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Important Terms To Know In Bankruptcy

November 29, 2011 | Comments: 0 | Views: 156

Although the bankruptcy process can seem to be complicated, it doesn't have to be. In fact, just learning about a few key terms can help make the process smoother and less stressful. In order to maximize your chances at successfully completing a bankruptcy case, it is important that you become actively involved. The best place to start is learning about the basics through a few important terms commonly used in the bankruptcy process.

Asset--is property of value that you own or are making payments towards owing. Common examples include a home, car, jewelry, furniture and clothing. A list of your assets is required in the filing process in order to determine whether you have any property of value that could be used to satisfy debts.

Asset Liquidation--is a process in which creditors seize and sell your assets. Asset liquidation occurs when the court grants creditors access to your debts in efforts to satisfy the debt owed to the creditor. However, some assets can be protected from liquidation through bankruptcy exemption laws.

Bankruptcy Exemption--is a law that protects certain assets from liquidation in a bankruptcy case. Each state has their own bankruptcy exemption laws that specify which property and up to what value amount is protected in bankruptcy. There is a federal bankruptcy exemption law that anyone can choose to claim over their state's bankruptcy exemptions.

Bankruptcy Petition--is the document that must be completed and submitted to the court to initiate the filing. This document includes detailed information about a debtor's assets, debts, income and financial history.

Chapter 7 Means Test--is a test used to determine if you qualify to file for Chapter 7. In order to qualify for a Chapter 7 case, your income must be less than the median income of the state of filing. If your income is greater than the median income of the state, you will not be eligible for Chapter 7 and must file for Chapter 13 instead.

Chapter 13 Plan--is the repayment plan that outlines how you will repay your debts in a Chapter 13 case. The plan is developed and approved by the court before being presented to the creditors. Once approved, creditors must adhere to the terms outlined by the plan and cannot collect on the debt outside of the plan. A typical Chapter 13 plan allows for debts to be repaid over a three to five year period.

Credit Counseling Course--is a debtor education course that is required before a discharge can be issued. The 90 minute course covers topics such as how to use credit wisely, money management skills and debt management options.

Debt-- is a line of credit or borrowed amount owed to a creditor. Debts include both secured and unsecured debts, both of which have the potential to be discharged in bankruptcy.

Discharge--is the court ruling that marks the closing of a bankruptcy case after successful completion. The court will issue a debt discharge once the debts have been successfully eliminated through Chapter 7 or repaid through Chapter 13.

Dismissal--is the court ruling that marks a rejection of a bankruptcy case. The court may be dismiss a case for failure to complete one of the required steps or due to fraudulent actions.

Christopher M, of Lee Law Firm, understands that financial hardships can affect honest, hard-working people. His early experience growing up in a very blue collar family in a rural area of Indiana, made a significant impression on his business philosophy today. As a child, he watched his family struggle as money didn't come easy and his parent work hard to provide for their family. As a bankruptcy attorney in Dallas, TX his practice has given him the opportunity to directly impact the lives of many people.

Source: EzineArticles
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