Meeting of Creditors – this is the meeting of creditors, which we commonly refer to as 341 “COURT” which you must go to once in each bankruptcy case. There is no judge in a robe present and it is less formal than an actual session of court with the judge. However, you are to dress and comport yourself accordingly and be on time. You are under oath to testify truthfully. You MUST bring a government issued unexpired picture ID and a social security card (or other fully sufficient proof of SSN- ask us if need be). This hearing is very short typically. There is a table we sit around with a trustee in a business suit, the trustee’s paralegal and legal assistant. There is a digital audio recorder that records the proceeding and no court reporter; therefore, you must speak out your answers and do not answer by nodding your head or going uh-huh and unh-unh. The trustee presides over this meeting. All debtors must attend approximately 3-6 weeks after you file bankruptcy. Usually the questions are about your income, expenses, property/assets and their value.
Adversarial Proceeding – this is a lawsuit that is filed, heard and decided within the debtor’s bankruptcy case. It is a case within a case so to speak. Not every bankruptcy case has an adversarial proceeding. Such examples of adversarial proceedings are 1) to determine the dischargeability of a debt, that is whether you will get out of the debt or not; or 2) the debtor filing a lawsuit against a creditor for violation of consumer protection laws and other matters. These adversarial proceedings are treated like and proceed as a regular lawsuit would. They are just under the control of the bankruptcy judge as a regular lawsuit would be under the control of a state superior court judge or a federal district court judge.
Asset Case – when a debtor files a chapter 7 bankruptcy and the Trustee determines that the debtor has “non-exempt assets”, that is assets that cannot be protected from being sold to pay creditors. The trustee can sell non-exempt assets in order to get funds to pay the debtor’s creditors. Most cases are NOT Asset Cases.
Automatic Stay (or The Stay) – (Section 362) this is the legal protection that a debtor gets when he files a bankruptcy and which makes it so it is illegal for creditors to come after the debtor and his property without getting permission from a bankruptcy judge. Think of it as a shield to protect you, yet also a sword to protect you that your attorney can use to bring sanctions through the Court against violators. (See “Stay Violation”)
B22 Means Test – this is a complicated formula that factors certain income the debtors have with household size, various expenses and various allowances for typical costs of living. If after the formula is calculated there is a determination that your income is more than the median income, then the court will find that the debtors have disposable income that must be used to pay creditors in some fashion through the bankruptcy system. Usually a determination of disposable income means the debtor will be required to file a Chapter 13 bankruptcy, the Wage Earner’s Plan, in order to satisfy the requirement to pay some money to creditors.
Bankruptcy – the legal process to help debtors under Title 11 of the U.S. Code (Laws/statutes). Filing bankruptcy is when a person or entity (Debtor) files a petition in the Bankruptcy Court asking for protection from his creditors.
Bankruptcy Administrator or BA – the person/office that overseas the bankruptcy system in NC.
Bankruptcy Case File Number – the number the court assigns to your file when your bankruptcy petition is filed. We can get you this number as soon as you file with the Court through us. You need this number to give creditors so they know you are not “bluffing” about having filed bankruptcy.
Bankruptcy Code -Title 11 of the United States Code. This is the law passed by the US Congress where you will find the bankruptcy laws. The U.S. Congress is required to have laws for debtors that are insolvent by the U.S. Constitution. Our Founding Fathers of this nation placed this in the U.S. Constitution so you have a constitutional right to seek help and relief through the bankruptcy laws.
Bankruptcy Court website – www.nceb.uscourts.gov
Bankruptcy Estate – when someone files bankruptcy, it automatically creates an Estate. This consists of all of the assets and rights owned by the debtor.
Bankruptcy Fraud – as a debtor, you are required by law to FULLY DISCLOSE ALL INCOME, TRANSFERS, PROPERTY AND ASSETS. If you do not, then you can be arrested, charged, convicted and sentenced for the crime of bankruptcy fraud. This is the reason your attorney asks so many detailed questions and sometimes seems to ask the same questions many times, but a little different each time. YOU are under the duty to TELL YOUR ATTORNEY about all transfers of property within the past four (4) years, all property you own or possess (paid for or not!!!), all money you have, all debts of yours, all money owed to you, all lawsuits you believe you have against others and everything else the attorney asks you, the attorney’s paperwork requests or the Court asks you. You are under a duty of FULL DISCLOSURE. You are not allowed to forget about things, or think a question didn’t mean something, or think something really isn’t important. Everything means everything. All means all! You MUST tell your attorney about all this information IN WRITING on the paperwork your attorney asks you to fill out. Telling the attorney or his staff about it orally is insufficient!
