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Adversary Proceeding: this is a lawsuit filed within your bankruptcy case. There can be any number
of reasons for filing a lawsuit but we most often use adversary proceedings to pursue your rights under the Bankruptcy
Code and other consumer protection statutes.
Arrears (mortgage): the amount of money that you are behind on your mortgage piror to filing bankruptcy.
This sum will be paid through your bankruptcy plan in a chapter 13 case. You continue to make your regular house payment
to your mortgage creditor. When you complete your chapter 13 plan, you will then be current on your house mortgage.
Automatic stay: the automatic stay is a term used for an order of the court that goes into effect immediately
upon the filing of a bankruptcy petition. It stays or stops all creditor actions without further request from
the court (hence, automatic). The automatic stay lasts for the duration of your bankruptcy case and creditors are not
allowed to contact you or take any action without asking the court's permnission first. If a creditor contacts you or
does something to collect a debt after you filed bankruptcy, it is called a violation of the automatic stay.
Cram-down: a term often used in bankruptcy in connection with a secured claim. In bankruptcy, a secured
claim can be split into two components--one part representing the value of the collateral and the remaining part is the amount
of the debt remaining over and above the value of the collateral such as for a car, if the car is worth $8,000.00 and owe
$12,000.00. A cram-down means that you pay for the value of the collateral through your bankruptcy plan as opposed to
what you owe on it.
Chapter 7: commonly referred to as a liquidation. A chapter 7 trustee sells or liquidates all of the
debtor's non-exempt assets to generate money to pay the debtor's creditors.
Chapter 13: sometimes referred to as a wage-earner's plan where you pay money every month to the Chapter
13 trustee who will take that money and pay your creditors according to a set plan. At the end of your case, any remaining
debts dealt with through your plan will be discharged.
Discharge: order from the court eliminating your debts dealt with through your bankruptcy case. The
discharge order is the goal of your bankruptcy case. If a creditor attempts to collect a discharged debt, it violates
the bnkaruptcy court's discharge order.
Exemptions or "exempt property": Because we do not want to leave people completely destitute, you are allowed
to keep a certain amount of property from your creditors in a bankruptcy case. This is called "exempt property"
or an "exemption." Different exemptions may apply in any particular case but North Carolina's exemptions are discussed
under the FAQs.
"Inside the plan": bankruptcy lawyers often use this term to mean that the debt will be paid through your
chapter 13 plan. Most debts are paid or dealt with "inside the plan" but some debts, typically, car payments but
could be others, are left "outside the plan" and you continue to make those payments yourself.
Means test: a calculation that we must use for above-median income debtors to see if you qualify to
file a chapter 7 case or how much money you must pay to your unsecured creditors in a chapter 13 case. The means test
uses IRS allowances for routine expenses like housing, food, transportation expenses and also allows deductions for secured
claims.
Motion to Dismiss: this motion is filed typically by the Chapter 13 trustee asking that your case be dismissed.
Ususally, this motion is filed when you have not made your chapter 13 plan payments. This motion may also be filed if
the trustee thinks that your chapter 13 plan does not comply with the rules or if too little will be paid to certain creditors
like secured creditors or tax claims.
Motion for Relief from the Automatic Stay: the automatic stay is the court order that prohibits creditors
from taking any action. If the creditor takes action, it will first file a document with the court (a "motion") asking
the court to allow them ("relief") to do what they want with regards to their collateral. If you are making house payments
directly to your mortgage creditor as part of your bankruptcy case and do not make the payments, you will receive one of these.
Post-petition: anything that happens after you file for bankruptcy protection. For example, if you
are making your house payments directly to your mortgage creditor but get behind, this would be called your post-petition
arrears to distinguish from your pre-petition arrears.
Pre-petition: this term is often used to mean anything that occurred prior to your filing for bankruptcy
protection. For example, the amount that may be behind on your house before you file bankruptcy would be called a pre-petition
arrears.
Projected Disposable Income (PDI): this term refers to the amount of money left over after all deductions
are taken under the means test and is the money theoretically available to pay to your unsecured creditors every month through
your chapter 13 plan.
Proof of claim: a document filed by your creditors in your bankruptcy case asserting their right to payment.
If a creditor does not file a proof of claim in your case, they will not share in any distribution.
Secured claim: a secured claim is an obligation that has collateral associated with it. If you were
not to pay the debt prior to bankruptcy, the creditor would be able to foreclose on the collateral or repossess the collateral.
Typically, secured claims consist of a house, car, sometimes furniture purchases financed through the store where you purchased
the furniture.
Trustee: the trustee is the person in charge of your bankruptcy case or who administers your case.
The trustee has an obligation to ensure a fair distribution to your creditors and to ensure your bankruptcy plan complies
with the Bankruptcy Code.
Unsecured claim: an unsecured claim is any debt or obligation that does not have collateral associated with
it. Typically, unsecured claims are credit cards, medical bills, promissory notes/signature loans.
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