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Adversary:

A lawsuit filed within a bankruptcy case.  The adversary proceeding is filed in the United States Bankruptcy Court and is assigned a different case number from the bankruptcy case.  If a creditor believes its debt should not be covered under the discharge the creditor can file an adversary proceeding.  Debtors can also file adversary lawsuits if for example a creditor violates bankruptcy.   

Asset:

An “asset” is something of value to someone.  Personal property, real property, intellectual property, land, income, money, ideas, movie scripts, songs, and anything with value, real or perceived, is an asset.  Assets are generally protected as exemptions in a bankruptcy case.  Protecting your assets is arguably the most important issue when considering bankruptcy.  Both Chapter 7 and Chapter 13 cases allow us to protect the maximum under California and Federal Law.  California exemptions are used to protect assets located in San Diego County and in California and sometimes other states when you file Chapter 7 bankruptcy.  Additionally, the Law Offices of Mark L. Miller can protect your assets.

Chapter 7:

Chapter 7 is the most bankruptcy filed because it wipes out debt and most people retain their assets.  Most unsecured debts are discharged in a chapter 7 including credit cards, personal loans, payday loans, medical bills, consolidation loans, auto repossessions, deficiencies from foreclosures, some back taxes, check cashing loans and more.  Student loans, spousal support, child support, alimony, taxes owed for the last three years, court fines, restitution orders, parking tickets, speeding tickets and intentional, malicious, fraudulently incurred debts are not forgiven through Chapter 7 bankruptcy.   

Chapter 7 cases are liquidations because unprotected property is sold (liquidated) by the trustee assigned to a bankruptcy case.  The property sale proceeds pay creditors.  Most debtors who file Chapter 7 bankruptcy eliminate all of their debt and keep all of their property.  There are some limitations to the amount of property individuals and couples can keep and prior to filing this should be discussed with an experienced bankruptcy attorney.   

Chapter 13:

Allows individuals to reorganize their debt by paying a fix monthly payment over a preset number of months.  Chapter 13 is a good option for someone who otherwise does not qualify for a Chapter 7

Sometimes a person does not qualify for Chapter 7 bankruptcy because they have too many assets including real estate and/or personal property, they make too much money, filed another bankruptcy too soon, own a property that is going to foreclose and want to keep the property and pay their past due payments over time, owe back income taxes and need to structure tax payments over time and/or want to avoid an unsecured mortgage on their house.

Other reasons a Chapter 7 may not be the best fit is because a client wants to keep property that is about to foreclose. A chapter 13 will stop a foreclosure and allows the client to repay their past due mortgage payments over time while retaining the property.

Income tax debt that is more than three years old may be eliminated in a Chapter 7 liquidation. Taxes for the last three years are not discharged in bankruptcy so a chapter 13 reorganization with a fixed monthly payment can keep the IRS and Franchise Tax Board from harassing you for payment, garnishing your wages and attaching liens to you for unpaid tax debt.

Many homeowners choose to file chapter 13 instead of Chapter 7 because of second and third unsecured mortgages that can be “avoided”. A mortgage is considered unsecured if the home is valued at less than the balance owed on the first mortgage. In a chapter 13 plan the debtor can include language.

Lastly financial hardships sometimes affect us more than once and clients might find they need to file bankruptcy again but it may be too soon for a Chapter 7 Bankruptcy case so chapter 13 is another alternative. 

Charge Off:

When an account is unpaid for several months the creditor can charge off your account as uncollectable. The creditor claims the debt as a financial loss and typically writes off the debt on its tax return. Even though the original creditor charged off the account you still owe the debt. After the debt is charged off the creditor can sell the debt to a third party called a debt collector. A charged off account remains on your credit for seven years.

Credit Counseling:

Meant to help consumers and debtors better understand debt, their finances and work on budgeting. Each debtor who files bankruptcy must participate in and provide a certificate of credit counseling. Credit counseling courses are typically done online or by phone depending on the services offered by the company used. During your credit counseling session you will answer questions about your income, expenses and debt. From the information you provide your credit counselor will work with you to create a budget and discuss options to resolve your debt.

Debtor:

Someone who owes a debt. A debt is something owed or payable to another person. A debtor may owe unsecured debt, priority tax debt, credit card debt, student loan, student loan debt, auto debt, mortgage debt, house debt, Person or company owing money to someone else.  

