I had a conversation recently with someone I know that works with the California Highway Patrol. He likes to talk shop. He used some phrases that I wasn’t very familiar with such as “FST“, “Deuce“, and “Chippy“. Chippy? The heck do ya mean?1 I had to ask him what he meant by some and the others I figured out, probably because I watch a lot of Jeopardy. Probably not.
I got thinking about the specialized language that every job has, including my own as a bankruptcy attorney, and I thought I probably use a lot of words that my clients don’t understand initially. I compiled a small list of the 10 terms that you should know if you are considering filing for bankruptcy. I think I might add a more complete list of terms in the future.
Here are 10 of the most common terms used in bankruptcy in alphabetical (and numerical) order.
1. 341 Meeting (or simply just “341”)
This is a meeting that you must attend about a month after you have filed for bankruptcy. A bankruptcy trustee (keep reading) will ask you questions about your petition (keep reading). The term comes from the section in the bankruptcy code, 11 U.S.C. §341, that requires that this meeting is held.
2. 521 documents
These are documents that you are required to send to your bankruptcy trustee (i.e. bank statements, tax returns, pay stubs, etc.). Again, this term comes from the section in the bankruptcy code, 11 U.S.C. §521, that indicates what documents you need to provide.
3. Automatic Stay
According to wikipedia, the “automatic stay is an automatic injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy.” Basically what this means is that the automatic stay is a legal remedy that keeps (or stays) your creditors from collecting from you, garnishing you, or conducting any legal proceedings against you. The automatic stay goes into effect the moment you file for bankruptcy. If you are a debtor that is filing for bankruptcy, the automatic stay is your friend.
4. Chapter 13 Plan
In a chapter 13 bankruptcy, you propose a plan to the Court and your creditors to pay back none, some, or all your debts. A chapter 7 on the other hand, does not propose a plan but provides for the liquidation of all non-exempt property. This analysis is complex and almost always requires the help of a bankruptcy attorney. Debtors make monthly payments over a period Chapter 13 plans are either for 3 years or for 5 years. You might hear the judge or chapter 13 trustee saying things like “the debtor failed to make his plan payment” or “the plan is unfeasible”. When they say these things they are talking about the chapter 13 plan
5. Domestic Support Obligations (DSO)
Domestic Support Obligations simply means child support or alimony. A lot of people know what this is but they rarely hear it called a Domestic Support Obligation.
When you have completed your bankruptcy, the bankruptcy court will grant you a “discharge”. This means that you no longer have any legal obligation to pay your debts.
There are two types of property in bankruptcy: exempt property and non-exempt property. Bankruptcy law allows you to keep a certain amount of necessary property such as equity in a home or car, essentials such as household appliances and furniture, and retirement funds, just to name a few. The trustee cannot take these things away from you. Non-exempt property generally tend to be non-necessities or luxuries such as boats, ATVs, or other valuables that are not specifically mentioned as exempt. These are things the trustee can take. Because exemption planning can be quite complex, it’s a good idea to hire an attorney just for this reason alone.
8. The Means Test
From NOLO, the means test “determines whether your income is low enough for you to file Chapter 7 bankruptcy . . . [i]t’s a formula designed to keep filers with higher incomes from filing for Chapter 7 bankruptcy.” In more simple terms, you can’t file a chapter 7 bankruptcy if you make too much money. How much money is too much is determined by a formula. Again, you should see a bankruptcy attorney to determine if you pass the Means Test.
The bankruptcy petition is a document about 50 to 70 pages long that you file with the bankruptcy court to start your bankruptcy. This is the document that the bankruptcy trustee will use to review your case. The trustee will also ask you questions about your petition. Your bankruptcy attorney will either meet with you and ask questions or have you fill out a packet with a bunch of questions to help him prepare your bankruptcy petition.
The bankruptcy trustee is an attorney appointed by the Court to represent the bankruptcy estate. This effectively means he represents all your creditors. His job is to collect as much as he can from the bankruptcy estate, liquidate it, and distribute the funds to the creditors. The trustee is like opposing counsel in your bankruptcy case.
While a short list like this can be helpful, there is no substitute for competent legal bankruptcy counsel.
1 Fargo is a great movie and I highly recommend that you watch it. Watch it on VidAngel and filter out the content you don’t want.