Frequently asked questions (FAQ) about terms that are used during a bankruptcy case. Click a question below to read the answer.
- WHAT IS THE DIFFERENCE BETWEEN CHAPTER 7 AND CHAPTER 13 BANKRUPTCIES?
- WHAT DOES THE TRUSTEE DO?
- DOES THE TRUSTEE COME TO MY HOME?
- WHAT IS A DEBTOR?
- WHAT IS A CREDITOR?
- WHAT IS THE DIFFERENCE BETWEEN SECURED AND UNSECURED DEBT?
- WHAT IS A PRIORITY DEBT?
- WHAT IS AN AUTOMATIC STAY?
- WHAT IS AN EXEMPTION?
- WHAT IS A DISCHARGE?
- WHAT IS A REAFFIRMATION AGREEMENT?
- WHAT IS A CHAPTER 13 PLAN?
1. WHAT IS THE DIFFERENCE BETWEEN CHAPTER 7 AND CHAPTER 13 BANKRUPTCIES IN WEST VIRGINIA?
A West Virginia Chapter 7 bankruptcy is actually a liquidation. A debtor may exempt a certain amount of assets based on the requirements of the state in which he resides, unless he has not lived in that state for the last 730 days, which would cause the law of a previous residency to apply. What the debtor could not exempt would be sold to pay bills. Most West Virginia debtors filing a Chapter 7 case do not lose any of their assets. (For more information see: West Virginia Bankruptcy Property Exemptions.) A West Virginia Chapter 13 bankruptcy is a reorganization. You retain all of your assets, unless it is in your best interest to surrender or sell them. Depending on facts and circumstances, a payment will be made to a Chapter 13 trustee for a period of three to five years to satisfy your obligations. The amount of money that each creditor would receive would depend on the type of debt, the value of the assets that you own, and the amount of income that you earn.
2. WHAT DOES THE TRUSTEE DO?
The Chapter 7 trustee’s main job is to determine whether your bankruptcy estate contains any assets that can be sold. If so, the Chapter 7 trustee sells those assets and distributes the proceeds to creditors. The Chapter 13 trustee’s main job is to determine whether the plan conforms to the law and object to the bankruptcy court if it does not. Then the Chapter 13 trustee collects the plan payments and distributes them to creditors. The trustee presides over the meeting of creditors.
3. DOES THE TRUSTEE COME TO MY HOME?
In West Virginia that would be a very rare occurrence as the exemption for household goods is sufficiently high enough to protect all the household goods owned by most West Virginians. If the Trustee thinks you have undervalued your home, he would more likely send a realtor or appraiser.
4. WHAT IS A DEBTOR?
A debtor is a person who owes a debt and, for bankruptcy purposes, is the person filing the bankruptcy case.
5. WHAT IS A CREDITOR?
A creditor is a person who is owed a debt.
6. WHAT IS THE DIFFERENCE BETWEEN SECURED AND UNSECURED DEBT?
Secured debt is debt for which there is a lien on an asset such as an auto loan or home loan, while unsecured debts are debts not secured by liens on any assets.
7. WHAT IS A PRIORITY DEBT?
A priority debt is an unsecured debt that gets special treatment in a bankruptcy case. In Chapter 7 cases, priority debts get paid first. In Chapter 13 cases, priority debts must be paid in full. The most common priority debts are delinquent child support, alimony, and portions of most taxes.
8. WHAT IS AN AUTOMATIC STAY?
The automatic stay is the legal term meaning that your creditors may not take any action against you to collect a debt after you file your case. Certain types of domestic relations and criminal matters may continue, and the stay can be lifted upon motion of a creditor, generally secured creditors who want to take possession of collateral securing a debt that you don’t intend to pay.
9. WHAT IS AN EXEMPTION?
An exemption sets forth the property you may protect from your creditors or the bankruptcy Trustee.
10. WHAT IS A DISCHARGE?
A discharge is the legal relief granted to a debtor in bankruptcy who has completed all that is required of him/her. A discharge voids any personal liability for any judgment and acts as an injunction against the collection of any dischargeable debt.
11. WHAT IS A REAFFIRMATION AGREEMENT?
A reaffirmation agreement is an agreement between a debtor in bankruptcy and one of his creditors that the debtor would continue to be liable for a debt in spite of filing bankruptcy. Naturally, the creditor would be required to honor his/her end of the bargain. There are strict requirements for reaffirmation agreements, and it must be filed with the bankruptcy court prior to discharge.
12. WHAT IS A CHAPTER 13 PLAN?
A Chapter 13 plan is the document filed with the court that sets forth the amount of money you will pay to the trustee and directly to other creditors, as well as how your creditors are to be classified and how their claims are to be treated inside the plan.