can be reached at 619-488-6168 or you may visit our offices at 750 B Street, Suite 2510, San Diego, CA 92101.
The following is a brief introduction to the common language that you will find in bankruptcy-related cases. If you wish to learn more about these terms and their exact legal definition, you may visit the Bankruptcy Basics Glossary at www.uscourts.gov/educational-resources/educational-activities/bankruptcy-basics-glossary
Bankruptcy Common Terms
Automatic Stay: After filing for bankruptcy the debtor is protected by Automatic Stay. Automatic stay or ‘bankruptcy stay’ protect the debtor from any debt collecting activity. Once the debtor files for bankruptcy there is very little a creditor can do to pursue any form of payment.
Bankruptcy: a legal action against the debt owed to a creditor. Bankruptcies provide a legal way to distribute the debtor's property and assets to pay off the creditors. In the wider scope of the law, bankruptcies allow a resettlement of debt where some debt is dischargeable and other debt can be paid back within a certain time frame (usually 3-5 years).
Bankruptcy Code: the federal bankruptcy law officially recognized as title 11 of the U.S Code (11 U.S.C SS 101-1330). The Bankruptcy Code provides protections for debtors after a bankruptcy petition has been filed. The Bankruptcy Code outlines the procedures for filing a bankruptcy petition.
Bankruptcy Court: bankruptcy decisions take place in a bankruptcy court where a bankruptcy judge provides regular service.
BAPCPA: The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 substantially amended the Bankruptcy Code to include protections for creditors against fraud.
Bankruptcy Petition: a federal request for protection of the bankruptcy laws. There are different chapters used to file a bankruptcy petition. The debtor's specific situation will dictate which chapter suits their situation. Filing a bankruptcy petition is simple with the right legal guidance.
Bankruptcy Trustee: appointed member of the court who is in charge of distributing assets and properties. Depending on the bankruptcy case, bankruptcy trustees are in charge of repossessing the debtor's dischargeable property, selling the dischargeable property, and using the earnings to pay off any debt owed to creditors. In Chapter 13 the bankruptcy trustee is appointed by the court to act as a middleman between the debtor and the creditor. The bankruptcy trustee is in charge of distributing the debtor's monthly settlement amongst the creditors.
Business Bankruptcy or Commercial Bankruptcy: a bankruptcy case that may involve a sole owner of a company, a corporation, a limited liability company, or a partnership. Business bankruptcies are protected by the automatic stay clause which is outlined in every chapter of the bankruptcy code.
Chapter 7: a liquidation of the debtor's property. Chapter 7 enables a bankruptcy trustee to repossess any dischargeable property and sell the property for earnings. Bankruptcy Code has established non-dischargeable property that differs by state. In most cases you may be capable of keeping your vehicle and other property. Chapter 7 differs from any other chapter. After the debt is discharged in a bankruptcy court, the debtor is freed from any repayment obligations. In addition, Chapter 7 provides legal protection from debt collecting through the automatic stay.
Chapter 9: a bankruptcy proceeding that involves a municipality and creditors. A municipality includes school districts, cities, towns, or counties. In Chapter 9 cases the municipality is protected from any debt collecting activity by establishing a creditor repayment program. The outstanding debt can be paid off in settlements.
Chapter 11: a bankruptcy proceeding that allows the reorganization of debts owed to creditors. Under Chapter 11, corporations, sole proprietorships, partnerships, and individuals (usually corporate personnel) are capable of maintaining their business as ‘debtors in possession’ while receiving the benefits of a bankruptcy court decision. Under Chapter 11 the business is protected by automatic stay laws that prevent a creditor from pursuing any debt collecting activity. Businesses may find comfort in a Chapter 11 bankruptcy as it allows businesses to restructure with the oversight of a trustee. During the restructuring of the business, the debtor in possession can access certain loans to help with the cost of restructuring. Chapter 11 is not for all businesses, some businesses cannot be restructured and may find more relief through a Chapter 7 bankruptcy.
Chapter 12: a bankruptcy proceeding designed to aid farmers. Chapter 12 is very similar to Chapter 13 in that they both allow the individual to maintain their property by establishing a repayment program to their creditors.
Chapter 13: a bankruptcy proceeding that allows the debtor to keep all of their property by establishing a repayment program. The debtor is protected by automatic stay after Chapter 13 has been filed. If a Chapter 13 repayment program is approved the creditors cannot pursue additional payments unless they provide enough proof that the debtor is filing a Chapter 13 in bad faith. The repayment program should include full payments to some creditors and the program should extend no more than 3 to 5 years. Through Chapter 13 debtors will have some debt discharged while the remaining debt is paid off with the help of a bankruptcy trustee. The remaining debt is paid in settlements and must be approved by a bankruptcy judge. The settlement plan may be subject to objection by creditors. Individuals filing for Chapter 7 may find their case being moved to a Chapter 13 if the creditors can prove that the debtor is capable of paying back the debt through a settlement program.
Chapter 15: a bankruptcy proceeding that allows foreign companies or individuals to access the U.S bankruptcy courts. Chapter 15 was introduced in 2005 with the amendments under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The purpose of this chapter is to provide relief and protection to foreign debtors. Like other chapters, Chapter 15 provides the protections underlined in the automatic stay.
11 U.S Code SS 341- Meeting of creditors and equity security holders: a meeting that occurs with the debtor's bankruptcy trustee and the creditors. Judges may not attend a creditors meeting. During the creditors and equity security holders meeting, the trustee informs the debtor about his or her ability to file for a different chapter (one that provides a repayment option), about the effect of bankruptcy on credit history, and about the outcome of having the debt discharged.