Discharge:

The United States Bankruptcy Court issues an injunction ordering debts to be forgiven pursuant to the Federal Bankruptcy Code.  The discharge is entered at the completion of a bankruptcy case.  In a Chapter 7 bankruptcy the discharge is generally entered about four months after the case.  With chapter 13 cases the discharge is entered at the end of the chapter 13 plan when all payments are complete according to the plan term which by law is either 36 or 60 months. 

Exemption:

Exemptions determine which property and assets you can keep in a bankruptcy case. The bankruptcy code incorporates state codes that detail the exemptions a debtor can claim and how much property can be protected. The good news is that the majority of bankruptcy filers keep all of their assets and property while getting rid of their debt.

If you have too many assets a chapter 13 bankruptcy may be the better option to help you with your debt. The more unexempt property you have the higher your chapter 13 plan payment may be.

Determining what exemptions to claim is arguably the most important decision in a bankruptcy case. Before deciding what exemptions to claim you should discuss your options in detail with an experienced bankruptcy attorney. 

Liquidation:

Unprotected assets (property) in a Chapter 7 bankruptcy are sold by the Trustee and the money from the sale used to pay back creditors.  Each creditor is paid a proportional amount of the proceeds from the sale.  Creditors must file a proof of claim to be paid from the recovered funds or the creditor will be excluded. 

Meeting of Creditors or 341a Meeting:

All debtors in a bankruptcy proceeding must attend the meeting of creditors, also referred to as the 341a meeting.  If married and filing jointly, both spouses must attend the 341a meeting. 

When a bankruptcy petition is filed a trustee is automatically assigned to each case.  The trustee assigned to the case will conduct the 341a meeting.  The 341a meeting is not held in front of a judge and in our district is not in a courtroom.    

The 341a meeting is usually held about 30 days after the bankruptcy petition is filed.  Each 341a meeting typically lasts between five and fifteen minutes.  If a debtor does not attend the 341a meeting trustee can ask the court to dismiss the case.

Proof of Claim:

A proof of claim is a written statement that notifies the bankruptcy court, the debtor, the trustee, and other interested parties that a creditor is asserting its right to receive a distribution (pay out) from the bankruptcy estate. The creditor’s proof of claim is filed with the United States Bankruptcy Court and must detail claimed amount of money owed.

Federal Rule of Bankruptcy Procedure 3002 requires creditors to file their proof of claim within 90 days of the date set for the 341a meeting of creditors. Some creditors like the Internal Revenue Service and California Franchise Tax Board are allowed additional time to file a proof of claim.

If a creditor misses the deadline to file its proof of claim, the debt may be excluded and the creditor will not be paid any money. Some creditors file a proof of claim but because of the type of debt they are not paid through the bankruptcy estate.

Skilled and knowledgeable bankruptcy attorneys know the law regarding proof of claims and carefully monitor when creditors file claims, the amount claimed and that the creditor has a legal basis for payment. 

Reaffirmation:

After initiating a bankruptcy case, a debtor and creditor enter into a new contract agreement to exclude from discharge the item in the reaffirmation.  The most common type of reaffirmation agreement is for a vehicle(s) a debtor wants to retain and continue paying.  

Redemption:

Specific to and limited to debtors filing bankruptcy, a redemption is a refinance of an item during, and through the Bankruptcy process.  A redemption loan pays off the old higher balance loan.  The new loan is for the value of the redeemed item.  The interest rate is sometimes higher but the redemption loan reduces the balance owed to the value of the redeemed item.  A debtor who is redeeming an item must file a motion with the Bankruptcy Court seeking approval of the new loan.  The Bankruptcy Court Judge signs an Order approving the redemption loan. 

"For example, a 2014 Chevy Truck that is worth $20,000.00 with a $35,000.00 vehicle loan.  The 2014 Chevy Truck can be redeemed for a new $20,000.00 loan.  The old vehicle loan is paid off with the redemption loan and any negative equity is included in the bankruptcy and discharged."  

Trustee:

The person who is appointed by the United States Bankruptcy Court to oversee and administer bankruptcy cases.  These trustees are often referred to as a “panel trustee” because they are not employed by the United States Bankruptcy Court.

The main function of the panel Trustee is to investigate and liquidate unprotected assets (property) and use the funds to pay the bankruptcy debtor(s) creditors.  Panel trustees conduct the 341a meeting of creditors in each bankruptcy case that is randomly assigned to that trustee.