Are you currently going through a bankruptcy and feeling a bit confused by all of the terms that are being used that you've never heard before? If so, it will help to know what some of those unfamiliar terms mean.

Affirmation Agreement

You'll likely need to use an affirmation agreement if you are using Chapter 7 bankruptcy. This is because some debts are secured by assets, such as a home or car, that are not being discharged by the bankruptcy process. The reaffirmation agreement states that the assets and debts are not part of the bankruptcy filing, and essentially states that you still owe the debt and that the creditor can repossess the asset if you fail to pay the debt. 

Automatic Stay

People filing for bankruptcy will be granted an automatic stay by the court. This prevents creditors from taking action against you for your existing debts while the bankruptcy is going through the legal process. This means that your home cannot be foreclosed on, a vehicle cannot be repossessed, and that your wages will stop being garnished. Creditors are not even allowed to contact you and ask for you to make payment. 

The automatic stay goes away when the bankruptcy has been resolved. If your bankruptcy is approved, some of those debts will be discharged and the creditor is not allowed to contact you. If your bankruptcy is not approved, those creditors will be allowed to contact you and resume debt collection practices. 

341 Meeting

There is a meeting you will need to hold known as the 341 meeting. The name comes from the section of the bankruptcy code that requires this meeting, and the numbers don't hold any more significance than that. The purpose of the meeting is to allow creditors to challenge the bankruptcy by asking you questions that you must answer under oath. Many creditors do not attend this meeting, but they do have the option to do so. 

Means Testing

Part of the Chapter 7 bankruptcy process requires that you go through means testing, which is a way of determining if you qualify for bankruptcy based on your income. It is used as a way to prevent people from abusing the bankruptcy process to not pay for debts when they would normally be able to pay back those debts over time. It is possible to challenge a bankruptcy denial due to means testing if you have special circumstances. 

Contact a local bankruptcy attorney for more information.