The last thing you need when you’re dealing with financial stress is a whole bunch of legal terms, jargon and lingo that you don’t understand. Filing for bankruptcy can be an emotional, difficult process, and because of this it is wise to work with an experienced bankruptcy lawyer who can guide you smoothly through the process. Bankruptcy attorney Barry Arrington has worked with many people throughout Colorado and has helped them get a fresh financial future. We hope this definition of common bankruptcy terms helps you as you begin your bankruptcy case:
1. What is a Lien?
A lien is a reserved right to possess property belonging to another person, until a debt owed by that person is discharged or repaid to the lender. An example would be a mortgage – the lien is placed on property when the loan is made up-front. If you fail to make your payments, the lender has the right to foreclose if you don’t pay.
2. What is Secured Debt?
Secured debt is any debt which has specific property attached to it that you have offered as collateral which the creditor can repossess if you fail to pay. The creditor is allowed to put a lien on these kinds of debts. An example of secured debt would be your home or vehicle (read more about secured debt).
2. What is Unsecured Debt?
Unsecured debt is any type of debt where the creditor has no collateral against you. There is no property (such as a car or home) which they can take away, or on which they can put a lien. Unsecured debt usually can’t be claimed by a lender – although they can sue you for the money. An example of unsecured debt would be credit card debt or medical bills (read more about unsecured debt).
3. What is Liquidation?
When your assets are “liquidated,” it means they are sold in order to pay your creditors. Chapter 7 bankruptcy is often called “liquidation bankruptcy.”
We hope this list of common bankruptcy terms has helped you. If you are considering filing for Chapter 7 or Chapter 13 bankruptcy in Littleton, Centennial or Aurora, and are confused by the process, contact experienced bankruptcy attorney Barry Arrington for a free consultation at 303-205-7870 or submit the “Get Help Now” form to begin your journey towards financial freedom.