Getting to know some important terms in bankruptcy is a good step towards understanding how the process can benefit you. Here are some of the terms you should familiarize yourself with before meeting with your Houston bankruptcy lawyer:
Chapter 7 — is a liquidation bankruptcy in which your nonessential, nonexempt assets may be liquidated to satisfy debts to creditors. If you do not have any eligible assets the debt is simply eliminated and considered resolved.
Chapter 13 — is a reorganization bankruptcy in which your eligible debts are rolled into a single repayment plan with no interest. The plan is based on your income and asset value, spreading the payments out over a three to five year period.
Dismissal — is the termination of your case in which you did not receive a debt discharge. Dismissals can occur for any number of reasons from failure to complete the necessary requirements to fraud.
Secured debt — is a debt that is secured against an asset as collateral, which does give the creditor repossession rights if you default. Common examples are mortgage loans, car loans, and title loans.
Unsecured debt — is a debt that is not secured against an asset as collateral, which means the creditor has no repossession rights if you default. Common examples are credit cards, medical bills, utility bills and some personal loans.