As with anything new, there are terms to learn. A new job involves an education in a new set of responsibilities and practices. A class at school involves learning terminology pertinent to the subject. The older we get, the tougher it sometimes is to learn new terminology especially when we find ourselves in the middle of a financial mess, with which it seems we have no hope for moving forward and getting out of it.
Closer to home, in the event you are filing for bankruptcy in South Florida, there are many key bankruptcy terms with which you should become familiar. Knowing these five terms will help you communicate a little better with your attorney and will definitely help you understand the lingo of the bank and/or creditors.
5 Bankruptcy Terms to be Familiar With:
- Asset: Anything tangible or intangible that is capable of being owned or controlled to produce value, and that is held to have positive economic value, is considered an asset. Simply stated, assets represent value of ownership that can be converted into cash.
- Insolvency: Insolvency is the inability of a debtor to pay their debt. Cash flow insolvency involves a lack of liquidity to pay debts as they fall due. Balance sheet insolvency involves having negative net assets, in which liabilities exceed assets. Insolvency is not a synonym for bankruptcy, which is a determination of insolvency made by a court with resulting legal orders intended to resolve the debts.
- Discharge: An order given by the bankruptcy judge, at the conclusion of all legal steps in processing a bankrupt person’s assets and debts, which forgives those remaining debts that cannot be paid, with certain exceptions.
- Exemption: Exemptions are the property that are legally beyond the reach of creditors or the bankruptcy trustee. The debtor in bankruptcy keeps the exempt property. What property, and the values that may be exempted is determined by state and federal statutes, and varies from state to state.
- Debtor/creditor: A debtor is an entity that owes a debt to another entity, i.e., an individual, a firm, a government, a company or other legal person. A creditor is a party, a person, organization, company, or government, that has a claim to the services of a second party. It is a person or institution to whom money is owed.
Researching the various terms associated with a bankruptcy filing will help you to unravel the sometimes murky financial waters of the bankruptcy process in Broward County and South Florida. It will also help you to better discuss your case with an attorney.
Education will always place you in the most advantageous position should bankruptcy or foreclosure become real alternatives for you. Knowing terms and definitions and how these apply to your unique situation will help you gain an edge during the bankruptcy process.
5 Bankruptcy Terms to be Familiar With