Resuming Bankruptcy Glossary: Common Bankruptcy Terms Defined (Pt. 1), here, we will highlight the definitions of some more commonly used bankruptcy terms. If you will be or are going through bankruptcy, understanding what these terms mean and how they may apply to your situation can be important.
Our Bankruptcy Glossary Continued
- Dischargeable debt – Debt that can be discharged or eliminated through a bankruptcy proceeding. Debts that generally qualify as dischargeable in legitimate bankruptcy cases include (but are not necessarily limited to) credit card debt, mortgage debt, car loan debt, medical bill-related debt, etc.
- Exemptions – The property that can be excluded from a bankruptcy estate due to the applicable Colorado Bankruptcy laws. For instance, Colorado bankruptcy exemptions can allow people to keep some of their personal property, vehicles and possibly even their home as long as the value of these items doesn’t exceed the allowable maximum for the given exemption.
- Joint petition – A bankruptcy petition that has been filed by a married couple. While married people do not have to file for bankruptcy jointly, when they do, they can enjoy certain advantages (such as higher allowable bankruptcy exemptions).
- Lien – The legal right to hold or liquidate a debtor’s property due to some outstanding debt. For example, creditors like the IRS can place liens against people’s homes (or other valuable property) until people pay or resolve their outstanding tax debt.
- Liquidation – The selling off of a debtor’s property as part of a Chapter 7 bankruptcy case. The proceeds from the sale are used to pay off the debtor’s creditors, and debtors can use bankruptcy exemptions to protect some of their property and prevent it from being liquidated.
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