Michigan Bankruptcy Terminology Lawyer
The following are some terms you might encounter relating to Michigan bankruptcy laws.
Adversary Proceeding: These are lawsuit filed by creditor's seeking to deny the discharge or debts.
Automatic Stay: Immediately after the filing of a petition for bankruptcy the court issues a stay to prevent creditors and collection agencies from continuing collection actions, such as harassing phone calls. This also stops late fees from accruing.
Bankruptcy Code: Title 11 of the United States Code governs bankruptcy proceedings. Bankruptcy is controlled by federal law, with states determining their own exemptions. When federal law conflicts with state law, the federal law is the one that is followed. Consult a bankruptcy lawyer at Acclaim Law Services if you'd like to know about exemptions under Michigan bankruptcy law.
Chapter 7: Chapter 7 (straight bankruptcy) is usually the best remedy for people with unsecured debts they cannot repay at this time or in the near future.
Chapter 13: Chapter 13 is for people who can afford to pay back part of their debts. Chapter 13 allows people to keep their auto and/or house by catching up on missed payments over a 3-5 year period.
Collateral: Property that is subject to a lien. The general rule with respect to liens is "First in time, first in right." This means that the first creditor to make a formal legal claim to a property as collateral for a loan will have the first option to benefit from its seizure and sale.
Confirmation: The court order that makes the terms of a repayment plan legally binding.
Conversion: The process of changing from a Chapter 7 bankruptcy case to a Chapter 13 bankruptcy case or a Chapter 13 case to a Chapter 7 case.
Creditor: The person or organization to whom money is owed.
Debtor: The person or organization owing money to another.
Denial of Discharge: A bankruptcy is denied and any debts that could have been discharged in this proceedings cannot be discharged in a later bankruptcy proceedings. Creditors can continue to claim assets and all debts remains.
Discharge: The legal elimination of debt as the result of a bankruptcy proceeding. When a debt is discharged, it is no longer legally enforceable against the debtor.
Dischargeable: These are the types of debts that can be eliminated in bankruptcy (also see non-dischargeable). Consult a bankruptcy attorney at Acclaim Law Services if you'd like to know more about what kinds of debts ARE dischargeable under Michigan bankruptcy law.
Dismissal: A bankruptcy case is dismissed and the debtor still owes the creditors as before.
Exempt Assets or Property: These are assets, income or property, which are removed from the bankruptcy estate and are not available to be used to repay debt. The debtor selects this property from a list of allowable exemptions, which differ from state to state. Examples of exempted assets include child support, health aids, unemployment compensation, or tools used for work. Consult a bankruptcy attorney at Acclaim Law Services if you'd like to know about exemptions under Michigan bankruptcy law.
Fiduciary: One who is entrusted with duties on behalf of another.
General, Unsecured Claim: Within the hierarchy of bankruptcy debt, a general, unsecured claim is the lowest priority for repayment. If there are sufficient funds in the estate to pay low-priority creditors, these claims will be paid of the total unsecured debt.
Lien: The documentation of an interest in real or personal property to secure a debt. A lien may be voluntary (such as a mortgage) or involuntary (such as a judgment lien or tax lien).
Liquidated Debt: A debt that is for a known dollar amount.
Non Dischargeable: A debt that cannot be eliminated in bankruptcy, such as child support. What is non-dischargeable can differ depending upon the type of bankruptcy. Consult a bankruptcy lawyer at Acclaim Law Services if you'd like to know more about what kinds of debts are NOT dischargeable under Michigan bankruptcy law.
Perfection: Steps taken to properly record a lien in order to increase its priority for repayment. For example, a mortgage is perfected by recording it with the county recorder. A lien on personal property is perfected by filing a financing statement with the secretary of state.
Personal Property: Any physical property that is not a house or land.
Petition: The filing of the petition begins the bankruptcy process, therefore debt-related actions are often described as "pre-petition" or "post-petition." Consult a bankruptcy lawyer at Acclaim Law Services to begin the process of filing a bankruptcy petition.
Preferential Payment: This is a payment made to a creditor shortly before a bankruptcy filing. A bankruptcy court trustee might reclaim that payment during the bankruptcy proceedings and redistribute it among other creditors. For example, if a person filing for bankruptcy made a substantial payment to a friend before filing, the trustee might attempt to secure that money to distribute to higher priority debtors, such as an ex-wife or the IRS.
Pre-petition: Debts incurred before the filing of a bankruptcy petition. These are the only debts that will be relieved with a bankruptcy proceedings, not any additional debt incurred after filing.
Priority Claims: Debts are paid off in order of priority. Claims with a higher priority must be paid in full before claims with lower priority are paid at all. All claims with the same priority will receive some payment, equaling their percentage in the total debt. Claims are paid in this order: 1) costs of administration, 2) priority claims, and 3) general unsecured claims. Priority claims include unpaid wages, spousal or child support, and taxes.
Proof of Claim: A form filed with bankruptcy court to establish a creditor's claim against a debtor.
Property of an Estate: Property that can be sold by the court-appointed trustee, the proceeds of which can be used to pay the claims of creditors.
Reaffirm a debt: A debtor in bankruptcy proceedings can choose to reaffirm a debt that would otherwise be discharged. One reason a person might choose to reaffirm a debt would be because he or she must maintain a relationship with the creditor in the debtor does not want to create bad will. For example, if the debtor lives in a town with only one doctor and will have to be seen by that doctor again in the future. If the debtor fails to repay the debt, the creditor can sue or repossess.
Relief from Stay: When a bankruptcy proceedings begins, the judge will issue a stay to stop a foreclosure or other form of debt collection until the case has been concluded. Sometimes a creditor will ask the judge to lift that stay to permit the creditor to take action, such as seizing property or allowing the cording of a notice of default.
Schedules: The debtor is required to file lists of assets and liabilities with the courts to begin a bankruptcy case. These lists are called schedules.
Secured Debt: This form of debt is secured by real property, such as a home or a car. A creditor could take that property to pay debt. The debtor may have agreed to allow creditor to take the property when securing the loan or debt, or the court may have allowed the creditor to put a lien on the property because money was owed.
Trustee: A trustee is a person appointed by the judge in bankruptcy court to represent the interests of creditors and to review debt schedules.
Unliquidated Debt: A debt in which the exact monetary value is unknown; for example, if a person has been sued for a personal injury caused in an accident but the court has not yet decided how much is owed to the person who brought the lawsuit.
Unsecured Debt: An unsecured debt is any debt that does not have collateral to back it up. A mortgage is backed by a house, which can be foreclosed on to gain income. A bank can repossess a car to collect on its loan. A credit card (unless it's a prepaid credit card) is unsecured debt. Hospital bills are unsecured debt. Loans to families and friends are unsecured debt.