BANKRUPTCY GLOSSARY: COMMON BANKRUPTCY TERMS DEFINED (PT. 3)
Concluding our blog series Bankruptcy Glossary: Common Bankruptcy Terms Defined, below, we will define some more common bankruptcy terms that are important to understand if you will be filing for or are going through bankruptcy.
Final Part of Our Bankruptcy Glossary
Means test – The qualifying test used to assess people’s average income to determine whether they are eligible to file for Chapter 7 bankruptcy. With the means test for bankruptcy, a debtor’s average monthly income for a certain period of time (usually the six months prior to filing the bankruptcy petition) is calculated; if this average is lower than the aggregate (average) monthly income for people in Colorado, then a person will have “passed” the means test. If not, then other factors of the means test may be used to determine a person’s eligibility for Chapter 7.
Nondischargeable debt – Debt that will not be eliminated through a bankruptcy case. In general nondischargeable debt in bankruptcy includes (but is by no means limited to) child support debt, restitution-related debt, certain types of tax debt, student loan debt, etc.
Secured debt – Debt that is backed by some type of collateral, lien or mortgage. In the event of default on a secured debt, creditors may be able to keep the original collateral or repossess the item for which the debt has accumulated. Home mortgages are common types of secured debt.
Unsecured debt – Debt that is not backed by any type of collateral, lien or mortgage. Credit card debt is a common type of unsecured debt.
341 meeting – A meeting of creditors that occurs as part of a Chapter 13 bankruptcy case. As part of this meeting, creditors and the court can question debtors (under oath) about their various debts and financial affairs.
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