If you’re filing for bankruptcy, you may encounter a number of new terms you don’t understand. To help you out, this article defines the terms bankruptcy, bankruptcy administrator, Bankruptcy Code, bankruptcy court, bankruptcy estate, bankruptcy judge, and bankruptcy petition.
Bankruptcy is a type of legal proceeding for a person or business unable to pay their debts. The goal of bankruptcy proceedings is to free a person from their debt while providing their creditor(s) an opportunity for repayment. However, while it gives debtors a fresh start, it is also recorded in their credit reports, making it difficult for them to receive loans in the future.
The bankruptcy process usually begins when a debtor files a bankruptcy petition. Then, their assets are measured and evaluated and used to repay a portion of their outstanding debts.
Bankruptcy is handled in federal court and governed by the Bankruptcy Code. There are multiple types of bankruptcy:
A bankruptcy administrator, also called a bankruptcy trustee, is appointed by the court to be in charge of a particular bankruptcy case. Their role is to monitor the interactions between the debtor and creditors to ensure that no party is behaving fraudulently. Bankruptcy administrators are typically government employees, attorneys, or accountants by trade.
The U.S. Bankruptcy Code is the code governing matters related to bankruptcy. It was developed in the 1960s and 1970s with the Bankruptcy Reform Act of 1978. While the Bankruptcy Code is federal, there are many state exemptions to it.
Various chapters of the Bankruptcy Code concern:
The term bankruptcy court refers to specialized federal courtrooms settling all personal and corporate bankruptcy cases. The bankruptcy court system was established by Congress in 1978 as part of the Bankruptcy Reform Act.
A debtor’s bankruptcy estate is all of the property they own when they file for bankruptcy, except for most pensions and educational trusts.
The following assets are included in a bankruptcy estate:
A bankruptcy judge is a federal judicial officer of a United States district court who is appointed by the majority of judges of the U.S. court of appeals. Bankruptcy judges have jurisdiction over bankruptcy mattesr. As of 2019, there were 347 bankruptcy judges.
There are four types of bankruptcy petitions:
Filing for bankruptcy can discharge a number of liability claims, or debts owed for damages owed to another party. All liability claims are dischargeable in bankruptcy unless something in the Bankruptcy Code states otherwise.
Exceptions to bankruptcy discharge include: