It can be confusing trying to understand the process of bankruptcy and the many terms that are associated with it. Below are some terms that you may read or hear about. After reading these explanations, you will have a better understanding of some of the frequently used bankruptcy terms. If you have further questions, call our offices. (513) 793-6555. We’d be happy to assist you.
Bankruptcy: A legal procedure in which individuals and businesses deal with debt problems. This helps many people begin a new financial start.
Chapter 7: This chapter of bankruptcy involves liquidation which allows a person’s non-exempt assets to be sold in order to pay creditors. Most debts are forgiven.
Chapter 11: This chapter of bankruptcy helps to reorganize finances and debts so that an individual, partnership, LLC, or corporation is able to pay back debts over a certain time period while keeping a business functioning.
Chapter 13: This chapter of bankruptcy allows a debtor to pay back debts over a period of time. Some debts may be forgiven after the payment plan ends. Debt is reorganized.
Dischargeable debts: These debts do not have to be paid back by a debtor. They are forgiven. Creditors are not able to take action against the debtor in order to collect debts.
Exemptions: Exemptions or exempt assets are protected during bankruptcy. They cannot be taken by the bankruptcy trustee or creditors. These assets are determined by the state and type of bankruptcy that is filed.
Liquidation: This involves selling a debtor’s assets and using the proceeds to pay creditors.
Means test: A means test decides if a person is eligible to file for Chapter 7 bankruptcy. The means test determines whether a person’s income is below a certain level and if a person is capable of making minimum payments to creditors, and is also necessary in Chapter 13.
Secured debt: This is debt that is backed by collateral. If a debtor defaults, a creditor has the right to take the property. A mortgage would be an example of a secured debt. If you default on your mortgage, the bank can take your home and sell it to pay off the rest of the loan. A car loan is another example.
Unsecured debt: This is a debt that is not secured by collateral. A creditor is not able to take the property if a debtor defaults. Credit card debt is the most common example.
If you feel that you may qualify for bankruptcy, it is important to discuss your situation with an experienced bankruptcy attorney.
For help, call Geygan & Geygan
A qualified attorney can help assess your financial situation and determine if you qualify for bankruptcy.
If you are looking for an experienced law firm to counsel you throughout a bankruptcy case, contact Geygan & Geygan. Call (513) 793-6555, fill out the form below, or email firstname.lastname@example.org. Our office is located in the Kenwood area of Cincinnati. CALL NOW!
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