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  • An Introduction to Common Bankruptcy Terms (Part 1)

    For those filing for bankruptcy, taking some time to become familiar with common bankruptcy terms can ease your stress as you work towards securing a financial fresh start.

    For those filing for bankruptcy, taking some time to become familiar with common bankruptcy terms can ease your stress as you work towards securing a financial fresh start.

    Going through bankruptcy for the first – or even the second – time can be a stressful and overwhelming process. While you will likely not be familiar with what you need to do or the process to come, even the terms used in bankruptcy can be confusing and disorienting. For those considering filing for bankruptcy, taking some time to become familiar with common bankruptcy terms can do wonders to improving your understanding of what is to come and to easing your stress as you work towards securing a financial fresh start. The following are some of the most common bankruptcy terms, along with their definitions:

    • Chapter 7 bankruptcy, which is also commonly referred to as liquidation bankruptcy, is a form of federal debt relief in which a person can get his unsecured debts discharged in exchange for liquidating what assets he has to pay off creditors. It’s important to note that there are exemptions as to what assets are liquidated (meaning that a debtor may be able to keep his car, his home and some personal items) and that some debts, such as student loans and court-ordered payments, can’t be discharged through bankruptcy.
    • Means tests are qualifications tests to assess whether a debtor qualifies for Chapter 7 bankruptcy. A means test will account for a person’s income, his living expenses and his total monthly debt payments (among other factors).
    • Chapter 13 bankruptcy, which is also commonly referred to as reorganization bankruptcy, is a form of federal debt relief in which a person can set up a structured repayment schedule to pay off his creditors over the course of three to five years.
      Chapter 13 bankruptcy tends to be a better option for those who are earning a regular income and/or who do not qualify for filing for Chapter 7 bankruptcy.
    • Discharge refers to debts being wiped off the books after filing for Chapter 7 bankruptcy.
    • Bankruptcy estates are the compilation of a person’s debts and assets. Once a bankruptcy estate is compiled, the bankruptcy court will decide how the assets will or can be used to pay off debts.

    If you are struggling with debt and are looking for a financial fresh start, contact the trusted Colorado bankruptcy lawyers at The Law Office of Andrew McKenna. For more than 20 years, we have been successfully overseeing our Clients’ bankruptcy cases so they can resolve their financial issues as beneficially as possible. Our comprehensive legal knowledge coupled with our vast experience allows us to consistently and efficiently help our Clients achieve the best possible resolutions to their financial matters. For an evaluation of your case and expert advice regarding how to move forward, call us at (303) 730-8819.

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