Monday, January 31, 2011
Know Your Bankruptcy Terms
Filing for bankruptcy can be overwhelming and confusing. With the help of a bankruptcy lawyer, however, you will have a much better understanding of the legal process and how you can protect yourself. The following bankruptcy terms will help you understand the different parts of bankruptcy law.
List of Important Bankruptcy Terms to Know
Bankruptcy – The legal status of an organization or individual who is unable to repay debts owed to creditors.
Chapter – A chapter refers to the section of bankruptcy law that determines which type of bankruptcy you file. Each chapter or type of bankruptcy has different processes and requirements. Your bankruptcy attorney can help you figure out which chapter of bankruptcy applies best to your situation. The four main chapters of bankruptcy law are:
Creditor – An organization or an individual to whom money is owed.
Debtor – The organization or individual who is either voluntarily or involuntarily filing for bankruptcy.
Dischargeable Debt – Dischargeable debt can be wiped out during bankruptcy proceedings and will not be owed.
Liquidation – The legal process in bankruptcy law that takes the assets and property from the debtor filing for bankruptcy and redistributes it among the creditors to pay back the debt owed.
Non-Dischargeable Debt – Non-dischargeable debt cannot or may not be wiped out during bankruptcy proceedings and is still owed to creditors.
Petition – The paperwork that begins bankruptcy proceedings, filed by the debtor who needs to file bankruptcy or the creditors to whom money is owed.