If you're a first time bankruptcy filer, there is going to be a lot of new terminology that will be thrown at you. It helps to know the following terms so that you understand what you are being told through the initial bankruptcy proceedings.
Chapter 7 Bankruptcy
One common form of bankruptcy is called Chapter 7, and it's intended for individuals that are going through bankruptcy rather than businesses. It is also ideal for people that have very few assets, even if they own property. That is because property is often liquidated in order to pay off creditors for this type of bankruptcy.
Chapter 13 Bankruptcy
The other form of bankruptcy often used is Chapter 13, which is mainly for people that have many assets or businesses. This main difference with this type of bankruptcy is that you'll end up restructuring certain unsecured debts and pay them back over a specified. Your personal credit will not take as big of a hit, and you'll be able to recover from the bankruptcy sooner than if you used Chapter 7.
The person that is assigned to oversee the bankruptcy filing is known as the bankruptcy administrator. Be aware that only some states require a bankruptcy administrator, and they will monitor the paperwork and actions that the trustee carries out throughout the entire process. They'll try to catch incorrect forms that are filled out, and verify that no fraud is being committed.
A bankruptcy trustee has the responsibility of liquidating any assets that need to be sold. They will make a determination of what assets must be liquidated, and then divide the earnings from the liquidation among all of the creditors.
Debts are often referred to as being discharged, which means that you are absolved from paying the debt and the creditor cannot take any legal action to claim it from you. Certain debts will not be allowed to be discharged, such as income taxes and student loans.
If it is discovered that you are selectively paying back some creditors after you intended to file for bankruptcy, a claw back could be issued. This is when the money that has been paid will be taken back by the court so that it can be properly divided among creditors. This is sometimes done if a person filing for bankruptcy wants to ensure that a certain creditor receives their money, but it is illegal to do this since it is unfair to other creditors.
Contact a bankruptcy attorney service for more help.