Assets include everything you own and everything you might have a claim to. In bankruptcy, if its worth a penny, or possibly worth a penny at some point in the future, it should probably be listed in your schedules, even if you currently owe more money on that item than it is worth. When asked about their assets, people often overlook things like clothes, furniture, pets, tax refunds, potential lawsuits against someone else, and debts that other people owe to them.
This seems simple -- a debt is money you owe to someone else. But you have to remember that, in bankruptcy, the key point is not whether you think you owe money to someone. Rather, there is a debt when another person thinks you owe money to them. Also, your bankruptcy case is only concerned with any debt that you owed as of the date you file, not any you incur after that date.
Debtor / Creditor
A debtor is someone who owes a debt, and a creditor is the person they owe that debt to. When you file for bankruptcy, you will be referred to as the Debtor in the case. If a joint petition is filed, the husband is usually referred to as the Debtor, and the wife is usually referred to as the Joint Debtor. It may seem a little old-fashioned, but it does help to keep things clear.
This is the Holy Grail in bankruptcy -- its what everyone is after. When a debt is discharged it means that you no longer have any legal obligation to pay it, and creditors can't contact you about it or ask you to pay the debt.
You might hear this term in the context of determining whether an asset is "property of the estate." When you file a bankruptcy petition, it creates an "estate" for bankruptcy purposes, which consists of all your assets on the date of the petition. Usually, you will retain possession of your property, but you cannot sell, transfer, or destroy any of it without permission while the case is ongoing. Creditors can only look to non-exempt assets in the estate to pay their claims.
Sort of like "protection." In bankruptcy you use exemptions (determined by state or federal law depending on where you live) to keep some or all of your property from creditors. An exempt asset is one that the trustee or creditors cannot touch.
Meeting of Creditors
Also known as a "341 hearing" in lawyer-speak. This is required in every bankruptcy case, and the debtor must attend. It is supposed to be an opportunity for the trustee and the creditors to ask the debtor about his financial situation, although usually no creditors attend the majority of Chapter 7 or Chapter 13 meetings.
In a Chapter 13 bankruptcy, you are required to pay back a portion of your debts over either three or five years. The Plan is a document you file that states how much you will be paying, over how long, and the amounts that different types (or classes) of creditors will get.
The trustee is appointed by the court to administer a bankruptcy case. His role is to represent the estate that is created by a bankruptcy filing. In a Chapter 7 case, if there is any non-exempt property, the trustee can sell that property and distribute the proceeds to creditors. In a Chapter 13 case, he will receive your plan payments and distribute them to the creditors as stated in your plan. He also conducts the meeting of creditors. In fact, in most Chapter 7 cases you will never appear before a judge, only the trustee assigned to your case.
Ask Your Attorney
This dictionary is only a starting point, and you should ask your attorney to thoroughly explain any term you are unfamiliar with. We live with this stuff day in and day out, so it can be easy to forget that not everyone is speaking the same language. The explanations provided are general in nature and cannot describe how these terms apply in every situation.
Please note that although this legal guide may provide information concerning potential legal issues, it is not a substitute for legal advice from qualified counsel. You should consult an attorney for individual advice regarding your own situation. This legal guide does not create any attorney-client relationship between you and Kristin M. Smith, Associate at Olenicoff & Zinser, PC.