Bankruptcy Definitions

Legal Terms to know in BANKRUPTCY

The best way to understand what a bankruptcy and all its legal terms entails is to sit down for your FREE CONSULTATION with Fort Lauderdale Bankruptcy Attorney Carmen G. Soto. For a simplified idea, here are some key terms when dealing with a bankruptcy.

Asset - this word refers to items of value that may be added to the bankruptcy estate.

Automatic Stay - This a protection to the debtor in which the law automatically prohibits creditors from continuing any collection efforts after the debtor files for bankruptcy.

Bankruptcy (Ch. 7) - The process in which an individual may liquidate as much of their consumer debt permissible under the Bankruptcy Code.

Creditor - The person to which the debtor owes money.

Debtor - The person that is in debt and filing bankruptcy.

Discharge - A relief action for a debtor taken by the court which cancels the debt owed to a creditor.

Discharge Objection - Legal action taken by a creditor to attempt to keep their interest in a debt non-dischargeable by the Bankruptcy court.

Exemption - A protection of certain possession of the debtor from the reach of creditors or liquidation, provided in the Bankruptcy Code.

Secured debt - This is the kind of debt that is secured with property owned by the debtor. The debtor has promised to pay, but has also allowed the creditor to place a lien on certain property if there is non-payment. The most common examples are Mortgages which impose a lien on the home, or motor vehicle loans which impose liens on the vehicle. Essentially the creditor has the right to collect the property in the place of the repayment.

Trustee - Upon filing for bankruptcy the court appoints a Trustee/representative to review and evaluate the process. The Trustee has the responsibility to determine if there are any additional assets, collect assets, distribute assets, and also declare if it is a non-asset bankruptcy case.

Unsecured debt - This type of debt is not secured by any of the debtor's property. The creditor has no right to place a lien or collect the debtor's property for non-payment. The most common unsecured debt are credit cards, utility bills and medical bills.

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