For some people, the Tampa bankruptcy process can be confusing and overwhelming. The intention of bankruptcy is not meant to be a difficult process, rather a tool for debt relief and financial freedom. Getting to know some of the more common terms is the first step to understanding the bankruptcy process.
Automatic Stay– is a legal order issued by the court that halts all debt collection efforts. The automatic stay is issued upon filing the bankruptcy petition, and prohibits creditors from collecting on a debt in bankruptcy.
Bankruptcy petition– is a legal document that provides details about your debts, assets, income, funds and an overview of your financial history. This document is used to file your case with the court to initiate the bankruptcy proceeding.
Means Test– the tool used to determine your financial eligibility for a Chapter 7 bankruptcy. It compares your income to the median income of the state. Incomes less than or equal to this amount may qualify for Chapter 7; whereas, incomes greater than this amount may not and, instead, may be eligible to file Chapter 13.
Secured debt– is a type of debt that is secured against collateral. These debts are called “secured” because they are tied to an asset, which can be seized in the event of default. Examples are: mortgage loans, car loans, payday loans and some personal loans.
Trustee– is the court appointed representative over a bankruptcy case. They are responsible for paying creditors, collecting and distributing assets when applicable and monitoring repayment plans.
Unsecured debt– is a type of debt that’s not secured against collateral. It’s called “unsecured” because the creditor has no right to assets in the event of default. Examples are credit cards, medical bills, some personal loans, and utility bills.