Posted on: 26 August 2021
The first time you file for bankruptcy, you might have questions about the process. You might also have questions about common terms that you hear with a bankruptcy case. Learning the common terms of bankruptcy can help you understand how it works. Here are some of the most common terms to know if you are getting ready to file for bankruptcy.
Qualifying Debts vs. Nonqualifying Debts
The first set of terms you might hear are qualifying debts and nonqualifying debts. These terms are vital in a Chapter 7 case as they decide what happens to your debts. Qualifying debts are the type that qualify for a discharge in Chapter 7. Nonqualifying debts are those that do not qualify for a discharge. If you have nonqualifying debts when you file, you will owe these bills in full, even if you use bankruptcy. Qualifying debts end up getting discharged, reducing the debt that you owe.
Exempt Assets vs. Nonexempt Assets
The next set of terms relate to your assets. Exempt assets are the assets you can keep in a Chapter 7 case, while nonexempt assets are things the court can seize. The court might decide to seize some of your nonexempt assets, but they do not always choose to take them. Your attorney can help you maximize your exempt assets to avoid losing them.
You will hear the term "trustee" quite often when filing for bankruptcy, so you should know what this is. A trustee is a court-appointed attorney that manages your case. The court will often assign that person to you. Your trustee has the responsibility of verifying all your information for your bankruptcy case.
If you file for bankruptcy, the court will often require that you take two credit counseling classes. You must take one before you file and the other one afterward. Credit counseling teaches you important principles of personal financial management.
The final term to understand is discharge. A discharge is equivalent to debt forgiveness. When the court discharges your debts, it means that they wipe them away. A discharge is the reason many people choose to file for Chapter 7 bankruptcy, as it helps them regain control of their financial situation.
If you understand these terms, you will have a better understanding of what is going on with your bankruptcy case. If you would like more information about bankruptcy options, please contact a bankruptcy attorney law firm today.Share