Budget – Schedule I & J – these are the bankruptcy schedules that disclose your income and expenses. Schedule I is income and Schedule J is expenses (i.e. budget). Please review carefully and be familiar with your Schedule J expenses and budget, so when you go to court you can justify your expenses that may be more than normal to the bankruptcy trustee. Your attorney will go over this matter with you and if you feel you don’t understand.
Chapter 7 – the type of bankruptcy the debtor files where his goal is to discharge, or wipe out, all of his unsecured debts, such as credit cards, doctor bills and the like. He does not make payments to the court. He usually just keeps paying his mortgage and car payments, if he wants to keep them.
Chapter 12 Bankruptcy – a reorganization bankruptcy for family farmers, miners and commercial fishermen.
Chapter 12 Plan – this tells creditors and the bankruptcy court how the debtor is going to pay his bills now that he is in bankruptcy. The creditors and chapter 12 trustee can object to it. It can be very complicated.
Chapter 13 Bankruptcy – the type of bankruptcy a debtor files to save his house or car from foreclosure or repossession, or for some other reason which requires him to make payments to his creditors in a chapter 13 plan payment he makes to a chapter 13 trustee, who pays the creditors. It is a reorganization of the debts. Chapter 13 debtors still have to pay their house payments if they want to keep their houses.
Chapter 13 Plan – this tells creditors and the bankruptcy court how the debtor is going to pay his bills now that he is in bankruptcy. The creditors and chapter 13 trustee can object to it. It can be very complicated. In the Western District of North Carolina (Charlotte) you must pay your mortgages through the bankruptcy court.
Chapter 13 Plan Payment – this is the monthly amount of money you must pay the court by the 1st of each month beginning with the 1st day of the month that occurs IMMEDIATELY after filing. Do NOT be late on your first payment!! There is NOT a 30 day “grace period” or any other “grace period”. You have the full previous month to come up with your payment. The payment may change several times usually up. Your attorney shall try to make this payment as law as the LAW ALLOWS. If the payment is raised, it is not because the Court is picking on you. It is raised because that minimum amount must be paid to cover your vehicles, house payment, arrearage on house payments, past due taxes and other amounts required to be paid through your bankruptcy payment. Values of your property and amounts of taxes, arrearage on your house payments and other amounts are the usual reasons. Sometimes later in the bankruptcy the Court determines through FACTS that values of property or amounts owed are more than we proposed in the initial bankruptcy. While most Chapter 13 Plan payments stay the same as or only increase slightly as initially proposed by Mr. Hardy, sometimes (not often) matters are not known by the debtor or attorney that require substantial increases. Mr. hardy shall review all these changes to make sure you are not required to pay more than you should to get your debt relief.
Chapter 13 Self-Employment Worksheet – this is a form that the local rules in our district require. You are to submit this information for six (6) months after filing a Chapter 13 bankruptcy, if you are self-employed, and have revolving accounts for supplies/inventory in your business that you intend to keep using. A form can be obtained on the bankruptcy court website. It answers a lot of questions about your finances, how you run your business, whether you will be borrowing money to run it. Once again, it requires you to file a profit/loss statement for six (6) months after filing a Chapter 13 bankruptcy (once again, if you are self-employed and shall be keeping revolving accounts).
Claim and Delivery – a claim and delivery action is a lawsuit a creditor files against someone who owes him money and who has given the creditor collateral that is personal property (usually cars, furniture or mobile homes, but NOT land). Simply put, the creditor is suing for the money and for possession of the collateral: he is claiming there is a debt and collateral and asking for delivery of the collateral to the creditor until the court can have a hearing to give the creditor a judgment. If you do not respond to the lawsuit in time, then the creditor can get the right to take your property without a hearing. See a lawyer to determine your deadline, as it could be as short as 5 days.
Co-Debtor (Cosigner) – This is anyone who has cosigned on any of your debts or is jointly liable on a debt with you. You must disclose to the court all joint debtors in your bankruptcy filing. You need to tell your attorney about ALL co-debtors before filing your bankruptcy.
