Common Bankruptcy Terminology
Bankruptcy can be difficult to understand, especially if an individual has no prior familiarity with any of the terms used to explain this process. Most people have a misconstrued understanding of this procedure; they believe that bankruptcy will completely ruin them and strip them of all assets. However, with a good understanding of the terminology used in the Bankruptcy Code, one will find that this is actually not the case.
Terms to Know
It is important for one on the brink of insolvency to familiarize him or herself with the following terms:
- Liquidation: The sale of one’s property in order to gain the money necessary to pay owed creditors
- Chapter 7: This form of bankruptcy involves liquidation of one’s assets in order to pay off creditors
- Chapter 13: This form of bankruptcy involves the reorganization of one’s repayment plans in order to meet all creditor payment obligations
- Non-Exempt Property: Items that the debtor will lose during the liquidation process, including second homes and cars, expensive collections, and cash
- Exempt Property: Items that the debtor is allowed to keep during the liquidation process, including a vehicle, clothing, certain appliances and furniture, public benefits, and at least a portion of one’s home
- Secured Debt: Debt that is backed by some sort of collateral, such as a mortgage or some other type of lien
- Unsecured Debt: Debt that is not secured or not fully backed by collateral or a lien
These terms should help alleviate the process of learning about bankruptcy.
Contact Us
If you would like to learn more about bankruptcy, or if you feel as though bankruptcy is the right method of debt resolution for you, contact the Austin bankruptcy lawyers of Slater, Kennon & Jameson, LLP today at 512-338-1100 to speak with one of our qualified attorneys.