Bankruptcy is a matter of federal law and is, with the exception of exemptions, which are determined by state law on most assets. More on preferences.īankruptcy Code: Title 11 of the United States Code governs bankruptcy proceedings. For more, see Lien Avoidance and Lien Stripping.Īvoidance powers: Rights given to the bankruptcy trustee (or the debtor in possession in a Chapter 11 and in certain instances to Debtors in other chapters) to recover certain transfers of property such as preferences or fraudulent transfers or to set aside liens created before the bankruptcy case was filed. Also, many liens on household goods and business equipment can be avoided. In Mississippi, most judgment liens that have attached to the debtor’s home can be avoided if the debtor’s equity in his home is less than $75,000.00. In some cases a lien can be avoided, the debt discharged, and the debtor can keep the asset. If the garnishment was started before the filing of the bankruptcy, then the garnishment stops.Īvoidance: The Bankruptcy Code permits the debtor to eliminate (avoid) some kinds of liens that interfere with (or impair) an exemption claimed in the bankruptcy. If a judgment was taken, the creditor start a garnishment. If the lawsuit was filed, then it stops and a judgment cannot be take. For example: If a lawsuit, has not been filed, then the creditor cannot file it. See Relief from Stay on terminating the injunction. Example: If you assume your cell phone contract, you agree to continue paying the monthly charges in exchange for being able to use the service.Īutomatic stay: The injunction issued automatically upon the filing of a bankruptcy case which stops almost all collection activity, including phone calls, lawsuits, garnishments, IRS levies, foreclosures and repossessions. The debtor must list all of his assets in the bankruptcy schedules.Īssumption of a lease or contract: An agreement to continue performing duties under a contract or lease. They include tangible assets such as furniture and cars and intangible things such as debt owed to the debtor and the debtor’s the right to sue someone. Examples are suits to determine the dischargeability of a debt, suits against creditors that violate the Automatic Stay.Īssets: Assets are every form of property that the debtor owns. We have attempted to take much of the legal jargon out of the definitions.Īdequate protection: Payment to a creditor with collateral to protect the value of the creditor’s lien during the bankruptcy proceeding from loss because the collateral’s value will depreciate or lower over time.Īdversary proceeding: A lawsuit filed in the bankruptcy court which is related to the debtor’s bankruptcy case. Here is a brief definition of those terms used in this site and in the Bankruptcy Code.
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