Important Terms In Bankruptcy: Part 1

: Reese Baker & Associates

  Filed under: Filing bankruptcy

bankruptcy termsIf you are considering filing for bankruptcy in Houston, there are a few terms you should know to better prepare yourself for the process.

Automatic stay — is a legal order that, once issued, prohibits creditors from making collection attempts on your accounts. In other words, once you file for bankruptcy all eligible debt accounts will be uncollectible and your creditors are not allowed to contact you directly.

Discharge — is the legal determination releasing you of liability over your eligible debts in bankruptcy and the conclusion of your case. Debts that receive a discharge are not collectible and creditors must acknowledge this resolution¬† of your debt liability.

Exemption — is the legal protection of a piece of property, item or other asset from liquidation in a bankruptcy case. Texas exemption laws are some of the most lenient in the country, offering a wide range of protection of your personal belongings.

Means test — is the tool used to determine your eligibility for a Chapter 7 bankruptcy. To keep it simple, your income must be below the median income of Texas in order to be eligible for a Chapter 7 filing.

Petition — is the legal document you complete and file with the court that initiates your bankruptcy case. This is one of the most important documents; providing a detailed account of your debts, assets, income, funds and financial history.

Trustee — is the court appointed representative that manages your case. The trustee makes payments to creditors, collects and distributes assets, and monitors repayment plans.