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    Estate & Probate » Blog » Bankruptcy 101

    Bankruptcy 101

    Bankruptcy is a complicated area of law that is difficult for many to understand. Like any body of law, one of the most complicated factors is that it involves a unique group of keywords that are used by judges, lawyers, and individuals in the middle of the legal process. Anyone going through the bankruptcy process can benefit from understanding some of the essential terms used throughout the bankruptcy process.

    Important Bankruptcy Terms

    Some of the most important bankruptcy terms that should be known by individuals who are in the midst of the process include the following:

    • Absolute Priority: When a person makes payments during the bankruptcy process, these amounts are distributed in accordance with the absolute priority, which is established in the federal bankruptcy code.
    • Automatic Stay: An automatic stay refers to the block that is created when a person files for bankruptcy and prevents creditors from collecting on debts in any manner.
    • Core Proceedings: There are many things that occur during the bankruptcy process, but core proceedings refer to steps that are decided on by the bankruptcy court.
    • Dischargeable Debt: Debt that is eliminated when a person files for bankruptcy is considered to be dischargeable debt, while debt that cannot be eliminated is considered to be nondischargeable.
    • Distressed: In the context of bankruptcy, distressed refers to companies that are approaching bankruptcy or unable to pay their debts. There is not an exact situation or financial amount that constitutes when someone or something is distressed and the term is used somewhat freely by bankruptcy experts.
    • Garnishment: In some bankruptcy cases, garnishment occurs when the government takes an established amount from a person’s wages or other periodic income sources.
    • Liquidation: Liquidation occurs when a business is unable to pay the fees required to continue operations. During the liquidation process, the company closes and its assets are divided among its creditors and shareholders.
    • Substantive Consolidation: Substantive consolidation refers to the combination of an estate belonging to one debt with that of another. In some cases, substantive consolidation includes the combination of debts owed by numerous parties.
    • Trustee: During the bankruptcy process, a trustee is appointed by the United States Trustee Program to function as an administrator of the debtor’s estate. While in Chapter 7 bankruptcy a trustee is responsible for gathering non-exempt assets and using this property to repay debts, in Chapter 13 bankruptcy a trustee receives each payment installment.

    The Assistance of a Seasoned Oklahoma Bankruptcy Attorney

    The bankruptcy process is particularly challenging. One of the most complicated aspects of bankruptcy is deciding between filing for Chapter 7 or Chapter 13. A seasoned attorney can answer the various questions that a client might have about bankruptcy. An experienced lawyer can also prove to be particularly beneficial in navigating this process. Since 1982, many individuals in Oklahoma have discovered that Jim A. Lyon has the skills necessary to make sure that your bankruptcy proceeds in a smooth manner. Do not hesitate to contact attorney Jim A. Lyon by calling (405) 843 – 0461 or filling out the firm’s quick and convenient online form.

    Ethan Moran
    Ethan Moran
    09:36 28 Dec 22
    To my wife and I, our probate case was complicated. Not to Jim! He made it look so easy, and his attention to detail is incredible. Highly recommend to anyone seeking an estate planning lawyer.
    Philippe Joshua
    Philippe Joshua
    17:56 30 Nov 22
    Jim's firm was referred to me by a friend who knew I was looking for an estate planning lawyer. I can't say enough good stuff about him. He's genuine, thorough and highly skilled. Strongly recommend.
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    Estate & Probate » Blog » Bankruptcy 101