Debt discharge through bankruptcy helps millions of households start over every single year. The recession has eliminated all stigma from this type legal proceeding, but not everyone is familiar with the intricacies of the Chapter 7 and Chapter 13 processes. Check out the following list of helpful terms to know if you are thinking about filing for bankruptcy:
Discharge A discharge is what every debtor aims to achieve when they file for bankruptcy. This is a formal grant that releases the debtor from liability for loans that had previously accrued. Depending on whether you file Chapter 7 or Chapter 13, certain loans are to be wiped out, while other may not be. A discharge also prevents the creditors who hold these debts from coming after you in an attempt to collect more money.
Bankruptcy Trustee This is private individual who is granted special powers by the Federal Bankruptcy Court to look after your assets during Chapter 7 or Chapter 13 proceedings. He or she will review your petition for discharge and possibly sell off some of your valuable assets in order to pay off certain creditors. The trustee’s role varies widely based on the type of bankruptcy you file as well as your unique mix of debts and assets.
Priority When most people file for discharge, it is fairly likely that they cannot pay all of their debts even if they liquidate all of their assets. Since there is not enough money to pay all creditors, the Bankruptcy Code sets out a list of which creditors get paid off first. This is known as a priority ranking, with certain creditors being ranked ahead of others for policy reasons.
The Golden State Law Group is a Southern California firm whose trained staff has decades of experience helping to guide debtors through Chapter 7 and Chapter 13 proceedings. If you feel trapped under the burden of overdue loans, call our San Diego office at (619) 234-3333 for a free case evaluation.