Bankruptcy is a lot easier to understand and much more comfortable to go through when you know who’s who.
We start a series today about the terms used in bankruptcy cases. Bankruptcy laws and procedures can definitely be confusing. It helps a lot to be able to understand the language used by the people involved.
The People Involved
An appropriate place to start is with the different roles of the people involved. Knowing what each person does and how they fit into the big picture gives you a good start at getting a hang of that big picture.
This is what the U.S. Bankruptcy Code calls the person filing bankruptcy. See Section 101(13) of the Bankruptcy Code. It’s more neutral and less judgmental in tone than the term used decades ago, “bankrupt.”
These are the individuals and businesses to which the debtor owes money, or which at least claim to be owed money.
The Bankruptcy Code makes clear that the debt or claim must be in existence at the time the bankruptcy case is filed to be a creditor in that case. See Section 101(10).
There are many kinds of debts. We’ll get into them in upcoming blog posts.
A large majority of bankruptcy cases are filed by debtors represented by a lawyer. In fact, bankruptcy law is such a specialized and complicated area of law that most lawyers who file bankruptcy cases focus all or most of their time doing this work.
Your lawyer has a legal duty and a formal ethical duty to serve you and no one else. He or she is bound by law to be loyal to you alone. Your lawyer is required to provide you accurate legal information about your options, and to give you sound advice.
Most bankruptcy lawyers are in the bankruptcy field because they are compassionate and want to help make your life better. Find one that you trust and be honest with him or her in order to be protected and served well.
To state the obvious, creditors have much more financial resources than you to hire lawyers to serve their interests. Consumer creditor employees themselves are usually pretty knowledgeable about the law. They deal with their customers filing bankruptcy all the time, so they know how the game is played. Understandably both their lawyers and employees are trying to do the best for the creditor. The truth is they don’t mind taking advantage of your limited knowledge to serve their interests. You need someone looking out for you.
These are the paper pushers who administer the nuts and bolts of bankruptcy cases. Your lawyer will file your bankruptcy petition and other documents (electronically) with the clerk. This office sends you many (but not all) of the important notices and documents about your case. You’ll likely never have to deal directly with the clerk’s office but these people do a lot behind the scenes.
Bankruptcy Trustee and U.S. Trustee
We’ll focus more attention on the role of the Chapter 7 trustee, Chapter 13 trustee, and U.S. Trustee. For now just be aware that the Chapter 7 and Chapter 13 trustees legally stand in the shoes of your creditors, at least for certain purposes. You and your lawyer work with them in a professional and even friendly fashion much of the time. But essentially their job is to serve your creditors, not you.
You and your lawyer will see your trustee for a short meeting about a month after you file your case. More about your possible dealings with the trustees as we get into Chapter 7 and Chapter 13 terminology.
The U.S. Trustee oversees the Chapter 7 and 13 trustees, and has an enforcement role we’ll discuss more later. You’ll unlikely ever see the U.S. Trustee.
A bankruptcy judge is assigned to every case. But the judge is someone else you will not likely ever see. You’ll most likely never see the inside of a courtroom in a consumer bankruptcy case. Often the most contact you’ll have with the bankruptcy judge is seeing his or her signature on the official paperwork.
There are exceptions to this in both Chapter 7 and Chapter 13 cases (as well as in the much rarer Chapter 9, 11 and 12). We’ll tell you about these as we go through other bankruptcy terminology in upcoming blog posts.
We’ll start next time with descriptions of all these different bankruptcy Chapters.