When it comes to learning any new topic, vocabulary is key. After all, if you know the "lingo," you won't be caught off-guard when your bankruptcy attorney or the bankruptcy judge refers to different important topics.
Ultimately, learning all the terms you need to know to successfully navigate a Chapter 7 or Chapter 13 bankruptcy process takes time -- and that's why bankruptcy lawyers spend years studying and practicing law to perfect their knowledge of the topic. However, it never hurts to know a few basics before you engage in a serious legal process like bankruptcy.
3 bankruptcy terms you should know
Here are three bankruptcy terms that everyone should know:
Automatic stay: The automatic stay is one of the first benefits that every bankruptcy filer receives after submitting their bankruptcy documents to the court. The automatic stay forces all creditors covered under the bankruptcy to stop trying to pursue payment and/or collection of debts owed. The automatic stay will stop or pause harassing calls from creditors, pause foreclosure proceedings, pause debt-related lawsuits and even stop court-approved wage garnishments.
Exempt property: Most people who file for Chapter 7 bankruptcy are worried and concerned about the personal property they may need to give up to the liquidation process. However, a great deal of a filer's personal property will be protected as "exempt property."
For example, homes, one personal vehicle, vehicles or machinery and tools required for work, furniture, clothing, appliances and other categories of property up to a certain value may be exempt from liquidation. A skilled attorney can assist his or her clients to ensure that they benefit from as many exemptions as possible -- and keep as much property as they can -- during the bankruptcy process.
Objections: The creditors who are owed money in a bankruptcy case might submit objections to exemptions and objections to dischargeability. An objection to exemptions will try to argue that certain pieces of property that the filer wants exempt should, in fact, be liquidated and sold to settle debts. An objection to dischargeability will try to argue that certain debts are not legally resolvable via the bankruptcy process.
Are you ready to begin your bankruptcy process?
If you're struggling from a difficult debt situation, you might want to investigate the various solutions that are available to you in order to overcome your debt problems. These solutions may include bankruptcy or other debt management strategies.