Credit Counseling Class– in the bankruptcy context this is the meeting or internet/telephone conference that someone must attend before they can file bankruptcy. If you do not do it before you file a bankruptcy, obtain a certificate proving you did it and file the certificate with the bankruptcy court with your bankruptcy filing, your case will either be stricken or dismissed, depending on where you live (neither is good). In the non-bankruptcy context, this is usually where an organization may be able to help a debtor restructure his debts.
Creditor – a person who is owed money. In bankruptcy, it is the person to whom the debtor owes money.
Credit Report – you can go to www.annualcreditreport.com to get your free credit report from each of the three (3) major credit reporting agencies. You must get your credit report before filing bankruptcy to make sure you do not miss any creditors. However, YOU OWE MORE PEOPLE MONEY THAN ON YOUR CREDIT REPORT!!!! People owe me money, but I don’t report the debt to credit reporting agencies. Do NOT include the just the debts on your credit report only. Include EVERYBODY you owe money, big and small, new and old. Everybody means everybody. You CANNOT hurt yourself putting a debt into your bankruptcy, but you can sure hurt yourself if you leave them out!
Debt – this is money you owe anybody. Include ALL debts in your bankruptcy whether you want to pay the debt or not!! If you want to pay a creditor you owe money a debt when you file bankruptcy, then specifically ask your attorney about it. Include ALL debts, big or small (yes, even $5.00), old or new, whether you want to pay it or not.
Debtor – one who owes money. In bankruptcy, it is a person or company who files bankruptcy.
Deed – this is the document that shows you own your real estate unless you inherited your real estate. It must be filed in the Register of Deeds in the county where the real estate is located to be valid.
Deed of Trust – this is the mortgage document or lien the creditor has to be able to enforce your mortgage debt. It must be filed in the Register of Deeds in the county where the real estate is located.
Deficiency Judgment – this is when a creditor has sued to get possession of a car or of a house and it sells the collateral and does not get enough money from the sale to pay off the entire loan. The deficiency is what still is owed. If it is a judgment, it can be a lien on your land and can be used to collect other assets from you.
Discharge – this is the bankruptcy court order signed by a bankruptcy judge at the END of a bankruptcy case which shows that a debtor has done all he is required to do in his bankruptcy case and that his debts which can be discharged, or wiped out, are discharged. Your attorney can explain the effect of an order of discharge on your debts, as it has a different effect on different types of debts.
Discharge Violation – this is when a creditor you included in your bankruptcy attempts to collect upon the debt after your bankruptcy is over and you have been discharged (see above). Contact your attorney if this happens. Mr. Hardy takes these cases on a contingency fee basis so you do not have to pay any money upfront. You only pay the attorney and costs out of any recovery of damages or settlement.
Dismissal – this is when a bankruptcy case is not completed and is thrown out of the bankruptcy court. This can happen for any number of reasons, including when a debtor asks for it to happen.
Executory Contract – (Schedule G) – when you file bankruptcy, you need to list ALL contracts you are in whether it is a lease, rental, business contract, gym membership, cell phone, satellite, cable, internet, real estate contract with a realtor no matter which party you are or which side you are on in the contract. In the bankruptcy you get to decide whether you want to 1) stay in the contract (ASSUME the contract); or, 2) get out of the contract (REJECT the contract), that is no longer be responsible for performing the contract OR paying the contract any further, whether you are behind on it or not. This is your opportunity to get out of any contract in which you may be losing money or that is for a service you no longer want. You will NOT have to pay early termination fees if you reject any contract. If you are in business, this is your opportunity to get out of any money losing business deals, to get rid of advertising costs or if you are going out of business to get out of advertising contracts, phone contracts, rents, etc.
Exemptions – these are a certain dollar amount of certain types of items, which a debtor can protect from its creditors and from a bankruptcy trustee. What items you can protect and what dollar value of those particular items you can protect vary from state to state. The new bankruptcy law made deciding which state’s exemptions to claim more complicated. If you do not claim or ask for them in your bankruptcy, you do not get them. The trustee can and may object to them, but he must have a good faith factual basis grounded in law.
Financial Management Class – this is the meeting or internet/telephone conference that a debtor(s) must do before getting a discharge order in a bankruptcy. If you do not do the Financial Management Class before your deadline, your case will close and it will cost you a substantial amount of money to reopen your case to get the order of discharge (after you have done your Financial Management Class, of course). If you do not get an order of discharge in your case, then you will not have future protection of the bankruptcy court.
