Bankruptcy, or “BK”

A federal system in which debtors are given relief or "protection" from Creditors seeking payments on current or past credit obligations. Depending on the type of bankruptcy that is filed, debtors will either retain certain assets and make repayments to their creditors at negotiated interest rates and payments, or will return current assets to their creditors and not be obligated to any financial repayment on that debt.

Chapter 7

The liquidation bankruptcy, in which a trustee is appointed to collect and sell, if economically feasible, all property owned by the debtor that is not exempt from these actions. The debtor will not be obligated to any financial repayment on debt included in this bankruptcy.

Chapter 13

The repayment bankruptcy, which permits individuals to keep their property by repaying creditors out of their future income. A plan is put in place that is approved by the bankruptcy court. The debtor must repay the Chapter 13 trustee the amounts set forth in the plan. Debtors receive a discharge after they complete their Chapter 13 repayment plan.

Meeting of Creditors

This meeting, also called the 341 Meeting and conducted under the oath of perjury by the appointed Trustee, is for individuals who have just filed for bankruptcy, to determine if the bankruptcy will be allowed to proceed and under what terms, and will allow any creditor that have been included in the bankruptcy to plead their rights to assets or repayment with the bankruptcy court.