The Language of Bankruptcy

Bankruptcy is an alternative consumers can choose when their debts exceed the ability to pay.The bankruptcy enables people to start over again financially by eliminating a portion or all of the existing debts.The process is designed to help consumers shed burdensome debt that they can't pay while also insuring creditors are treated as fairly as possible.

Not all debts are dischargeable or able to be eliminated. For example,if you owe child support payments, the bankruptcy will not eliminate your financial obligation.Other types of debt that cannot be discharged includes taxes, student loans and restitution.

There are a number of terms used during the bankruptcy process that you need to become familiar with. When you hire a bankruptcy attorney in Tyler, TX, for example, the attorney and the court will use the following terms.

>> Automatic stay – most debt collections must stop after bankruptcy is filed

>> Discharged debts – debts the court has agreed the debtor does not have to pay

>> Exempt assets – assets the debtor is permitted to keep despite the bankruptcy like a house or car or a minimum amount of cash on hand

>> Encumbered assets – assets that have been used as collateral on a loan or have been legally liened as a result of a lawsuit, other court case or the law itself permitted the lien due to an unpaid claim

>> Secured debts – debts that can be collected on through seizure of assets if the debtor fails to make payments on a loan as agreed

>> Liquidated assets – assets sold for the cash so that debts can be paid

>> Unsecured debts – debts that have no assets as collateral and so the assets cannot be seized for nonpayment

A good example of unsecured debts is credit card bills and hospital bills.

When the Debt Burden is Too Heavy

The bankruptcy process is complex and no two situations are alike.In April 2005,a new law was passed called the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The law requires that anyone considering bankruptcy must first consult with an approved nonprofit credit counseling agency.

The first thing you should do is hire a bankruptcy attorney. The attorney can review your circumstances and determine if bankruptcy is a good option for your situation. If bankruptcy is the best option then the attorney will also advise you as to whether you should file a Chapter 7 (straight bankruptcy) or Chapter 13 (wage-earner bankruptcy).If you are a business then a Chapter 11 would be filed.

The attorney you choose should be familiar with federal bankruptcy laws but must also be familiar with any state laws that may come into play.State laws on child support, home ownership,community property and others are considered.So if you live in Texas,you can hire an attorney in Tyler, TX and know you are getting thorough legal advice.

A bankruptcy attorney will normally recommend a nonprofit credit counseling agency.If you are burdened with debt you simply have little chance of repaying with your current income,don't wait until it's a crisis to talk to an attorney to find out what your alternatives are.

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