Foreclosure – the procedure creditors use in the court system to sell real estate on which they have a lien called a deed of trust, or mortgage.
Judgment (Judgment Lien) – a judgment is a court order signed by a judge which says that someone has won a lawsuit and what they have to do as a result of it, whether it is to pay a certain amount of money, or something else like do something they did not want to do. Creditors use them to collect money. They are liens on the loser’s land in the county in which the judgment is filed and they can be moved from county to county, state to state, and country to country. In SC they are good for 10 years and in NC they are good for 10 years but can be renewed for 10 more. Creditors use them to take debtors other property that is not exempt (see the definition herein).
Lien – Liens may best be defined by giving examples of them. There are many kinds of liens, but several examples are: car and mobile home title liens, mortgages/deeds of trust on land, and judgments, which are liens on any real estate owned by a judgment debtor in the county in which the judgment is filed. If a creditor has a lien, then that creditor has certain rights against the item, which is the creditor’s collateral for its loan or judgment. The item against which the lien has been placed is still owned by the debtor, but the creditor has the right to take (repossess) that item, 1) if the debt is not being paid by the debtor, 2) if there is enough equity in the collateral, and, 3) in the event the creditor obtains a judgment, if the property is not exempt.
Local Rules – your lawyer must do your paperwork according the bankruptcy code and rules, which come from Washington, DC. He also must make sure that your work is done according to the Local Rules, which are rules that your local courts have also said you must follow, such as forms you must complete, or procedures you must follow.
Means Test – B22 – this is a complicated formula that factors certain income the debtors have with household size, various expenses and various allowances for typical costs of living. If after the formula is calculated there is a determination that your income is more than the median income, then the court will find that the debtors have disposable income that must be used to pay creditors in some fashion through the bankruptcy system. Usually a determination of disposable income means the debtor will be required to file a Chapter 13 bankruptcy, the Wage Earner’s Plan, in order to satisfy the requirement to pay some money to creditors.
Motion to Dismiss – (Chapter 13 case) – this is a motion that is filed to dismiss your bankruptcy and deny you a discharge and relief in the bankruptcy. If you comply with all your attorney’s requests, then you should not worry. The most common reasons these are filed is for failure to make your Chapter 13 Plan payments, failure to pay the needed payment to make your bankruptcy work, or failure to file your tax returns.
Motion to Dismiss – (Chapter 7 case) – this is a motion that is filed to deny you a discharge or to require you to convert to a Chapter 13 bankruptcy. The most common reason for these motions is for having to much disposable income (see B-22 Means Test).
Motion for Relief from Stay (Section 362 Motion)– Creditors file these motions in bankruptcy court asking the bankruptcy judge to “lift the stay” so the creditor can attach, repossess or take the debtor’s asset (the collateral) upon which the creditor has a lien such as a car, house, etc. that the debtor is purchasing. Creditors file these motions when the debtor, after the filing of the bankruptcy petition, has not made payments on the collateral (like a house or car you are buying) or didn’t pay his insurance or property taxes for that collateral, or for some other reason.
No Asset Case – when you file chapter 7 bankruptcy, if the chapter 7 bankruptcy trustee does not feel that you own anything that is not exempt which he can sell to get money to pay the creditors, then your case will be called a No Asset Case.
Notice of Hearing – this is a notice you receive to go to court. Contact your attorney’s office immediately if you receive one.
Petition – the first few pages of the paperwork you file with the bankruptcy court, which put you in bankruptcy. The words on these pages ask the bankruptcy court to protect you from your creditors and when you file them at the court you get an order from the bankruptcy court, which protects you. It is filed electronically which means that it is filed by email.
Priority of Liens – When someone gets a lien, it is obtained at a certain date and time. That marks its priority, or in what order it is a Lien against that particular item of property relative to all other liens. For example, when someone talks about having a First Mortgage, Second Mortgage, they are talking about the Priority of the mortgages. For example, you can have two mortgages on your house and then someone sues you and gets a judgment. The judgment would have Third priority if the two mortgages had been filed before the judgment was filed.
Profit/Loss Statement – if you are self-employed or have a business, then to determine your income we must have a monthly profit/loss statement for the six (6) full months before you file your bankruptcy. You may be required to provide monthly profit/loss statements for a while after you file your bankruptcy. A profit/loss statement is where you list and add up all receipts/deposits of your business and subtract operating expenses of that business. The amount left is your profit if positive and your loss if negative. It is all right if the profit is an amount that pays your living expenses (Schedule J – See Schedule I and J) and any bankruptcy payment.
