Like many areas of law, Bankruptcy uses distinct terminology, and it has particularized processes. It is such a complex area of law that in 1978 Congress saw fit to create a separate set of courts to handle only bankruptcy cases. No attorney can teach you everything about bankruptcy in a short pamphlet. The information below is provided to assist you in some basic understandings. Should you have specific questions about your case, you should always speak with us. The information provided herein is not intended to be legal advice and you should not rely on anything stated below without first speaking with us.
Post-petition means the time starting the day that your bankruptcy case is actually filed with the Bankruptcy Court.
Pre-petition means the entire time up to, but not including the day that your bankruptcy case is actually filed with the Bankruptcy Court.
Discharge refers to the Bankruptcy Court Order issued at the end of your case that provides your “fresh start” by voiding out most or all of your debts. Most all types of debts are dischargeable. Some are not. The most common non-dischargeable debts are unpaid child support, unpaid alimony, many criminal and civil fines, certain tax debts, and generally student loans. Some debts BECOME not subject to the discharge if the individual creditor successfully objects, which is uncommon, but it does happen. The most dischargeability issues are for where the debt itself was incurred by some type of fraud, for luxury items worth more than $950, for malicious damages to property, for debts arising from embezzlement, larceny, or breach of fiduciary duty, and debts you didn’t list on a previous bankruptcy case. We will analyze your debts and identify any debts that are not dischargeable. Only you can identify debts that might be subject to a creditor’s attack. A chapter 7 discharge is different from a chapter 13 discharge. Discharge and dischargeability issues are generally not covered in our representation.
The Bankruptcy Petition is the first few pages of your Bankruptcy Court papers which essentially state the basics of who you are, where you live, and some technical aspects of the case. This is the paper that starts the bankruptcy case.
The Bankruptcy Schedules and Statements are the bulk of the Bankruptcy Court papers and they generally total 60 to 100 pages or more. In these papers, you will disclose everything you own, everything you owe, your entire household income, and all of your household’s expenses. You will also disclose certain transactions that occurred during the last 4 years or so, you will identify certain of your bankruptcy goals, and you will compare your household income/expenses to similar families of the same size.
Secured creditors are creditors that retain a lien on some collateral. The most common types are home and car loan lenders. There are other types of secured loans, and we will review the information you provide to see if there are any.
Priority unsecured creditors are creditors that have no liens or collateral, but that receive special treatment in bankruptcy. There are ten different categories of priority debts, but the most common are unpaid domestic support obligations, wages you owe to employees, and most taxes. Priority debts generally survive discharge.
General unsecured creditors are creditors that are neither secured nor priority. Basically, if the debt is not on the list of secured creditors or priority creditors, then it is a general unsecured debt. Almost all of the general unsecured debts are eligible for discharge.
Post-petition secured payments refers to the regular monthly payments you make to the lenders for your home loan(s), car loans(s), and any other loan that is secured by some form of collateral. Generally, you have probably been advised to CONTINUE making these payments only if you intend to keep the collateral. If your intent is to surrender the collateral, you have been advised to STOP making these payments. Sometimes, lenders will not take your payments once the bankruptcy is filed. If this happens, speak with us.
Post-petition Domestic Support Payments refers to any monthly payment you owe for the purpose of child support, spousal support, alimony, or anything in that nature. You are required to make these payments, even during your bankruptcy. If you fail to make all of your post-petition domestic support payments, your bankruptcy discharge could be delayed or withheld. Additionally, any debts you owe for these types of obligations will not be discharged at the end of your case.
Post-petition Income Tax Returns and Tax Payments refers to your annual obligations to file tax returns and pay any taxes due, even during and after your bankruptcy case. Taxes that you owe for years before you file bankruptcy may or may not be discharged at the end of your case. Speak with us if you have questions about a particular PRE bankruptcy tax debt.
Pre and Post-petition payments to general unsecured creditors refers to all payments made to any creditor that is unsecured. This includes payments to family member, friends, credit cards, bank personal loans, medical bills, old utility bills, collection accounts, and any other debt that is not secured with collateral. You have generally been instructed to cease all payments immediately upon hiring us. Should you decide to continue payments post-petition, you are free to do so. However, payments you make pre-petition CAN BE taken back by your case trustee, so you should advise us of all of those payments, regardless of the amount or the creditor. This is especially true of family members. You may feel a moral obligation to repay those loans, but don’t do so until AFTER your bankruptcy case is filed. You should feel free to pay student loans and taxes, but you are not required to do so during your bankruptcy case. Generally, tax and student loan debts survive discharge.
The Meeting of the Creditors is the only time you will meet with your trustee. If you are on the eastern shore, your meeting will take place in Salisbury. If you live elsewhere, your meeting will take place in either Baltimore or Greenbelt. About a week into your bankruptcy case, the Bankruptcy Court will send you a notice in the mail announcing the date, time, and location of the meeting. This meeting usually happens about 4 – 6 weeks after we file your case. You must be present for that meeting, and you must have with you your actual drivers’ license AND social security card. Copies are not acceptable, but other forms of ID are. If you don’t have a drives’ license or a social security card, let us know ASAP.
The Automatic Stay of Proceedings refers to the provision of Bankruptcy Law requiring nearly ALL efforts by your creditors to cease. This means that current lawsuits must be suspended, collection calls and letters must cease, garnishments, repossessions, attachments, and foreclosures must suspend, and even attempts to settle debts must stop. There are some exceptions to the Automatic Stay of Proceedings, the most common of which are the continuation of the establishment of paternity and visitation, common divorce (but not property distribution), setting or collecting current child support, (but not overdue child support), some tenant evictions, some tax offsets, and criminal actions. If you’ve made us aware of actions of your creditors, we will advise you in that regard.
Motion for Relief of the Automatic Stay refers to the proceeding in Bankruptcy Court taken by one of your creditors seeking the permission of the Bankruptcy Court to continue collection proceedings outside of bankruptcy. Generally, these motions are expected where you are surrendering collateral such as a car or real estate. There is NO mechanism or process within the bankruptcy system to hand over ownership of the collateral. The creditor must still obtain the Bankruptcy Court’s permission by filing this motion. When this motion is granted, the creditor will have permission to send a tow truck or to continue foreclosure or to take any other legal steps to collect collateral. Generally, the Relief from the Automatic Stay is never granted as against YOU, only as against property used as collateral. We expect these motions in most circumstances. However, if you fail to make post-petition payments to a secured creditor, the motion will be a surprise. Either way, we will advise you.