The bankruptcy terms are words that are important for individuals to know. These words are relevant to the overall context of the bankruptcy process. It is important for people to understand the bankruptcy terms if the various workings of the process are to be understood.The most fundamental and basic bankruptcy term is bankruptcy itself.
Bankruptcy may be described as a legal procedure that is meant to help any debtor with the payment of their debts.
Automatic stay is a type of injunction. The automatic stay stops all collection activities such as lawsuits, garnishments and foreclosures after a petition is filed.
Chapter 7 is a very crucial term in these cases. This chapter deals with the liquidation and sale of the nonexempt property of the debtor. The proceeds is then divided between the creditors.
Chapter 11 is equally important. It is an alternative to bankruptcy. The bankrupt provides a reorganization plan that would keep the business going and also pay the creditors. Even though Chapter 11 is meant solely for the business organizations, individuals can also file under it.
The Disclosure Statement is part of the Chapter 11 plan, whereby the debtor provides enough necessary information for the creditors to decide the worth of the plan.
Chapter 12 concerns itself with the family farmers and shows how their debts may be rearranged in order to save them from facing bankruptcy.
This chapter deals with debt adjustment in the cases of individuals who have a consistent income only. Under Chapter 13, the debtor gets an opportunity to repay his debt within three to five years.
In the 341 meeting the debtor is quizzed, under oath, about his financial matters by creditors, an examiner and a trustee.
An important part of bankruptcy is secured debt. A secured debt is one where the borrower offers a personal property as collateral.
Last Updated on : 10th July 2013