Proof of Claim – this is what a creditor has to file with the bankruptcy court to show what it is owed so that it can be paid its share of money recovered in a chapter 7 or its share of the debtors’ monthly payments in a chapter 13 or 11.
Proof of Insurance – this is proof from your insurance agent or insurance company that you have and are maintaining insurance on your house or car or other property that insurance is required by contract. During the bankruptcy you must maintain insurance on any property you have that is collateral for a debt.
Property Tax Card – this is what is on file at your county courthouse which shows what your taxes owed are, what the value of your property is, what the tax rate is, who the owners of record are, and what property we are talking about (i.e. cars, land, trailers, boats). Your attorney will need these.
Rules – this is a set of regulations passed by the Judicial Conference that also covers other bankruptcy issues. You and your lawyer must follow these rules since they are law. They are generally procedural in nature being they tell lawyers how to do things that the Bankruptcy Code requires and allows in a Bankruptcy case.
Schedules – in bankruptcy, these are the pages on which all of your information you file with the bankruptcy court is written. All of the information provided is given under penalty of perjury and you may have to prove that what is in them is true. The U.S. Trustee audits one (1) out of every 250 files. All bankruptcy legal documents filed with the Bankruptcy Court are filed electronically by email.
Spouse – (Wife, Husband) – To file bankruptcy in a joint petition, that is husband and wife together, you must be legally married with a marriage license. North Carolina does not recognize common law marriages.
State Courts – These are the courts of a particular state, such as NC. Most of the courts with which most people deal are state courts, such as divorce court, traffic court, non-federal criminal court, workers compensation, probate court, etc.
Stay Violation – this is when a creditor you included in your bankruptcy attempts to collect upon the debt after your bankruptcy is filed, but before it is over. Immediately tell the creditor that is attempting to collect from you that you have filed bankruptcy and give them your attorney’s name and phone number and ask them not to attempt to collect from you again. Immediately write a note recording the date, time, place, name of creditor and circumstances. If it happens again, then contact your attorney. Make SURE to write out the note of what happens each time, don’t just call the attorney and tell all about it. This is potentially worth good money to you. If the creditor contacts you again, then you have the right to ask the Court to place sanctions on the creditor, that is pay you and your attorney money! Mr. Hardy takes these cases on a contingency fee basis so you do not have to pay any money upfront. You only pay the attorney and costs out of any recovery of damages or settlement.
Summary Ejectment (Eviction) – this is an action by a landlord to evict you. A bankruptcy can stop an eviction, but you MUST pay all rents after filing bankruptcy ON TIME and comply with all the terms of the lease after filing bankruptcy or you will not be allowed to stay in the premises. If you leave, then you can get out of all money owed the landlord. Sometimes, it is easiest to leave if you are having a tough time paying each month as the landlord may be aggressive in the future to evict you if you are ever late again.
The Automatic Stay (or The Stay) – this is the legal protection that a debtor gets when he files a bankruptcy and which makes it so it is illegal for creditors to come after the debtor and his property without getting permission from a bankruptcy judge. Think of it as a shield to protect you, yet also a sword to protect you that your attorney can use to bring sanctions through the Court against violators. (See “Stay Violation”)
The Rules – this is a set of regulations passed by the Judicial Conference that also covers other bankruptcy issues. You and your lawyer must follow these rules since they are law. They are generally procedural in nature being they tell lawyers how to do things that the Bankruptcy Code requires and allows in a Bankruptcy case.
Transfer – (SOFA) – this is the transfer of any property in the two (2) years before you file bankruptcy (four years before filing for real estate). You MUST tell your attorney about any transfers IN WRITING on the paperwork your attorney asks you to fill out. That is the transfer of money, the selling of anything, the giving away of anything (gifts), signing a deed, signing a title, trading in something, taking a lien out on something, refinancing anything. AND if it is real estate involved, then you MUST tell your attorney IN WRITING on the paperwork he asks you to fill out about any real estate transfers for the four (4) years before you file bankruptcy.
Trustee – the person appointed by the bankruptcy court to administer the bankruptcy estate of a debtor who files bankruptcy according to the rules of the type of bankruptcy the debtor filed.