Bankruptcy Made Easier - Know the Terms Used


People that file bankruptcy are usually under a lot of pressure. Making the decision to file and getting through the process can be particularly stressful when you don't understand what is going on. This is usually do the terms being used by the lawyer. With this article, I hope to put much of that to rest for you.

Discharge

Discharge is usually a bad term in every possible setting, but not in bankruptcy. You want a discharge more than anything when you file bankruptcy. Why? It means your bankruptcy is at an end and many, if not all, of your debts have been washed away. Discharge represents the proverbial "finish line" for your case.

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Dischargeable Debt

You get to write off all your debts when you file bankruptcy, right? No. Only dischargeable debts get discounted or written off. Non-dischargeable debts survive the bankruptcy and you have to pay them in full. Some examples of non-dischargeable debts include income taxes and student loans. The extent to which a particular discharge debt can be written off depends on the type of bankruptcy you are filing and the nature of the debt.

Exempt Property

When you file bankruptcy, your creditors are paid through the liquidation of some or all of your assets. The bankruptcy code, however, contains language that creates certain types of exempt property. This property cannot be used to satisfy debts owed to creditors. Put another way - you get to keep it! The classic example of exempt property is the "homestead exemption". In some states you get to keep part of the value of your home. In Florida, you often get to keep the entire home and live in it despite the fact you've gone belly up.

Fraudulent Transfer

This is a term you need to understand and avoid like the plague. A fraudulent transfer is the movement of any asset by a debtor for the purpose of protecting it from creditors. Bankruptcy is set up to give you a fresh start, but you have to be honest and up front with the court. If you drop off all your jewelry at your sister's house and don't list it as an asset in your bankruptcy filing, you are guilty of fraudulent transfers. Your bankruptcy filing will be terminated at a minimum. In a worst case scenario, you'll go to jail. In short, it isn't worth risking.

Bankruptcy is actually a fairly straightforward process for most people who file for it. If you don't understand a subject, make sure to ask your lawyer to explain it. You are paying him or her after all!


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