In February 2011, Fox Sports reported in “Duerson recently filed for bankruptcy” that Dave Duerson, age 50, shot himself. The former Chicago Bears safety, who won a second Super Bowl with the 1990-91 New York Giants, filed for bankruptcy in September 2010. Duerson was found dead at his home in Miami. He claimed $14.7 million in liabilities, mostly connected to his company, Duerson Foods LLC. Duerson reported $34.6 million in assets from a 2004 judgment his company won but never collected. In December 2010, his ex-wife, Alicia Duerson, said she was owed $70,000 and accused him of withholding certain assets, including his two Super Bowl rings. Duerson’s financial troubles included a foreclosure action against his home, which he mortgaged to help keep his company afloat.
Bankruptcy filings have increased drastically since massive layoffs began in 2008. Some areas in New York have seen a doubling of bankruptcy filings. As the economic downturn continues, many Americans still unemployed after over 2 years, are seeking bankruptcy relief to get out of credit card debts, medical bills, second mortgage obligations, or rental property liabilities. People in bankruptcy may suffer constant anxiety, regret, and depression. Understanding bankruptcy terminology goes a long way in helping people get through events that are not planned in life. The following are terms often used in bankruptcy proceedings:
- Abandon: Non-exempt property the trustee does not want to liquidate and gives back to the debtor. Usually the trustee abandons property of inconsequential value or requires time and money to liquidate that exceeds the actual value of the property.
- Assume: Agree to continue performing duties under a contract or lease.
- Bankruptcy Code: Informal name for title 11 of the United States Code (11 U.S.C. §§ 101-1330), the federal bankruptcy law.
- Cash surrender value: Sum of money an insurance company pays the policyholder when the insured event occurs, or the policy is voluntarily terminated before it matures. This cash value is the savings element of most whole life insurance policies that are payable before death.
- Chapter 7: Bankruptcy Code chapter providing for liquidation (sale of debtor’s nonexempt property and distribution of proceeds to creditors).
- Chapter 13: Chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.
- Debtor: Person who files a bankruptcy petition.
- Discharge: A discharge releases a debtor from personal liability for dischargeable debts and prevents the creditors owed those debts from taking any collection action against the debtor.
- Equity: Value of debtor’s property interest that remains after creditors’ interests are considered. Example: If a house valued at $600,000 is subject to $80,000 mortgage, there is $520,000 equity.
- Executory contract: Contracts or leases under which both parties to the agreement have duties remaining to be performed. If a contract or lease is executory, a debtor may assume it or reject it.
- Exempt property: Property owned by an individual debtor that the Bankruptcy Code or state law allows the debtor to keep from unsecured creditors. The availability and amount of property the debtor may exempt depends on the state the debtor lives in.
- Homestead exemption: In some states the debtor may exempt all or a portion of the equity in debtor’s primary residence.
- Insider: Relative of an individual debtor.
- Judge: Judicial officer of United States district court who is the court official with decision-making over bankruptcy cases.
- Lien: Right to take and hold or sell property of a debtor as security or payment for a debt.
- Liquidation: Sale of a debtor’s property with the proceeds used for the benefit of creditors.
- Motion for relief from automatic stay: Request by a creditor to allow the creditor to take collection action against the debtor that would otherwise be prohibited by the automatic stay.
When in debt, engage an experienced New York bankruptcy attorney for support in evaluating bankruptcy options.