GLOSSARY TERMS

Bankruptcy has its own language. Here are some of the words you'll hear when you team up with a Bankrupt Michigan attorney.

  • Automatic stay: The injunction issued automatically upon the filing of a bankruptcy case that prohibits certain collection actions against the debtor, the debtor's property or the property of the estate.
  • Bankruptcy: A condition where a debtor cannot pay debts now or as they become due and uses the protection of the law to reorganize their financial affairs by liquidating certain property or formulating a repayment plan.
  • Bankruptcy code: Title 11 of the U. S. Code governs bankruptcy proceedings. Bankruptcy is a matter of federal law and is, with the exception of exemptions, the same in every state. When federal bankruptcy law conflicts with state law, federal law controls.
  • Chapter 7: Straight liquidation. The most common form of bankruptcy. A Chapter 7 case is a liquidation proceeding available to individuals, married couples, partnerships and corporations.
  • Chapter 13: Reorganization. A repayment plan for individuals with debts falling below statutory levels that provides for repayment of some or all of the debts out of future income over three to five years.
  • Collateral: The property that is subject to a lien.
  • Creditor: The person or organization to whom the debtor owes money.
  • Debtor: The debtor is the entity (person, partnership or corporation) who is liable for debts and who is the subject of a bankruptcy case.
  • Lien: An interest in real or personal property that secures a debt.
  • Relief from stay: A creditor can ask the judge to lift the automatic stay and permit some action against the debtor or the property of the estate.
  • Secured debt: A claim secured by a lien in the debtor's property by reason of the debtor's agreement or an involuntary lien such as a judgment or tax lien.
  • Trustee: The court appoints a trustee in every Chapter 7 and Chapter 13 case to review the debtor's schedules and represent the interests of the creditors in the bankruptcy case.
  • Unsecured debt: A claim or debt is unsecured if there is no collateral that is security for the debt. Most consumer debts are unsecured.

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