If you need to use bankruptcy to get yourself out of debt, chances are that it is your first time going through the process. It will help to familiarize yourself with the following terms so that you can better understand the legal process.
This is a form of bankruptcy where your assets are liquidated to pay off as many debts as possible. Remaining debts will be discharged, and you will no longer be obligated to pay them.
Instead of discharging all debts, they will be consolidated into a single repayment plan. This makes it much easier to repay those debts, especially since you won't need to pay interest as well.
Creditors are often referred to as the people you owe money to. They can be an individual, company, or government agency.
Any type of debt that you have that isn't tied to a physical asset, such as debt owed to a credit card company, is considered unsecured debt.
Debts that are tied to a physical asset that acts as collateral, such as a mortgage or auto loan, are considered secured debts. These assets could be lost in certain forms of bankruptcy.
Any debt that you will be released from paying is considered discharged. Once a debt is discharged, you will no longer be allowed to be contacted by a creditor to be paid the debt.
If you are looking to keep an asset from a secured debt, you need to sign a reaffirmation agreement with the creditor. This is when you agree that you will pay back the debt after the bankruptcy is finished in exchange for not having your property repossessed.
Filing for bankruptcy grants you an automatic stay. This means that creditors will be unable to contact you about repaying the debt that you owe. This is often used to prevent harassment from creditors during the bankruptcy process.
If any creditor objects to their debt being discharged, they'll need to file for a discharge objection. For example, a creditor may feel that you took on the debt after you considered filing for bankruptcy. If true, this would make the creditor entitled to you paying back your entire debt.
You must pass a means test in order to qualify for bankruptcy. This is done by looking at your income and the debts that you owe and determining if you have enough left over to pay back your debts.
If you have questions, reach out to a bankruptcy law firm to get answers.Share
28 February 2020