Complaint: the first legal document that is filed with the court to express a claim against another entity. The plaintiff files a complaint against an entity identified in the court of law as the defendant.
Consumer Bankruptcy: a bankruptcy case that is filed to reduce or discharge consumer debts.
Consumer debts: debts that are owed by individuals consumers as opposed to municipalities, businesses, or government. Consumer debts are accumulated for personal reasons as opposed to serving the needs of a business. Consumer debts include debts to credit cards, mortgages, payday loans, or vehicle loans.
Creditor: an individual or business (company/corporation/partnership) to whom money is owed. Creditors are almost always compensated by being partially paid off or being paid off in full.
Credit Counseling: Before filing a bankruptcy petition the debtor will have to submit to a form of counseling that assesses the debtor's situation. The counseling will provide repayment options and is required by the bankruptcy code before an official bankruptcy petition is filed. After counseling if all other options cannot be used to establish a repayment program, the individuals will be allowed to continue with a bankruptcy petition.
Debtor: a person or an entity that owes money to a creditor
A debtor in Possession: the debtor (usually a business) is allowed to keep their assets and business under Chapter 11 as a ‘debtor in possession’. The debtor in possession will have an appointed trustee that can help with the restructuring of the business.
Defendant: a person, business, other entity that accused through a formal complaint
Discharge: a discharge of debts is the outcome of a bankruptcy case. When dischargeable debts are eliminated in a court of law, the creditor can no longer pursue payment. Creditors will be unable to pursue collection through phone calls, emails, or mail. A discharge releases the debtor from any repayment obligation of debt that is considered dischargeable.
Dischargeable debt: are obligations that can be cleared by a bankruptcy court decision. Common dischargeable debts include credit card debts, mortgage loans, payday loans, and vehicle loans. Debt that has been discharged in a court of law cannot be redeemed by a creditor.
Exempt Property: property that the debtor can keep after he or she has filed for bankruptcy. The Bankruptcy code provides what type of property is exempt by providing guidelines on the value of the property that can be kept after a bankruptcy.
Examiner: officer appointed by the bankruptcy court to review Chapter 11 business bankruptcies. The examiner can act as a mediator to solve disputes arising from the different parties in a bankruptcy case.
Joint Petition: a bankruptcy petition that is filed by husband and wife as a single entity
Insider: an individual or entity that is capable of influencing the debtor's legal conduct. The insider can be a corporation, a person with more than a certain percentage of voting power, and partners.
Lien: a claim on a debtor's property that secures a form of payment once the property is sold. Property with liens are ‘uncleared’ and are cleared until the earnings from the sale are used to pay off the lien.
Liquidation: occurs in Chapter 7 bankruptcy cases where the debtor transfers their dischargeable property to a trustee who is in charge of selling the property for earnings that can be used to pay back the creditors.
Lis Pendens: a notice of a pending lawsuit. When debtors receive notice of a lawsuit they risk losing property and assets if they fail to correspond with a bankruptcy petition.
Means Test: a test that determines the economic well being of an individual filing for bankruptcy. The means test will assess the debtor's income and determine the debtor's capability of paying back the debt. Debtors with certain renewable and disposable income may be prevented from pursuing a Chapter 7 leaving them with the option to file for a Chapter 13 repayment program.
Motion to Lift Automatic Stay: a formal request from a creditor to lift a stay on a debtor so to pursue payment on debts that would otherwise be discharged
No Asset Case: a case that involves an individual with no real property that can be sold off to pay off creditors. Debtors in a no asset case are capable of maintaining the property exempt under their state law.
Non-Dischargeable Debt: debts that cannot be wiped off through a bankruptcy court judgment. Non-dischargeable debts include alimony, child support, debts that are a result of breaking the law, etc. These debts cannot be discharged in a court of law, however, debtors may find protection under the bankruptcy stay clause.
Plaintiff: person, business, or other entity that files a complaint with a court.
Pro Se: a representation of oneself in a courtroom. A courtroom proceeding where either the plaintiff or defendant are representing their case without the aid of an attorney or qualified professional
Reaffirmation Agreement: an agreement between the debtor and a creditor to have a certain debt re-created. The reaffirmation agreement is pursued when a debtor wants to keep some of the property that may be affected by a lien. In reaffirming the agreement, the debtor must present proof that they are capable of paying back the debt. If paying off the debt would cause an undue hardship the reaffirmation agreement is denied.
Redemption of Collateral: debtors with liens on their property that is worth less than the debt are able to pay off the lien by paying off the value of the property instead of the debt.
Schedules of Assets and Liabilities: a list of assets and liabilities that include the debtor's financial affairs and other information used when filing a bankruptcy petition.
Stipulation: an agreement between the defendant and the plaintiff
Unclaimed Funds: checks sent to creditors that were never redeemed and therefore returned to the trustee in charge of distributing payment. Unclaimed funds are sent to the clerk of the bankruptcy court who will secure the checks for five years. If after five years the unsecured funds are not claimed, they are sent to the US Treasury.
Voluntary Case: a bankruptcy proceeding that is voluntary rather than forced on an individual through creditor actions
The San Diego Bankruptcy Attorneys understand the laws and principles that guide the Bankruptcy Code. If you are in debt and considering bankruptcy contact a specialized bankruptcy attorney who is capable of guiding your case through legal venues that will allow you to keep most of your property. The Bankruptcy code establishes protections for debtors that allow them to maintain some assets and properties after a bankruptcy. The San Diego Bankruptcy Attorneys can be reached at 619-488-6168.