Assume: An agreement that an action, performance of duties, or a payment will occur under a contract. To “assume risk” means the risk falls on you if it fails. You will be responsible for the debts.
Bankruptcy: A legal procedure used by individuals or corporations to deal with unbearable debt obligations.
Bankruptcy Petition: The legal paperwork filed. It can be done by the debtor (in a voluntary case) or by the creditors (in an involuntary case).
Chapter 7: This type of bankruptcy is a “liquidation” bankruptcy. All non-exempt assets are sold and distributed to creditors.
Chapter 9: This deals with the reorganization of municipalities (cities, counties, etc) and likely will not be of much interest to our readers.
Chapter 11: This kind of bankruptcies are generally filed by businesses so they can stay operational. They propose a plan of repayment to creditors over time so they can stay in business today.
Chapter 13: This type of bankruptcy is generally sought by an individual and its purpose is to reorganize the finances of a person with regular income so they can pay creditors over time what is owed.
Current Monthly Income: The average monthly income of the person filing for generally the six months prior to the start of the bankruptcy case. Social Security income is not included.
Discharge: The debt/obligation no longer applies. The discharge also makes it illegal for creditors to make calls harassing people for money that was owed before the case started.
Equity: What do you have that’s worth money? If you have a house worth $250,000 and only owe $100,000 on it, there would be $150,000 of equity in the house.
Lien: The right that a creditor has to take your stuff to sell to fulfill your obligation to pay a valid debt.
Means Test: Basically, are you trying to cheat the system to get bankruptcy protection? There is a formula used to help determine if you pass or fail the means test.
Non-Dischargable Debt — Even if your case goes through sucessfully, this debt still stands. (i.e. Home Mortgages, child support, alimony)
Pre-bankruptcy Planning — The arrangement of a debtor’s property so that they can take full advantage of the Bankruptcy Code of Denver, Colorado
Reaffirmation Agreement — The agreement to keep paying on a dischargable debt 9like a car loan) so that you can keep the car after the bankruptcy.
Undersecured Claim — You owe more than it’s worth.