Collateral
You probably hear the word collateral used in everyday business transactions, but what exactly does it mean and how does it apply to your bankruptcy case? Collateral is an asset that backs up your debt. When you put something up as collateral, you are telling the lender what you will give in case you don’t pay back the loan.
In the case of a mortgage payment, your house is a collateral. If you don’t pay, the bank or mortgage company can take your house.
What is foreclosure?
Creditors need a way to turn collateral into money. The exact process may vary from state to state, and it may require judicial action depending on the property in question. In the case of real property (houses and land), it may take a few months for the bank to actually foreclose on your house and kick you out. If you file bankruptcy before a state judge orders an eviction, you can put everything on hold at least temporarily.
What is a 341 meeting?
This is the name of the meeting that takes place approximately 40 days after you file your petition. At this meeting, the case trustee represents the creditors and asks you questions about your financial situation. The creditors may show up, but they usually don’t. You will usually not deal directly with the judge, either.
No asset case
In about 95% of chapter 7 cases, the debtor does not have any assets worth liquidating. In other words, most people who file either don’t have any assets or only have exempt assets (like a house protected by Homestead exemption).